Genmab A/S Q2 FY2024 Earnings Call

Hello, and welcome to the Genmab First Half 2024 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 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 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 the company's financial results for the period ending June 30, 2024. With me today to present these results is our CFO, Anthony Pagano, our Chief Operating Officer, Anthony Mancini, and our Chief Medical Officer, Tahi Ahmadi. For the Q&A, we will be joined by our Chief Development Officer, Judith Klimovsky. 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. We have had a very exciting second quarter. The acquisition of ProfoundBio, which was completed in May, was a historic event for Genmab and one that will enhance our long-term growth profile. In just a moment, you will hear from Tahi on some of the exciting next steps that we have planned for Rina-S, and later Anthony Pagano will walk you through the financial impact of the acquisition. June was an exceptionally eventful month for EPKINLY, which is now the first and only bispecific antibody approved in the U.S. to treat both relapsed or refractory follicular lymphoma and relapsed or refractory diffuse large B-cell lymphoma. In addition to the U.S. approval and relapsed or refractory follicular lymphoma, the CHMP adopted a positive opinion recommending TEPKINLY, as epcoritamab is called in Europe for the same indication. Both regulatory actions were supported by data from the EPCORE NHL-1 trial, which was also recently published in the Lancet Hematology. We'd also like to note the potentially imminent start of another Phase III trial for epcoritamab. This one in combination with lenalidomide for transplant ineligible patients with relapsed or refractory diffuse large B-cell lymphoma. Together with our partner AbbVie, we continue to evaluate epcoritamab in multiple patient populations and treatment settings with the goal of establishing epcoritamab as a core therapy in B-cell malignancies. During our Q1 earnings call, we discussed the FDA approval and Japan NDA submission for Tivdak, both of which occurred early in the quarter. As a reminder, with this approval in the U.S., Tivdak became the first ADC with demonstrated overall survival data to be granted full FDA approval for the treatment of patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. I'm also excited to note that data from the innovaTV 301 study on which the approval was based was recently published in the prestigious New England Journal of Medicine. But now we hope that you have all had the chance to listen to our June 3 call, to review some of the exciting data that we presented at ASCO, including for Tivdak, EPKINLY, and, of course, acasunlimab. Tahi will provide you with a brief reminder of the very promising acasunlimab data and our next steps for the program on today's call. Before this, I would like to highlight the key change to the acasunlimab program that we announced on Monday. Genmab has now taken full control of the development of acasunlimab. This is a fantastic opportunity for us to own and advance this promising asset. Our partner, Biotech, has opted not to participate in the further development of acasunlimab, and we understand that this decision was based on their strategic portfolio prioritization and does not reflect the strength or potential of acasunlimab. This now becomes our second wholly owned candidate medicine entering Phase 3 by the end of this year, underscoring our strong confidence in the clinical promise and commercial potential. We are exceptionally well-positioned to maximize the potential of acasunlimab and we are very excited about the future of this program. I would also like to add that even though our partnership is changing on this program, it remains extremely strong and collaborative, and we are committed to continuing to work together to advance innovative antibody treatments for patients. Finally, turning to medicines powered by our innovation. Janssen announced that RYBREVANT has not been approved by the European Commission for the first-line treatment of adult patients with advanced non-small cell lung cancer with activating exon 20 insertion mutations. In addition, they have submitted a BLA for a subcutaneous version of amivantamab for all currently approved or submitted indications of IV RYBREVANT in certain patients with non-small cell lung cancer. More recently, in July, Janssen announced approval in the U.S. for DARZALEX FASPRO in combination with bortezomib, lenalidomide, and dexamethasone for the treatment of patients who are newly diagnosed with multiple myeloma and are eligible for autologous stem cell transplant. This combination based on data from the Phase III Perseus study has the potential to improve long-term outcomes for patients newly diagnosed with multiple myeloma and further supports DARZALEX as a backbone therapy for this disease. Anthony Mancini can provide you with a review of the recent performance for DARZALEX plus Auto-Select royalty medicines as well as, of course, for EPKINLY and Tivdak. First, I'm pleased to hand over now to Tahi, who will provide you with a reminder of the significant progress we are making with our wholly owned late-stage clinical programs, acasunlimab and Rina-S. Tahi, the floor is yours.

Thank you, Jan. I'm sure by now you've all seen the Phase II acasunlimab data in combination with pembrolizumab in second-line non-small cell lung cancer that we presented at ASCO. This data is very encouraging, demonstrating significant disease control and overall survival alongside a manageable safety profile. As a reminder, in the CPI pretreated patient population, we presented an impressive median overall survival of 17.5 months and a 12-month OS rate of 69%. Additional data will be presented at medical conferences, including the World Conference on Lung Cancer in September next month. This will include translational data that should help you better understand our confidence in the Q6-week dosing schedule. To ensure that there is no confusion, this will not include updated clinical data. We are simply too close to ASCO and are therefore limited by a very short follow-up, which really prevents a meaningful impact on time-to-event analysis. That said, the encouraging data both at ASCO and the translation data that will be presented at WCLC reinforces our commitment to swiftly progressing the Phase III trial in PD-L1 positive patients with non-small lung cancer who progressed on a CPI, either alone or in combination with chemotherapy. We expect to start this study before the end of the year. Given both our proven and extensive clinical development experience and our track record of acceleration, as you've seen with EPKINLY, we are confident in our ability to advance acasunlimab through Phase III and beyond. Moving now to Rina-S, as a reminder, this slide summarizes why Rina-S aligns with our vision to transform the lives of patients. We believe it has the potential to broaden, deepen, and consequently expand activity beyond what has been seen with first-generation folate receptor alpha approaches, becoming a potential best-in-class treatment for ovarian cancer and other folate receptor alpha-expressing solid tumors. In addition to the efficacy, it also has a differentiated safety profile, avoiding interstitial lung disease and corneal toxicity seen with other ADC therapies. This differentiation, both in efficacy and safety, is a direct result of the novel proprietary hydrophilic linker technology developed by ProfoundBio. We're exceptionally well-positioned to maximize the potential of Rina-S given both our full linker development capabilities, a track record of acceleration, and our experience in the gyn-onc space already with Tivdak. As we said before, we anticipate the first potential approval of Rina-S could be in 2027, and importantly, we anticipate blockbuster peak sales potential. This is what we shared with you when we announced the acquisition of ProfoundBio. Now that we are officially responsible for the development of Rina-S, let's take a look at our near-term plans. Previously, we told you that we will be providing an update to the initial encouraging Phase I ovarian cancer data that was presented at SITC last year. I can now confirm that you will see both updated data and additional follow-up at ESMO in September. I'm also pleased to note that we are on track to deliver on our accelerated development plan. We have aligned on the dose with health authorities and expect to start a Phase III trial in second line plus platinum-resistant ovarian cancer before the end of the year. So, in summary, significant progress for both acasunlimab and Rina-S, and we look forward to sharing more information with you when it becomes available. I will now hand it over to my colleague, Anthony Mancini.

Thanks, Tahi. In Q2 and in the first half of 2024, performance across our two key revenue streams, Royalty Medicines and Genmab commercialized medicines continued to demonstrate strong growth. Turning to our Royalty Medicines portfolio on Slide 8, DARZALEX delivered strong demand growth with $5.57 billion in first-half net sales, a 19% year-over-year growth driven by market share gains overall and meaningful market share increases in frontline multiple myeloma. As Jan mentioned, on July 30, FDA approval was received for a new indication for DARZALEX FASPRO quad combination based on the Perseus study in newly diagnosed transplant-eligible multiple myeloma. As J&J mentioned in their earnings call, primary endpoints were also met in two additional DARZALEX studies in Q2, CEPHEUS, a DARZALEX-based quad regimen in transplant-ineligible newly diagnosed multiple myeloma, and AQUILA in smoldering myeloma. Detailed results from these studies will be presented in an upcoming scientific meeting. Coupled with the final analysis of Mayo showing a median overall survival of 7.5 years, it's clear that DARZALEX is foundational to survival in multiple myeloma and that growth opportunities will continue with DARZALEX in early treatment settings. Beyond the early settings, DARZALEX is continuing to be a backbone therapy in combination with both newer and older therapies in relapsed or refractory multiple myeloma, including with TECVAYLI, our CD3 BCMA dual body bispecific, and TALVEY, our CD3 GPRC5D dual body bispecific, which each delivered solid performance in the first half of 2024. We expect continued growth and continued usage of DARZALEX throughout the multiple myeloma patient journey. KESIMPTA achieved continued strong demand performance with over $1.4 billion in the first half, a 64% year-over-year growth. KESIMPTA performance is not only progressing well in the United States but also outside the United States, it continues to be the new-to-brand prescription share leader in seven of ten major markets outside the U.S. TEPEZZA, the first and only FDA-approved treatment for thyroid eye disease generated net sales of $479 million in Q2. In addition, with the June 17 FDA submission for the subcutaneous formulation of RYBREVANT, our EGFR-cMET bispecific, it's another milestone to help make an even bigger impact on EGFR-mutated non-small cell lung cancer patients. In summary, we expect continued strong Genmab revenue growth from our six diverse royalty medicines in the second half of 2024 and beyond. Turning to our Genmab commercialized medicines on Slide 9. On June 26, we received accelerated approval in the U.S. for our second indication for EPKINLY as a monotherapy for patients with relapsed or refractory follicular lymphoma after two more lines of prior therapy. We also received a positive CHMP opinion for this indication on June 27 with an approval decision in Europe expected in Q3. The early response in the U.S. to EPKINLY in follicular lymphoma has been very positive. We continue to hear encouraging feedback from our customers across diverse sites of care regarding the FL label that does not require hospitalization. This gives us confidence in expanding EPKINLY utilization across practice settings as the first and only T cell-engaging bispecific antibody approved for both third-line plus DLBCL and third line plus FL. In addition, we presented 2.5-year follow-up data at ASCO, demonstrating the long-term durability and powerful responses with EPKINLY in third line plus DLBCL. We're very pleased with the EPKINLY demand performance across our key geographies with over 90% of net sales coming from the U.S. and Japan. EPKINLY delivered $121 million in net sales for the first half with $70 million in Q2, which includes foreign exchange headwinds in the first half of 2024. In both the U.S. and Japan, EPKINLY has seen robust uptake across key accounts, strong field execution and positive responses from customers and the patients we serve, really validating EPKINLY's differentiated profile that balances powerful efficacy, manageable safety, and a seamless patient experience with subcutaneous administration. Overall, the launch is exceeding our expectations with our third line plus DLBCL and third line plus FL indications as the first steps towards establishing EPKINLY as the core therapy across B-cell malignancies. Turning to Tivdak, our tissue factor directed ADC, it delivered $60 million in net sales for the first half of 2024, a year-over-year growth of 48%. This represents the 11th consecutive quarter of demand growth for Tivdak. We're very pleased with the performance and the recent full approval based on the significant 30% improvement in overall survival in the innovaTV 301 study, which is driving increased breadth and depth of prescribing. Gyn-onc and Med-onc customers continue to provide positive feedback on the impact Tivdak is making on the lives of women with cervical cancer, and we're well on our way to establishing Tivdak as a clear standard of care in second line plus recurrent or metastatic cervical cancer. The success we're building in gynecologic oncology with Tivdak is an important foundation to prepare for future potential launches such as Rina-S, and folate receptor alpha-expressing platinum-resistant ovarian cancer. As an end-to-end biotech company, we're very pleased that our Genmab commercialized medicines performance represents 31% of Genmab's overall revenue growth in the first half and look forward to carrying this momentum through the second half of 2024 and beyond. I'd like to take a moment to thank our partners and our entire cross-functional Genmab team across commercialization, R&D, and enabling functions for their tireless efforts every day to make a meaningful difference to the patients we serve. With that, I'll hand the call to Anthony Pagano to provide more perspective on both our first half financials and our updated guidance.

Great. Thanks, Anthony. We continue to strengthen our foundation throughout H1. Having delivered on our goal of successful regulatory approvals and launches for EPKINLY in the U.S., Europe and Japan in 2023, we are pleased with how these launches are progressing and even more so now with a second indication in the U.S. and the potential for additional approvals in Europe and Japan for late line follicular lymphoma. We've also significantly enhanced our long-term growth potential with the completion of the acquisition of ProfoundBio. And as we'll see, our financials remain strong. Recurring revenues grew by 42% in H1. This was principally driven by strong royalties from DARZALEX, KESIMPTA, and other approved medicines as well as strong performance from both EPKINLY and Tivdak. This strong H1 performance is driving an increase to our full-year revenue guidance. Our solid balance sheet, growing recurring revenues, and significant underlying profitability allow us to continue to invest in our business, our pipeline, and our team and capabilities in a very focused and disciplined way. Now, before we take a closer look at the results from H1 and our improved guidance, I'd like to provide you with an overview of some of the details and financial impact of the acquisition of ProfoundBio. Starting on the left, we've summarized how the DKK13.1 billion purchase price has been allocated. First, you can see the largest portion of the purchase price has been allocated to Rina-S. Here, amortization will begin on regulatory approval, which is estimated to be in 2027. Second, for the ADC Tech Platform, amortization started at the closing of the transaction and will continue over 15 years. This is what you can already see impacting the P&L in 2024 with an estimated full-year impact of DKK48 million. We also have goodwill, which isn't amortized and will be tested for impairment every year. Finally, the difference between the purchase price and the total fair value listed here is primarily due to an assumed deferred tax liability of DKK2.1 billion. This reflects the estimated future tax obligations related to the acquired intangible assets, primarily Rina-S and ADC Tech Platform. Now, moving to the right, you can see that since closing the deal, we've incurred DKK330 million of costs related to ProfoundBio. On a full-year basis, we expect costs of around DKK1.15 billion. As you will see, acquisition and integration-related charges or deal costs are a separate line item on our P&L. Taken together with the ADC amortization expenses, these are expected to be around DKK400 million for the year. As a reminder, these costs were excluded from the directional financial guidance I provided when we announced the deal back in April. So, with this background, let's take a look at our results for H1, and let's start with our revenues. We grew total revenue to over DKK9.5 billion in H1. As I've already highlighted, that included a 42% increase in our recurring revenue. This strong growth was driven by higher DARZALEX and KESIMPTA royalties as well as royalties from other products. We are pleased with how EPKINLY and Tivdak are performing. Taken together, these two products contributed 31% of our total revenue growth in H1. This illustrates the power of our recurring revenue. Overall, this strong recurring revenue growth enables our continued highly focused investment, as you can see on the next slide. In line with our significant growth opportunities, total operating expenses (OpEx) were approximately DKK6.7 billion in H1. As you can see, the majority of the growth was driven by R&D investments. Here, we've accelerated our investment into our product portfolio, especially the advancement of our mid to late-stage pipeline. Specifically, we're expanding the development for EPKINLY, Tivdak, 1046, and now, of course, Rina-S. As you can also see, SG&A growth moderated and was up only 12%, which reflects our continued focus on driving SG&A efficiency. As previously highlighted, we continue to invest to secure a successful EPKINLY launch in our two key markets, the U.S. and Japan. Of course, we've been really focused on the acquisition and integration of ProfoundBio. Now let's take a look at our financials as a whole. Here, you can see our summary P&L. Revenue came in at over DKK9.5 billion. That's up 36% on last year. Total OpEx was around DKK6.7 billion, and here, again, most of which was R&D. Even with that increased investment, we're still delivering over DKK2.4 billion of operating profit, and that's up more than 29%. Moving to our net financial items, here we have a gain of DKK1.4 billion. This gain was driven by the strengthening of the dollar against the kroner in the first half of the year as well as by an increase in interest income. Then we have a tax expense of DKK1.1 billion, which equates to an effective tax rate of 28.9%. I do want to pause for a moment and note that we are currently evaluating the integration of ProfoundBio operations from a tax perspective. Our effective tax rate may experience some volatility as integration activities progress. However, we do anticipate that this is going to normalize within the next 12 to 18 months. That brings us to our net profit of over DKK2.7 billion. As you can see, continued strong underlying financial performance. Having now looked at our H1 results, let's take a look at our updated guidance. At a macro level, you'll see we're projecting higher revenues and operating profit even as we take on two wholly owned Phase III programs. I've already covered in some detail the impact of the ProfoundBio acquisition. Now as far as us taking on full responsibility for acasunlimab, this does have the effect of grossing up both our revenue and our expenses for all products that remained in our collaboration with BioNTech. This results in around DKK600 million of both higher revenue and higher costs. It's important to note that this classification change in our guidance does not impact our operating profit. Now looking at the highlights of our revised guidance, we now expect our revenue at the midpoint to be up 28% over last year and be in the range of DKK20.5 billion to DKK21.7 billion. One of the drivers of this increase is strong net sales of our royalty medicines. We are now anticipating higher DARZALEX net sales in the range of DKK11.4 billion to DKK11.8 billion. We have increased our royalty guidance to DKK13.3 billion to DKK13.8 billion, and that's an increase to both the top and bottom end of the range. Importantly, we also anticipate that we're going to have over DKK1.3 billion of growth from EPKINLY and Tivdak. Now turning to our OpEx. Excluding deal and amortization costs, we are anticipating OpEx to be in the range of DKK13.7 million to DKK14.3 billion, which includes R&D investment to support the advancement of ProfoundBio's clinical programs, primarily Rina-S and also on our side, acasunlimab. I told you when we announced the acquisition of ProfoundBio that excluding acquisition and integration-related charges, we anticipate OpEx at or moderately above the upper end of our previously disclosed OpEx guidance. Therefore, excluding both the ProfoundBio deal and amortization costs and this DKK600 million item that I just described related to the BioNTech collaboration, this classification change confirms that we're delivering on that guidance commitment. Note that even with our increased investments, we continue to generate significant underlying profitability and we're on track to deliver another year of substantial operating profit. When excluding the acquisition, integration and amortization costs for ProfoundBio, the midpoint of our current operating profit guidance is now at DKK6.2 billion, which compares favorably to our previous guidance of DKK5.9 billion, and that's up 17% over 2023. Now before wrapping up, I'm going to spend just a minute to double click on the changes to our OpEx guidance. Remind you, at the midpoint, our original OpEx guidance was DKK12.9 billion. The impact of the operational changes for Genmab and ProfoundBio is around DKK500 million. This includes DKK800 million of costs related to ProfoundBio's operations, primarily driven by investment in Rina-S that I referenced earlier. It also includes a net DKK300 million reduction related to Genmab driven by continued prioritization efforts and scale benefits, partially offset by acasunlimab development. This brings us to DKK13.4 billion, which is fully in line with what we communicated when we announced the acquisition in early April. You can see the impact of the classification item or gross-up of the expenses for the products remaining in the BioNTech collaboration of DKK600 million. These higher costs are fully offset by higher revenue and have no impact on operating profit. Finally, you can see here that we have the ProfoundBio deal and amortization costs of DKK400 million. Having gone through the H1 numbers and our revised and improved guidance, let me provide a few closing remarks. In summary, we've had a very solid first half of the year. We have growing recurring revenue streams increasingly from our proprietary products, providing a strong backbone of significant underlying profitability, and we're investing those revenues in a highly focused way to realize our vision and capitalize on very significant growth opportunities in front of us. On that note, I'm going to hand you back over to Jan.

Thanks, Anthony. Let's move to our final slides. During the first half of the year, we have made significant progress towards our 2024 goals. Especially for EPKINLY, we have now announced or initiated two new Phase III trials, and the label has been expanded in the U.S. to include relapsed or refractory follicular lymphoma. We are extremely pleased with the full approval for Tivdak, which occurred in April, and the encouraging Phase II acasunlimab data that has informed the planned Phase III trial. As a reminder, that makes two wholly owned assets, acasunlimab and Rina-S, that we anticipate will both enter late-stage development before the end of this year. As we move into the second half of the year, we continue to have a lot to look forward to. That ends our presentation of general financial results for the first half of 2024. Operator, let's go to the questions.

Thank you. And now we're going to take our first question. It comes from Emily Field from Barclays. Your line is open. Please ask your question.

Hi. Thanks for my question. I just wanted to ask two questions, one kind of as a follow-up. Just on acasunlimab, when do you expect to start enrolling patients in the Phase III? Are you expecting that you will use docetaxel as a control arm? And just how are you thinking about a potential changing standard of care with the potential of the approval of TROP-2 ADCs? And then secondly, just now that you're going to have two wholly owned projects that you're starting going into Phase III, how should we think about Genmab R&D costs in 2025 and 2026? Thanks.

Thanks, Emily, for the questions. The first one to Tahi, you can give a bit more color on the Phase III trial for acasunlimab. Then Anthony Pagano can give you further color on the R&D costs, Emily. Tahi, why don't you start?

Yes. Thank you for the question. As it relates to the control arm, I think we've mentioned this multiple times that, all the relevant health authority interactions, and the only relevant comparison at this point is docetaxel. I think there's a lot of heightened discussion about whether subgroup analysis of a principal negative trial can lead to an approval. I think this is a discussion for another company, but all health authorities have been crystal clear on this particular question. Therefore, it will be docetaxel as a control, and that's the regulatory approved control arm. I mean I think we mentioned this in the prepared remarks; we are operationalizing towards having this study up and running by the end of the year.

Thanks, Tahi. I think further details will come in the future, Emily. Let's move to Anthony and then have further color on R&D expense. Anthony?

Thanks, Emily. As we think about our investment in R&D, we've been very clear about our priorities. A good way to frame this out is to break R&D down into two segments. Segment number one is research and discovery all the way through to early development, and the second segment is that mid to late-stage segment. We think that the first segment being research and discovery through to early-stage development is now at the appropriate level, and any investments there will be much more moderate in nature. The second segment is that mid to late-stage segment. Here, this is where the focus of the organization is. We're prioritizing investments in this area versus investments in other areas. Clearly, investments in EPKINLY, Tivdak, 1046, and now, of course, Rina-S will get the lion's share of any growth here moving forward. The majority of the growth moving forward will be from segment two, focused on potentially registration-enabling trials.

Thanks, Anthony. Let's move to the next question.

Thank you. And the next question comes from the line of Xian Deng from UBS. Your line is open. Please ask the question.

Hi. Thank you for taking my questions. I have two. The first one is about acasunlimab. You've indicated that it's now a wholly owned asset. I'm curious if you're still open to new partnerships or if you're committed to keeping it wholly owned in the future. If you are considering new partners, what qualities would you look for in an ideal partner? My second question is about the acasunlimab data update for Tahi. What can we expect in terms of the size of the patient group for the every 6-week study?

Thanks, Xian, for the question. So, regarding acasunlimab, I can tell you that we are very, very pleased to have it now wholly owned. We're not foreseeing that we need to look for a partner. We think this is a fantastic molecule, which can potentially be much broader positioned than the initial indication. We intend to hold on to it for the time being, see what we could do in the future, potentially look for a partner in select areas, for example, for China, as that sets different dynamics in the market. As you know, we have key priority markets in the U.S. and Japan. We may move into Europe and the U.K. with some of our products in the future, but maybe China is a good territory to look for a partner. A regional partnership is potentially an option, but we have not decided that. We're very, very pleased with the 100% ownership, and we will progress as aggressively as we can to see how to move it towards registration trials and then to the market. Tahi, could you give a bit more color on the type of data planned and other conferences, as there will likely be other conferences in the coming months that will showcase very well-presented data?

Sure. Thank you, Jan, and thank you for the question. The data that you will see will essentially try to provide clarity on how a Q6-week schedule changes the biology. You will see data on T-cell expansion of relevant subgroups of T-cells, T-cell exhaustion, and other pharmacodynamic markers relevant to the mechanism of action as well as PK data that correlates and explains what really the pharmacokinetic and pharmacodynamic differences are between Q3 and Q6 and why that matters and how that translates into the clinical observations that we observed. So that is the main focus on these datasets to provide additional color on the mechanism on the biology and how we concluded the differentiated profile for Q6-week scheduling.

Thanks, Tahi. Let's move to other questions. Operator?

Thank you. And now we're going to take a question from Jonathan Chang from LeeRink. Your line is open. Please ask the question.

Hi. Guys. Thanks for taking my questions. First question, what are your latest thoughts on the next development steps of Rina-S ovarian cancer? When could we learn the details of the Phase III second-line plus platinum-resistant ovarian cancer study expected to start before the end of the year? As a follow-up to that, what is your confidence level in the ability of Rina-S to address patients across the biomarker spectrum in ovarian? How important is that to your strategy? Thank you.

Thank you for the questions on Rina-S. We are very excited about this molecule. Let's have Tahi start and then we can have someone else provide additional insights. Tahi, please begin with both questions.

Sure. I'll take the second one first. From the very beginning, this was part of our excitement about the Rina-S molecule and also relates to our excitement in the linker technology that we believe. Quite firmly, and I think you will then have the opportunity to see the data at ESMO that Rina-S will have meaningful activity across the spectrum and beyond of folate receptor expression in patients. So that's the first part. As it relates to the details on the Phase III, some of this will become public as the study goes into the public space on clinicaltrials.gov, clearly indicating what the segment is and I think I addressed a sub-question that may have been in your mind regarding the population. The control arm will have a hodgepodge of available alternative therapies in the setting DLBCL trial. This will be the first study, not the last one. To some degree, we are in a dynamic where we obviously want to update you. We've updated you on the startup of the study already, but also want to be cognizant of the fact that this is a hyper-competitive environment. You will see it as it gets executed, and it will get executed quite rapidly and accelerated, I promise you.

Thank you, Tahi. So more to come, Jonathan, in the very near future.

Thank you. And the next question comes from the line of Asthika Goonewardene from Truist. Your line is open. Please ask your question.

Hi, guys. Thanks for taking my questions. Congratulations on the progress and impressive outlook for the second half of this year and beyond. I wanted to go back to 1046 and also tag on 1042. Tahi, you mentioned you were clear on what you expect and what not to expect that were long. I'm curious if there are other conferences later in the year where you could provide an update for 1046, just given how exciting the ASCO data was and do you want to see more call-ups. Related to that, in previous calls, I think we've got a feel that there might be something on 1042, perhaps in head and neck later on this year. I just wanted to check back and see that it is still a possibility? What kind of uptake can we expect on that culture as well? Thanks.

Thanks, Asthika, for your questions. I think Tahi, you can handle them both and shed some light on upcoming conferences.

Let's take them for the two first. I think what we've said multiple times is that there were some observation learnings that I hope will also become a little bit more transparent with the mentioned presentation at Portland that we're taking into consideration and are being tested as we speak. When that data is mature, then we'll present that and that will provide, we're quite confident, a very clear answer on 1042. So, I'm not going to comment on this any more than that; to some degree, we'll just have to wait to put data in our hands. On 1046, I think Jan already mentioned there's going to be additional data at SITC. There will be a lot around translational data. In terms of clinical data, I think it makes sense to generate more follow-up on more patients that have been enrolled to better elucidate the mitigation strategy that we implemented to make it safer. Therefore, that time to event readout takes a little bit more time. We will bring that into the public domain as soon as it makes sense from a data set perspective.

Thanks, Tahi. If we give you extra Asthika also at SITC and then we present some further preclinical data that will further help you to understand this new biology of activating T-cells and NK/T cells via bispecifics. So, lots of new data supporting the excitement around acasunlimab.

Thank you. Now we'll go and take our next question. The next question comes from the line of Peter Verdult from Citi. Your line is open. Please ask the question.

Yes. Thank you, Peter Verdult from Citi. Two questions, please. Jan, speaking to the Pfizer Oncology team. They've got four head and neck cancer assets that they could go into Phase III, but they're saying not all will. I wanted to confirm and apologize if I've missed this, but is the head and neck Phase III program for Tivdak confirmed or do we await confirmation of that? Lastly, Tahi or Jan, I'm sorry to test your patience, but what is the latest on acasunlimab timelines in terms of data release and J&J decision? Or is it unchanged since the last update? Again, apologies for testing your patience. Thank you.

Thanks, Peter for the questions. I'll ask Judith to give a bit of color on the head and neck plans for Tivdak. Before that, I can handle the HexaBody-CD38 question, Peter. We are progressing really, really rapidly, and we are fully on schedule to have the data and present them to J&J in the second half for HexaBody-CD38 versus subcutaneous data, and there will likely be an update from the company also by the end of this year and maybe not at the medical conference but then in another format. So maybe Judith, you can give a bit of color on head and neck cancer data for Tivdak.

Yes. As you know, we presented the encouraging data on order based on RMC at ASCO. Of course, we are waiting for the maturity of this data. In parallel, we opened another cohort with strict eligibility criteria, assessing this in conjunction with Part A, which is a combination to assess a strategic fit for the company and for Tivdak, making a further decision by the end of the year. We are closely monitoring the data. Thank you.

Sorry, just to be clear, is the Phase III program confirmed or are you waiting for that data first?

Usually, we start something at risk, but we jump into the pool. We need the right strategic state and have the right target profile for a particular indication, and this is what we are following the data for.

Thank you, Peter. Thank you, Judith. Next one please, operator.

Yes, of course. Now we're going to take our next question, and it comes from the line of Yaron Werber from TD Securities. Your line is open. Please ask your question.

Great. Also, maybe just a quick follow-on on acasunlimab. I just want to confirm, so it sounds like the Phase III is only going to be testing the Q6 week head-to-head against docetaxel. Can you comment on whether it will primarily be just PFS? Or is that going to be the PFS and the OS kind of co-primary? Thank you.

Thanks, Yaron for the questions. Tahi, can you give a bit of color on the endpoints for the Phase III?

Sure. It will be a 2-arm study with a control arm and with the Q6 arm of acasunlimab in combination with pembrolizumab. This is where we have to signal, and this is where the data leads us. The endpoint will be overall survival.

Thanks, Tahi. I think that's the answer for your question, Yaron. Let’s move to the next one, operator.

Thank you. And now we are going to take our next question and it comes from the line of Matthew Phipps from William Blair. Your line is open. Please ask your question.

Hello. I apologize for the background noise. Thanks for taking my questions. You've had a nice launch of EPKINLY in lymphoma so far in the DLBCL space. Just wondering how we should think about uptake in follicular lymphoma, given there's already another bispecific there and how much that can contribute later on. Thank you.

Thanks, Matthew for the question. Anthony Mancini, I think you can best handle this one, with a bit more color on the uptake in follicular lymphoma versus diffuse large B-cell lymphoma?

Yes. Thanks, Matt for the question. We're about six weeks into the launch here, but it's going really, really well. Again, we're really encouraged by what we hear regarding customer reaction to the favorable label without required hospitalization or monitoring. We think this gives us confidence that we can advance EPKINLY for use across diverse sites of care. We're starting to see growing EPKINLY adoption in many of the large physician group practices. We believe that the third-line plus FL label is going to enhance our ability to deliver innovation more broadly to patients in need, who want to be treated closer to home. We think the EPKINLY profile really enables that. The size of the population is modest, but due to the differentiation of having one product across both indications, we think the reactions have been very favorable so far in the community. So, I'll leave it there.

Thanks, Anthony. Thanks Matt for the question. Let’s move on to the next one, operator.

Yes, of course. And we're going to take our next question, and it comes from the line of Michael Schmidt from Guggenheim Partners. Your line is open. Please ask your question.

Hey. Thanks for taking my questions. I had a commercial question, a follow-up on epcoritamab. Just thinking ahead, wondering how we should think about the launch trajectory in follicular lymphoma relative to the initial launch in DLBCL, given presumably there are fair amount of commercial synergies with the lab expansion? In DLBCL, specifically, how much visibility do you have, based on claims data and other sources on how the drug is used relative to other treatment options, be it other antibodies or CAR-T cell therapies? Thanks so much.

Thanks, Michael for the questions. I think Anthony Mancini will be best suited to answer this one.

Thanks, Michael for the questions. In terms of the launch trajectory in FL versus DLBCL, I'll give you a little bit of context, and this is really drug-treated patients. The DLBCL third-line plus market is about 3,600 patients in the U.S. So, it's really actually quite a similar size in Japan in FL, it's about half of that, so close to 2,000 patients. With the claims data we're seeing right now, the capture is not great, so we're not able to see the great detail. We do a lot of market research and customer research on a qualitative basis. We're able to see where the drugs were used. In the DLBCL space where we've had four quarters in the U.S., we are starting to see now more truly third-line patients. What we're seeing in the real world is really nearing what we see in clinical trials, so very positive customer reaction. In FL, it's still too early to tell. That said, when we ask physicians what they are after, the profile in terms of powerful efficacy, manageable safety, and really seamless and efficient step-up dosing and subcutaneous administration offered with EPKINLY is something that's really attractive, particularly across diverse practice settings. When you think about staff time, share time, scheduling efficiency, these are things that position us really well. So, we are encouraged by these first few steps here to make EPKINLY truly the core therapy across B-cell malignancies. We'll leave it there.

Thank you, Anthony. Thanks for the question, Michael.

Thank you. Now we're going to take our next question, and it comes from the line of Rajan Sharma from Goldman Sachs. Your line is open. Please ask your question.

Hi. Thanks for taking my questions. Just one follow-up on EPKINLY actually. Anthony Mancini, you made a comment in the prepared remarks that the launch is exceeding your expectations. So, I'd just be interested in what's driving that? Is that better uptake than you were originally expecting? Or is it actually potentially a larger market in the third-line DLBCL than you were initially expecting? Secondly, also on EPKINLY again. In the past, you've talked about the potential of removing the need for hospitalization from the DLBCL label. Could you just provide an update on progress there and when it could actually be reflected in the label? Thank you.

All right. Thanks Rajan for the question. Anthony Mancini, why don't you try the first one and then maybe Tahi on the next one for the second question.

Thanks Rajan for the question. Yes, we really are seeing execution of our launch plans exceeding our expectations. We continue to be the in-class market leader and I think it's driven by a couple of different things. First thing is strong execution across our field-based teams. That's the medical affairs team, the sales team, the market access, and patient services team really focused on where we think the key business segments are, the key accounts. Not just in the U.S., but actually in Japan as well. We've seen strong customer engagement, with over 85% of our key accounts ordering in the U.S. to date and over 80% also in Japan. We have no barriers from an access perspective, with 99% of covered medical lives in the U.S. with functional access to EPKINLY. That's what I mean regarding exceeding expectations. For removing hospitalization from the DLBCL label, Tahi?

Sure. We're actively working on this. There are essentially two datasets that will provide the relevant information to address the change in the label. One is similar to what occurred with follicular lymphoma, although we had a different strategy, using an optimization cohort for TEPEZZA with stricter prescriptions on steroids and fluids. This approach helped reduce the rate of complications, particularly the higher grades, and we did not observe any further increases. The second dataset is probably more relevant as it comes from a study conducted by our collaborator, AbbVie, primarily in the outpatient setting. This study generates clinical data in community hospital environments, offering guidance to prescribers on the safe administration of EPKINLY. All of this will be compiled and discussed with the relevant parties in the near future.

Thanks, Tahi. Thank you Rajan for the questions.

Thank you. Now we're going to take our next question, and it comes from the line of Yifeng Liu from HSBC. Your line is open. Please ask your question.

Hi. Thanks for taking my questions. I have one about acasunlimab. Given the Phase III data for the 6 weeks dosing regimen, how do you plan to incorporate those responders into your Phase III design? Additionally, regarding the BioNTech work on the gross-up costs, will there be any considerations in your 2025 projections, or is everything already included in the 2024 guidance? Lastly, could you provide an update on the ECO DLBCL1 Phase III trial for second-line DLBCL? Thank you.

Thanks, Yifeng for the question. For the first one, I think this is one for Tahi again. The second one, Anthony Pagano, and the third one on the DBCL1 trial to Judith. Tahi, can you start with the acasunlimab question on the Q6 week dosing and the Phase III design?

Yes. If I understood you correctly, you asked whether we would consider some response adaptive approach. I think it's probably a subset of patients that have significant stabilization as well; it is not only purely responsive. This is one of the hallmarks of immuno-oncology, where response doesn't always translate into population benefits for event-driven outcomes, particularly survival. Of course, we have the largest randomized Phase II study conducted, pre-studying a Phase III in that setting as far as I can tell. We're taking all the data that we have and trying to interrogate and better understand if there are ways to hone in on the specific patients that benefit the most, and this is already reflected in the inclusion-exclusion criteria of the Phase III. That's a good practice.

Thanks, Tahi. Let's move over to Anthony Pagano for the second question on the BioNTech guidance for 2024 and 2025.

Yes. I'll step through this quite carefully. Starting with maybe the economics. The economics are effectively not impacted by this gross up. To be clear, this is a classification matter. The impact to operating profit, which ultimately matters, is zero. I provided our original guidance for 2024. I was clear that we were looking for opportunities to transition to net expense accounting for 2024. i.e., we would not have to gross up our P&L for the expenses with the higher expenses offset by revenue. That was assumed in our original guidance for 2024. With BioNTech and their decision to opt out of the 1046 program, we concluded that we would not be able to move forward with that net accounting. This resulted in what I explained today in detail: for the programs remaining in the BioNTech collaboration, again, not 1046, we will have to gross up our P&L for the products remaining in the BioNTech collaboration with the associated higher costs offset by higher revenue. As I sit here today, that is what to assume for 2025 moving forward. If there's an opportunity to align this accounting and classification more closely with our other agreements, like we have with AbbVie, we will certainly look for that opportunity. But I don't want to bank on that right now. I want to emphasize that this classification matter does not impact our operating profit and is simply grossing up our P&L.

Yes, that's really clear. Thank you very much.

Thank you, Anthony. Lastly, let's move over to Judith for an update on ECO DLBCL1 Phase III trial.

I don't know which one you alluded to. We have three studies Phase III in DLBCL. Which one are you particularly asking about? So, I can give you a summary. We have a study comparing standard of care; we are following up on events to get the study to completion. There is a study in first-line DLBCL, which is actively recruiting. This is going very, very well in terms of recruitment. There is a new study posted for relapsed refractory Phase III with EPCOR Len, which will start recruiting very soon. So, these are the three trials and their status.

Thank you, Judith. That should help Yifeng for modeling. Let's go for the next question, maybe the last one. Operator?

Yes, participants. Thank you for all your questions for today. I would now like to hand the conference over to Jan van de Winkel for any closing remarks.

Thank you for calling in today to discuss Genmab's financial results for the first half of 2024. If you have additional questions, please reach out to our Investor Relations team. We hope that you all stay safe and keep optimistic, and we very much look forward to speaking with you again soon.