Genmab A/S (NASDAQ:GMAB) Q2 2024 Earnings Call Transcript

Genmab A/S (NASDAQ:GMAB) Q2 2024 Earnings Call Transcript August 12, 2024

Operator: 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.

Jan van de Winkel: 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 an 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, EPKINLEY, 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 assets.

Our partner, Biotech, has opted to not 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 each of our exon 20 insertion mutations. In addition, they have submitted a BLA for a subcutaneous version of amivantamab for all currently approved or submitted indication 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 at 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 like 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.

Tahamtan Ahmadi: 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 over survival alongside a manageable safety profile. As a reminder, in the CPI pretreated patient population, we presented an impressive median over survival of 17.5 months and a 12 months 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. And to ensure that there is no confusion, this will not include updated clinical data.

We are simply too close to ASCO and 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 on 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 of chemotherapy. And 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-noc space already with Tivdak.

And 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. Now 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.

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 the 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 10 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 a 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 a 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 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 foliate 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.

Anthony Pagano: 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 and 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. And 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. And 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. And then 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.

And 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. And 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. And 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.

And we’re pleased with how EPKINLY and Tivdak are performing. Taken together, these two products contributed 31% of our total revenue growth in H1. And this really illustrates the power of our recurring revenue. And 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 OpEx was 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, acasunlimab, now, of course, Rina-S.

As you can also see, SG&A growth moderated and was up only 12%, and this 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. And 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. And 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 tax expense of DKK1.1 billion, which equates to an effective tax rate of 28.9%. And here, I do want to pause for a moment and note that we are currently evaluating the integration of ProFoundBio operations from a tax perspective. So, 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. And that brings us to our net profit of over DKK2.7 billion. So, 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. But really here, it’s important to note 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. So here, we’ve 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. And 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 $13.7 million to $14.3 billion, which includes R&D investment to support the advancement of ProfoundBio’s clinical programs, primarily Rina-S and also on our side, acasunlimab. Now I told you when we announced the acquisition of ProfoundBio that excluding acquisition and integration-related charges, we are anticipating OpEx at or moderately above the upper end of our previously disclosed OpEx guidance.

So now 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, you can see that we’re absolutely delivering on that guidance commitment. And 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. In fact, when you exclude the acquisition, integration and amortization costs for ProfoundBio, the midpoint of our current operating profit guidance is now at DKK6.2 billion, and that 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.

As a reminder, at the midpoint, our original OpEx guidance was DKK12.9 billion. As you can see, the impact of the operational changes for Genmab and ProfoundBio is around $500 million. This includes the $800 million of costs related to ProfoundBio’s operations, and this is really 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. And that brings us to DKK13.4 billion, which is fully in line with what we communicated when we announced the acquisition in early April. Then you can see the impact of the classification item or gross-up of the expenses for the products remaining in the buy-and-set collaboration of DKK600 million.

Now again, to be clear, these higher costs are fully offset by higher revenue and have no impact on operating profit. And finally, you can see here, and we have the ProfoundBio deal and amortization costs of DKK400 million. Now having gone through the H1 numbers as well as 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, and that gives us a strong backbone of significant underlying profitability, and we’re investing those revenues in a highly focused way to realize our vision and to capitalize on the very significant growth opportunities in front of us. And on that note, I’m going to hand you back over to Jan.

Jan van de Winkel: 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. And of course, we are extremely pleased with the full approval for Tivdak, that occurred in April and the encouraging Phase II acasunlimab data that has informed the planned Phase III trial. And 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.

Operator: Thank you. [Operator Instructions] And now we’re going to take our first question. And it comes from a line of Emily Field from Barclays. Your line is open. Please ask your question.

Emily Field: 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 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.

Q&A Session

Jan van de Winkel: Thanks, Emily, for the questions. And the first one to Tahi, you can give a bit more color on the Phase III trial for acasunlimab. And then Anthony Pagano can give you further color on the R&D costs, Emily. Tahi, why don’t you start?

Tahamtan Ahmadi: Yes. Thank you for the question. I mean 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 a whether subgroup analysis of a principal negative trial. It 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. So, 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.

Jan van de Winkel: Thanks, Tahi. And I think further details will come in the future, Emily. Let’s move to Anthony and then have a further color on R&D expense. Anthony?

Anthony Pagano: Thanks, Emily. As we think about our investment in R&D, we’ve been super clear about our priorities. And I think the good way to sort of frame this out is to break R&D down into two segments. Segment number one, being research and discovery, all the way through to early development, and then the second segment being that mid to late-stage segment. As we think about that first segment being research and discovery through to early-stage development, we’ve talked quite a bit about us scaling that up over the last number of years. We view that as an underutilized asset in the company. And we can see that we’re now bearing the fruits of that investment in terms of scaling it up, in terms of the number and quality of R&Ds we see coming through.

We’ve been very clear now as we’ve gotten into sort of 2023, 2024, we think that, that whole setup in that investment, the amount of money we’re allocating there 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. And here, this is where the focus of the organization is. This is our priority. We are prioritizing investments in this area versus investments in other areas. So clearly, investments in at EPKINLY, Tivdak, 1046, and now Rina-S will get the lion’s share of any growth here moving forward. And I think it’s very obvious as to why this is, particularly any registration type trials. Again, we’re prioritizing those are potentially revenue generating in nature.

And that’s what we’re really focused on doing, Emily. So, you should very much sort of think about R&D along these two segments and any growth moving forward or the majority of the growth moving forward is really going to be from segment number two, that mid-to-late-stage programs, particularly potentially registration-enabling trials.

Jan van de Winkel: Thanks, Anthony. Thanks, Emily, for the question. Operator, let’s move to the next question.

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

Xian Deng: Hi. Thank you for taking my questions. Two please. The first one is on acasunlimab. You mentioned now this is a wholly owned asset. But just wondering, would you still be open to, for example, new partners here? Or are you committed that this will be wholly owned going forward? And if you are open to new partners, what sort of things would you be looking for in ideal partner please? So that’s the first question. And the second one is on acasunlimab data update for [indiscernible]. Just wondering, maybe for Tahi, so what sort of things can we actually expect. Will we have a bigger patient size for the every 6-week [hour] please?

Jan van de Winkel: Thanks, Xian, for the question. So, for acasunlimab, I can tell you that we are very, very, very pleased to have it now wholly owned. So, we are 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. And 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, because that sets a different dynamics in the market. Right now as you know, we have a key priority markets, in U.S. and Japan. We will likely move into [E04] plus U.K. also with some of our products in the future, but maybe China is a good territory, we think, to look for a partner.

So maybe a regional partnership is potentially an option, but we have not decided that. We are just very, very pleased with the 100% ownership, and we will progress as aggressively as we can see how to move it towards registration trials and then to the market. And then maybe Tahi, you can give a bit more color on the type of data as well plan and other conferences because there will likely be other conferences in the coming months, see on very well present data. Tahi?

Tahamtan Ahmadi: Sure. Thank you, Jan, and thank you for the question. The data that you will see is essentially trying to provide clarity on how a Q6-week schedule changes the biology. So, you will see data on T-cell expansion of relevant subgroups of T-cells, you will see data on T-cell exhaustion and relevant T-cell subsets and other pharmacodynamic markets 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 data sets to provide additional color on the mechanism on the biology and how we concluded the differentiated profile for Q6 week scheduling.

Jan van de Winkel: Thanks, Tahi. Let’s move to other questions. Operator?

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

Jonathan Chang: 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 resist ovarian cancer study expected to start before the end of the year? And then as a follow-up to that, what is your constant level in the ability of Rina-S to address patients across the biomarker spectrum in ovarian? And how important is that to your strategy? Thank you.

Jan van de Winkel: Thanks, Jonathan, for the questions on Rina-S. Another molecule, we are super excited about. Let’s ask Tahi to start and then [indiscernible] to step in to provide extra color. Tahi, why don’t you start with both questions?

Tahamtan Ahmadi: Sure. I’ll take the second one first. I mean this is from the very beginning was part of our excitement about 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 photoreceptor 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 in clinicaltrials.gov, very clear what the segment is, I think I really addressed a sub-question that you may have in your mind and what the population is. And I think the control arm as a hodgepodge of available alternative therapies in the setting DLCO trial.

And so that will be the first study not the last one. And so, I think you will have to wait. To some degree, we are in a dynamic where we obviously want to update you. And so, we updated you on informing that we very well in the startup of the study already. But we also want to be cognizant of the fact that this is a hypercompetitive environment. And so, you’ll see it as it gets executed, but it will get executed quite rapidly and accelerated I promise you there.

Jan van de Winkel: Thank you, Tahi. So more to come, Jonathan, in the very near future.

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

Asthika Goonewardene: Hi, guys. Thanks for taking my questions. Congratulations on the progress on the impressive outlook for the second half of this year and future. 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 that the ASCO data was and do you want to see more call-ups. And related to that, in previous calls, I think we’ve got the feel that there might be something on 1042 perhaps in head and neck later on this year. Just wanted to check back on that and see that still a possibility? Or what kind of uptake we can expect on that culture as well? Thanks.

Jan van de Winkel: Thanks, Asthika, for the questions. I think, Tahi, you can handle them both. Maybe shed a bit of light on other conferences.

Tahamtan Ahmadi: So, let’s take them for the two first. I think what we’ve said multiple times will be clear is there were some observation learnings that I hope will also become a little bit more transparent with the mentioned presentation at Portland that were at least taking into consideration and are being tested as we speak. And when that data is mature, then we’ll present that and that will then provide, we’re quite confident a very clear answer on 1042. So, I’m not going to comment on this any more than that because, 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 a little bit more follow-up on also more patients that have been enrolled in order to better elucidate the mitigation strategy that we implemented to make it more safe.

And so, with a time to event readout takes a little bit more time. So, we’ll bring that into the public domain as soon as it makes sense from a data set.

Jan van de Winkel: Thanks Tahi. And if we give your extra Asthika also at SITC and then to present some further preclinical data, which will further help you to understand this new biology of activating T-cells and NK/T cells VR4 by specifics. So, lots of new data supporting, I think the excitement around Acasunlimab.

Operator: Thank you. Now we’ll go and take our next question. And the next question comes from the line of Peter Verdult from Citi. Your line is open. Please ask your question.

Peter Verdult: Yes. Thank you. Peter Verdult, Citi. Two questions, please. Jan, speaking to the Pfizer Oncology team. They’ve got for head and neck cancer assets that they could go into Phase III, but they’re saying not all will. So, I just wanted to confirm and apologies if I’ve missed this, but is the head and neck Phase III program for Tivdak confirmed or do we await confirmation of that? And then 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.

Jan van de Winkel: Thanks, Peter for the questions. So why don’t I ask Judith to give a bit of color on the head and neck plans for Tivdak. But before that, I can probably 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 subq 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 another format. So maybe Judith, you can give a bit of color on head and neck cancer data for Tivdak.

Judith Klimovsky: Yes. So, as you know, we present the encouraging data on order based on RMC at ASCO. Of course, we are waiting for maturity of this data. And in parallel, we opened another cohort with strict eligibility criteria, and we are assessing this in conjunction with Part A, which is a combination to assess a strategic fit for the company and for Tivdak make further decision by the end of the year? So, we are closely monitoring the data. Thank you.

Peter Verdult: Sorry, just to be clear, is the Phase III program confirmed or you’re waiting that data first?

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

Peter Verdult: Thank you.

Jan van de Winkel: Thank you, Peter. Thank you, Judith. Next one please, operator.

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.

Yaron Werber: 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. And I don’t know if you can comment, would the primarily be just PFS? Or is that going to be the PFS and the OS kind of co-primary? Thank you.

Jan van de Winkel: Thanks, Yaron for the questions. Tahi, can you give a bit of color on the end points for the Phase III?

Tahamtan Ahmadi: Sure. It will be a 2-arm study with a control arm and with the Q6 arm of our casino in combination with pembro. This is where we have to signal and this is where the data leads us. And the endpoint will be over survival.

Jan van de Winkel: Thanks very clear Tahi. I think that’s the answer, Yaron, for your question. Let’s move to the next one, operator.

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.

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

Jan van de Winkel: Thanks, Matthew for the questions. And then Anthony Mancini, I think you can best handle this one, maybe a bit more on color uptake in follicular lymphoma versus diffuse large B-cell lymphoma?

Anthony Mancini: Yes. Thanks, Matt for the question. We’re about 6-weeks into the launch here, but it’s going really, really well. We’re, again, really encouraged by what we hear in terms of the customer reaction to the favorable label without required hospitalization or monitoring. And we think it gives us confidence that we can advance at EPKINLY that can we use across diverse sites of care. We’re starting to see growing EPKINLY adoption in many of the large physician group practices. And we believe that the third line plus FL label is going to really enhance our ability to deliver innovation more broadly to patients in need, where they want to be treated closer to home, and we think the EPKINLY profile really enables that.

In terms of the size of the population, it’s really a modest population size, but because of 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.

Jan van de Winkel: Thanks, Anthony. Thanks Matt for the question. Let’s move on to the next one operator.

Operator: Yes, of course. And we’ll 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.

Michael Schmidt: Hey. Thanks for taking my questions. I had a commercial question, a follow-up on epcoritamab. And just thinking ahead, wondering how we should think about the launch trajectory perhaps in follicular lymphoma relative to the initial launch in DLBCL, given presumably there is a fair amount of commercial synergies with the lab expansion? And in DLBCL, specifically, how much visibility do you have, perhaps 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.

Jan van de Winkel: Thanks, Michael for the questions. I think Anthony Mancini, we’ll keep you basically for a few minutes.

Anthony Mancini: Thanks Michael for the questions. In terms of the launch trajectory in FL versus DLBC, I’ll to 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 really actually quite similar size in Japan in FL, it’s about half of that. So, it’s about close to 2,000 patients. We really, with the claims data that we are seeing right now, the capture, as you know, is not great. So, we’re not able to see the great detail, but we do a lot of market research, and we do a lot of customer research on a qualitative basis. So, we’re able to see where the drugs were used. And in a DLBCL space where we’ve had four or four quarters in the U.S., we really are starting to see now more truly third-line patients.

And again, what we’re seeing in the real world is really nearing what we see in the clinical trial. So very positive customer reaction. In FL, it’s really too early to tell. That said, I think that when we ask physicians, what they’re after, the profile in terms of powerful efficacy, manageable safety and really seamless and efficient step-up dosing and subq-administration, that’s offered with EPKINLY is something that’s really attractive, particularly across diverse practice settings. So, when you think about staff time, share time, scheduling efficiency, these are things that position us really well. So, we’re encouraged by these first few steps here to make up EPKINLY truly the core therapy across B-cell malignancies. And we’ll leave it there.

Jan van de Winkel: Thank you, Anthony. Thanks for the question, Michael.

Operator: 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.

Rajan Sharma: 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’re initially expecting? Or is it actually potentially a larger market in third-line DLBCL than you were initially expecting? And then secondly, actually on EPKINLY again. In the past, you’ve talked to 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.

Jan van de Winkel: 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.

Anthony Mancini: So, thanks for the question, Rajan. 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 really 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 with a focus on where we think the key business segments are the key accounts are. And that’s not just in the U.S., it’s actually in Japan as well. So, we’ve really seen strong customer engagement and over 85% of our key accounts ordering in the U.S. to date and over 80% also in Japan. And of course, we have had no barriers from an access perspective with 99% of covered medical lives in the U.S. with functional access to EPKINLY.

So again, that’s what I mean in terms of the rationale for exceeding expectations. And I think for removing hospitalization from the DLBCL label, Tahi?

Tahamtan Ahmadi: Well, sure. I mean we’re obviously actively working on this. There are essentially two data sets that will inform and provide the relevant data to approach the [indiscernible] with the change in the label. One is similar to what happened on follicular lymphoma, although with a different strategy, we had a so-called optimization cohort for the [TEPEZZA] with a tighter prescription on steroids and fluids who were able to reduce the rate, particularly reduced grade and higher actually didn’t have any greater higher anymore and then the grade to wait. And then the second data break, which is probably more relevant because it’s also partisan forming as a study conducted by our collaborator, AbbVie mainly conducted in the outpatient setting really conducted in the community hospital setting and for the first time, really generating clinical data in these practices with their own setup, their own challenges and opportunities to provide comfort and guidance to prescribers who will operate in these settings on the safe administration of EPKINLY in the setting for the FSAB-cell, and this is all going to be compiled and discuss with the [indiscernible] in the near future.

Jan van de Winkel: Thanks, Tahi. Thank you Rajan for the questions.

Operator: Thank you. Now we’re going to take our next question. And the question comes from the line of Yifeng Liu from HSBC. Your line is open. Please ask your question.

Yifeng Liu: Hi. Thanks for taking my questions. I got one on acasunlimab. Just based on the Phase III date, obviously, for the 6 weeks dosing regimen. How do you think about incorporating those responders in your Phase III design? And then secondly, also on [indiscernible] work, I guess, on the Bonte gross-up cost, is there anything that being taken into account in your 2025 or is everything sort of taken to come already in 2024 guidance? And thirdly, maybe could you give an update on the ECO DLBCL1 Phase III trial, the second line [indiscernible] and DLBCL. Thanks.

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

Tahamtan Ahmadi: Yes. If I understood you correctly, it wasn’t really totally clear. You’re asking whether we would consider some response adaptive approach that was not clear.

Yifeng Liu: So just maybe I didn’t make myself quite clear just because I think India in the Phase III results and the overall survival benefit is predominantly driven by the responders. Just wonder how you’re taking that thinking into our Phase III design in terms of maybe opportunity on recruiting more potentially that patients can respond better?

Tahamtan Ahmadi: Yes, okay. Now I understand a little bit better. I’m not 100% sure whether it’s only the responders. I would say it’s probably a subset of patients that have also significant stabilization. So, it’s not only purely responsive. And I think this is one of the hallmarks of immuno-oncology that response doesn’t A2A translate into the population that benefits for event-driven outcomes particular survival. But of course – and we have – and this is probably arguably 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 in trying to interrogate and better understand if there are ways to hone on the specific patients that benefit the most and some of this is already affected, of course, in the inclusion exclusion of the Phase III. That’s a good practice.

Jan van de Winkel: Thanks, Tahi. Let’s move over to Anthony Pagano, for the second question on the BioNTech the guidance basically for 2024, 2025.

Anthony Pagano: Yes. I’ll step through this rather carefully in detail. I’m going to start with maybe the economics. And the economics are effectively not impacted by this gross up. It’d be very clear this is a classification matter, the impact to operating profit, which is ultimately what matters is zero. But now let’s step through it. We provided our original guidance for 2024. I was really clear that we were looking for an opportunity to transition to net expense accounting in our P&L for 2024, i.e., that we would not have to gross up our P&L for the expenses with the higher expenses and then offset by revenue. That’s what was assumed in our original guidance for 2024. Now as we got to where we got to, we arrived with BioNTech and their decision to opt out of the 1046 program.

In conjunction with that, we concluded that we would not be able to move forward with that net accounting moving forward. And that resulted in what I explained today in some level of detail for programs remaining in the BioNTech collaboration, again, not 1046 for all the other programs remaining in the collaboration, we will have to go with this gross-up classification, if you like it, where we’re going to have a larger cost, if you like, but that will be fully offset by the higher cost reimbursement revenue. As I sit here today, that is what we should assume for 2025 and moving forward. If there’s an opportunity to further align this accounting and classification with our other agreements like we have with AbbVie, we’ll certainly look for that opportunity.

But I don’t want to bank on that right now. And just to conclude, I do want to finish where I started that this classification item in matter does not in any way shape or form impact our operating profit. This is simply a grossing up, if you like, in playing terms of our P&L. I trust that’s clear.

Yifeng Liu: Yes. That’s really. Thank you very much.

Jan van de Winkel: Thanks, Anthony. Last question for Judith, an update on the status of the DLBCL study. Judith, any color?

Judith Klimovsky: I don’t know which one you alluded to. We have three studies Phase III in DLBCL. So, which one are you particularly asking about. So, I can give you a summary. So, we have a study, which is [indiscernible] comparison with standard of care, which we are following up events to get the study to completion. There is a study in the first line DLBCL, which is EPCOR, which is actively recruiting. I would say that this is going very, very well in terms of recruitment. And there is a new study posted which is a relapse refractory Phase III with EPCOR Len, which will start recruiting very soon. So, these are the 3 tariffs and the status.

Jan van de Winkel: Thanks, Judith. I think that should help Yifeng for the modeling. Let’s go for the next question, maybe the last one. Operator?

Operator: Yes, of course. And now we’re going to take our next question, and it comes from the line of Mattias Haggblom from Handelsbanken. Please ask your question.

Mattias Haggblom: Thanks. Mattias. I’ll keep it to one. So BioNTech faced the decision to opt from acasunlimab on their earnings call as we have order to have critical mass in non-small lung cancer. So, judging from the market reaction on the day newsfeed investor, we’re obviously disappointed by the change. So where in particular, do you think Genmab and BioNTech value the asset differently? I guess I’m trying to better understand what you described at ASCO unprecedent over data, if you think there is something in particular with the asset data generated so far or profile with a molecule that you perhaps appreciated more than your partner did? Thanks.

Jan van de Winkel: I think I can handle that question. Thanks for the questions. This was purely a strategic priority driven decision. There was no data analysis involved in that we got feedback from BioNTech on that. I think asked by BioNTech, about the prioritization of some of the other problems in lung cancer, and you will find the answer, but this was a strategic prioritization, which led to that optout of BioNTech. So, no other factors were involved at all. Operator, maybe on to the next one.

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

Jan van de Winkel: Thank you for calling in today to discuss Genmab 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.