Q4 2022 Genmab A/S Earnings Call
Speaker 1: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.
Speaker 2: Hello and welcome to the GenMav 4 year 2022 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 beliefs, anticipate, plan or expect.
Speaker 2: Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. GenMAPP 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.
Speaker 2: 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 Comments in to your first speaker today, Jan van de Vinkle.
Speaker 3: Please go ahead. Hello and welcome to GenMops conference call to discuss the company's financial results for the period ending December 31, 2022.
Speaker 3: With me today to present these results is our CFO Anthony Pagano.
Speaker 3: For the Q&A, we will be joined by our Chief Development Officer, Judith Klimoski, our Chief Operating Officer, Anthony Mancini, and our Chief Medical Officer, Tanya Mahdi. Let's move to slide two.
Speaker 3: As already said, we will be making forward looking statement, so please keep that in mind as we go through this call.
Speaker 3: Let's move to slide 3.
Speaker 3: Chemlop has a science-encored and innovation-based culture, and collaborations and partnerships have always been part of our DNA.
Speaker 3: During today's presentation, we will reference products being developed under these strategic collaborations and this slide acknowledges those relationships.
Speaker 3: Let's move to slide 4.
Speaker 3: communities of information musicians, related to care. business however will remain unchanged.
Speaker 3: And these include innovative sciences at our core and we strive to be forward thinking in all areas of our business.
Speaker 3: And we have an unstoppable team that aspires to use our innovations in antibody therapeutics to fundamentally transform the lives of patients.
Speaker 3: These foundational pillars led to great progress last year, setting us on the path that inspired our 2030 vision, which we unveiled in 2022.
Speaker 3: Let's turn now to recent accomplishments that will support our future success.
Speaker 4: Slide 5
Speaker 3: 2022 marks the 10th year of profitability for GenMob. As Anthony will describe in detail, this success is due to both our growing recurring revenue streams and our investing this revenue in a focused and disciplined manner.
Speaker 3: Throughout the past year, we continue to invest in the strategic growth of our team and the maturation and expansion of our differentiated innovative product pipeline.
Speaker 3: In September of last year, we, together with our partner, Sejan, celebrated the first full year of TIFAC being available for cervical cancer patients in the US.
Speaker 3: At the beginning of this year, the NCCN updated their cervical cancer treatment guidelines, upgrading TIFDAC to a preferred regimen for second-line or subsequent therapy in recurrent or metastatic cervical cancer.
Speaker 3: This update is important for patients who are entering their second line of therapy and applies regardless of the biomarker status.
Speaker 3: For this patient population, TifDac is the only non-IO preferred treatment regimen across the second line setting for all comos regardless of PD-L1 status.
Speaker 3: Based on this, on the high un-med needs and the strong efficacy results we have seen in clinical trials supported by the MCCN updates.
Speaker 3: We believe that TIFDAC is on the way to becoming the clear second line choice for women with recurrent or metastatic cervical cancer.
Speaker 3: Turning to our next potential medicine, 2022 was a critical year in the development of darkened Spl babes.
Speaker 3: We have spoken both following our Q3 results last year and our 2022 Ash Investor event about the BLA and MAA submissions by GenMOP and Oparna APRI respectively.
Speaker 3: We are pleased to add to this our submission of a Japan NDA at the end of December for Abcuritamab for the treatment of patients with relapsed or refractory OB-C-L after two or more lines of systemic therapy.
Speaker 3: With these regulatory submissions, we are one step closer to potentially delivering abcorithmop as a new therapeutic option for people living with certain hematologic malignancies in the US, Europe and Japan.
Speaker 3: Together with our partner, APP, we believe that APP has the potential to become a core therapy for patients around the world with B-Star malignant disease, and we are committed to progressing a comprehensive development program evaluating APP across a broad range of B-Star lymphomas.
Speaker 3: And we look forward to the next session.
Speaker 3: to receiving feedback from the US FDA by the producer date of May 21st.
Speaker 3: The past year was also notable for data presentations and publications.
Speaker 3: These highlighted investigational medicines across our portfolio, including a December article in the Journal of Clinical Oncology on the Phase 1-2 Abcarinum of Dose Expansion Data.
Speaker 3: The exponder of pipeline in 2022 with new investigational medicines entering the clinic.
Speaker 3: One of these, HEXABODY CD27, is part of an expansion of a thriving collaboration with BioNTech.
Speaker 3: I would also like to mention that as you can now see on clinical trials.gov
Speaker 3: There is a new arm in the phase 1-2 trial of HEXA BODY CT38 comparing it to subcutaneous daratumumab.
Speaker 3: This will be a head-to-head evaluation to determine whether hexapod in CD38 may be more potent in CD38 antibody-neive patients with relapsed or refractory multiple myeloma.
Speaker 3: We very much look forward to seeing how this trial progresses.
Speaker 3: So now let's now move to the next slide and a brief reminder of the impact of our innovation beyond our own pipeline.
Speaker 4: Slide six.
Speaker 3: Partner-owned programs, powered by our world-class innovation and especially our proprietary dual-body platform, also saw great progress in 2022.
Speaker 3: Novo Nordisk's MIM8 handled Phase 3a development and for both the Glistamab and the Tolkraetamab, Janssen posted multiple new Phase 3 trials on clinicaltrials.gov, including in combination with daratumumab. Thank you for your attention here, and please drink economics whileunless you need an assessment.
Speaker 3: In 2022, Janssen's tekvili became the second dual body based medicine to receive regulatory approval.
Speaker 3: With the transformation of a BLA for Talcreetam up in December , as well as a submission in Europe in January of this year, there is the potential for a tour of approved medicines from a dual body agreement with Janssen.
Speaker 3: If both Abacritamab and Talcritamab are approved in 2023, there will be eight approved medicines that incorporate GenMobs innovation available for patients, half of which will be powered by our dual body technology platform.
Speaker 3: I also want to briefly mention some exciting recent news.
Speaker 3: Last week, the British Pharmacological Society announced that the team behind the development of AmiVuntamab has been awarded its prestigious joint discovery of the year 2023.
Speaker 3: The creation of Amivantamab was a team effort with the two antibody libraries used to produce Amivantamab generated by GenMob and the antibody pair used to create Amivantamab selected in collaboration with Janssen R&D. This is subsequently led to preclinical and clinical development by Janssen.
Speaker 3: This award is further validation of the potential of GenMov's innovative dual body technology platform to create truly differentiated bi-specific antibody therapeutics.
Speaker 3: No turning to DASALEX. It continues to redefine the treatment of multiple myeloma, and as you have seen, changes not so for DARA 2MOP, the up 32% over 2021.
Speaker 3: And that is generating more than 10 billion Danish Kone in royalties for us.
Speaker 3: contributing materially to our robust financials.
Speaker 3: I would also like to note that the sales of Casinta passed the $1 billion mark in 2022.
Speaker 3: Kacinta has now the third blockbuster medicine on the market created by GenMob.
Speaker 3: I will now turn the call over to Anthony Pagano to take you through our 2022 financial results. Anthony, the floor is yours.
Speaker 5: Great, thanks, Jan. Let's move to slide seven.
Speaker 5: We continue to strengthen our foundation during 2022.
Speaker 5: To start, as Jan just mentioned, together with our partner AbbVie, we've achieved our goal of regulatory submissions for ETCO in the US, Europe , and Japan.
Speaker 5: And, as we'll see, our financials for the year are exceptionally strong.
Speaker 5: We grew operating profit by 111%.
Speaker 5: We also increased recurring revenues by 70%.
Speaker 5: This was principally driven by strong royalties from Darzalex and other approved medicines.
Speaker 5: But note that favorable FX also had a significant impact here. And I'm going to return to this in just a bit.
Speaker 5: Our strong balance sheet, growing recurring revenues, and significant underlying profitability allow us to continue to invest in our business and our pipeline in a very focused and disciplined way.
Speaker 5: And the important part of this has been to continue to build the team and capabilities that we need to succeed.
Speaker 5: So, let's take a look at those revenues in just a bit more detail on the next slide.
Speaker 5: We saw robust performance for Darzalex in 2022.
Speaker 5: As you can see in the chart, overall net sales grew by 32%.
Speaker 5: That's net sales of nearly $8 billion, which translates to over $10 billion crooner in royalty revenue.
Speaker 5: This exceptional growth was driven by continued strong market shares, including further uptake of the sub-tube formulation.
Speaker 5: And as a reminder for our royalties, we also had a significant FX tailwind.
Speaker 5: So, Darzalex remains a key driver of our revenue, as you can see on slide 9.
Speaker 5: We grew total revenue to around 14.6 billion kroner in 2022.
Speaker 5: And, as I've already highlighted, that included a 70% increase in our recurring revenue.
Speaker 5: We've already spoken about Darzalex and the very strong performance there.
Speaker 5: Turning to Kasympa and Tepesa, we saw an increase of 747 million kronor in royalties compared to last year.
Speaker 5: And impressively, Kasimpta achieved Blockbuster status in 2022.
Speaker 5: Taken together, this growth really illustrates the power of our recurring revenue.
Speaker 5: Finally, we've seen some pretty significant FX tailwinds, particularly for our royalty revenue related to the strength of the dollar and the contractual headray for Darzel X.
Speaker 5: Let me break that out in a bit more detail on the next slide.
Speaker 5: In aggregate, of the 70% year-over-year growth in recurring revenue, 30 percentage points were related to FX tailwinds.
Speaker 5: I'll make a few points here.
Speaker 5: First, as we all know, FX can move in both directions.
Speaker 5: So one year's tailwind can of course become next year's headwind.
Speaker 5: And second, with our 2022 figures enhanced by FX, we've set up a tough comp for 2023.
Speaker 5: That said, what's super encouraging for me is the 40% underlying operational growth.
Speaker 5: So in 2022, we've materially strengthened our revenue profile.
Speaker 5: Now let's take a look at how we're using our strong recurring revenue to continue investing in a highly focused way.
Speaker 5: As you'd expect, given the investments we're making, total off-bex grew 51% for the year.
Speaker 5: In R&D, we've accelerated our investment into our product portfolio, especially the advancement of ETCO and other pipeline projects.
Speaker 5: We've also further strengthened our team to enhance our commercial capabilities and support our expanding pipeline.
Speaker 5: That includes TIBDAC and the filings and potential launch for EPCO.
Speaker 5: Now, let's take a look at our financials as a whole on slide 12.
Speaker 5: Here you can see our summary P&L for 2022.
Speaker 5: Revenue came in at around 14.6 billion kroner. That's up 72% on last year, favorably impacted by a significant FX tailwind as mentioned previously.
Speaker 5: Total expenses were about $8.2 billion with 68% being R&D and 32% SG&A.
Speaker 5: And that brings us to our very strong operating profit of over $6 billion, and that's an increase of 111% compared to 2021.
Speaker 5: Moving now to our net financial items, here we have income of nearly $700 million, which is primarily driven by the same two partially offsetting items that we've highlighted recently.
Speaker 5: First, we've got the strengthening of the US dollar against the Danish kronor, positively impacting the value of our cash and investments.
Speaker 5: On the other side of the ledger, we have losses in our marketable securities due to rising interest rates and some losses on our public equity investments.
Speaker 5: And finally, there was an increase in interest income due to higher effective interest rates.
Speaker 5: Then we have tax expense of around $1.5 billion, which equates to an effective tax rate of 21.5%.
Speaker 5: It's important to note that this rate is positively impacted by some one-time items in 2022. So it isn't reflective of what we would expect moving forward.
Speaker 5: And that brings us to our net profit over 5.5 billion kroner.
Speaker 5: So as you can see, extremely strong financial performance.
Speaker 5: Now, before we take a look at our 2023 guidance, I want to take a minute to revisit our financial framework on the next slide.
Speaker 5: First off, our revenue profile on the left.
Speaker 5: At the beginning of 2020, Darzalex was our only product on the market. Today, we have six, and that will generate continued recurring revenue growth in 2023.
Speaker 5: And we see a clear path to potentially expand the number of approved products with the recent submissions for EPCO and Janssen submissions for Taqwetemab.
Speaker 5: Taken together, we expect significant cash inflows in the years to come.
Speaker 5: Moving to the right, we remain focused in our investments as we evolve our organization for continued success.
Speaker 5: At the top of the list is accelerating and expanding EPCO.
Speaker 5: But that's just one of the exciting opportunities that provide us with a compelling rationale for increasing investment.
Speaker 5: As we told you before, if we want to seize these meaningful opportunities, we've got to invest. That's exactly what we're doing.
Speaker 5: So with that background, let's take a look at the components of our strong recurring revenue on slide 14.
Speaker 5: For 2023, we anticipate another year of strong underlying revenue growth.
Speaker 5: Before I get into the detail, note that these projections are based on an assumed US dollar, Danish kronor exchange rate of 6.8.
Speaker 5: At the risk of stating the obvious, I thought it important to highlight that, as best we can tell, GEMAP collected consensus has been derived using 7.2.
Speaker 5: And as a reminder, the average dollar corona rate in 2022 was 7.1.
Speaker 5: Now looking at our total revenue, we're expecting to be in the range of 14.6 to 16.1 billion kronor.
Speaker 5: And more than 85% of this will come from recurring revenue, which is up meaningfully from last year.
Speaker 5: We anticipate that Darzalex sales will continue to ramp up and be in the range of $9.4 to $10 billion.
Speaker 5: So we're projecting Darzalex royalties to be between 10.4 to 11.1 billion kronor.
Speaker 5: Recurring revenues also include a 32% increase in royalties from Tepesa and Kasimpta.
Speaker 5: But we also expect significant FX headwinds.
Speaker 5: So overall, we anticipate recurring revenues will increase by around 12%.
Speaker 5: Turning now to non-recurring revenue, we expect this to be $2.1 billion at the midpoint in 2023 compared to $2.7 billion last year.
Speaker 5: As you'll recall, there were multiple regulatory filings in 2022, and we benefited by the one-time milestones associated with these.
Speaker 5: Let's now take a look at our recurring revenue and just a bit more detail on the next page.
Speaker 5: As I said, we are anticipating recurring revenue growth of around 12 percent. And it's important to note that's only a reported basis.
Speaker 5: What we're really focused on is delivering the 25% operational growth.
Speaker 5: But this 25% growth is partially offset by the 13% negative FX impact.
Speaker 5: We're assuming lower dollar-to-corona rate compared to 2022, and as I said earlier, it's a tough comp due to the Darzalex contractual hedge rate from last year. Now, I think it's important to step back and really look through this FX noise and focus on the fundamentals of our very, very strong revenue growth.
Speaker 5: Now, with that, having looked at revenue, let's look at our planned 2023 investment on the next slide.
Speaker 5: We expect total OpEx to be between 9.8 and 10.6 billion kronor. This fully reflects the evolution of our pipeline and indeed our entire business.
Speaker 5: We have three near-term investment priorities.
Speaker 5: First, initiating new phase 2 and phase 3 EPCO trials to really maximize his potential.
Speaker 5: Second, is generating the next wave of data for dual body PDL1, 401BB, and dual body CD40, 401BB.
Speaker 5: And of course, third, the potential launch of ECCO.
Speaker 5: These are our immediate priorities.
Speaker 5: But as I noted, we're not just focused on today.
Speaker 5: In line with our vision, we're also very focused on long-term value creation.
Speaker 5: So we're continuing to build out our infrastructure, teams, and systems.
Speaker 5: We're investing to maximize the value of our current technologies.
Speaker 5: And we're also investing to generate the next wave of IND candidates and to progress our early stage pipeline.
Speaker 5: With that, let's break out our 2023 investment profile with a few numbers on the next slide.
Speaker 5: Here, we've laid out the incremental investments we're expecting to make for our top priorities in 2023. Starting at the top, a successful launch for EPCO will require a significant amount of our focus and investment, especially on building out our two key markets.
Speaker 5: the US, and Japan. And as a reminder, while the initial indication for EPCO is rather modest, over the medium term, we think this can be a meaningful opportunity.
Speaker 5: In particular, in the US and Japan,
Speaker 5: where we are the commercial lead and booking that sales the market is highly competitive.
Speaker 5: So, for a successful launch, we need to focus investment in this area.
Speaker 5: But of course, it won't be our only focus.
Speaker 5: You can see the biggest overall increase in investment will be in advancing our portfolio.
Speaker 5: This is an investment for now and for the future as we look to expand development of our mid to late stage programs as well as the growth of our overall portfolio.
Speaker 5: As Jan mentioned, when talking about our 2030 vision, we will also be making investments to move into a new therapeutic area, which is part of scaling up our already world-class discovery engine.
Speaker 5: Now, having looked at the framework and the constituent parts, let's look at how this all comes together on slide 18.
Speaker 5: Here you can see our 2023 guidance.
Speaker 5: We expect our revenue to be in the range of 14.6 to 16.1 billion kroner. And most of this is made up of recurring revenue where we're expecting 25% of operational growth.
Speaker 5: For OpEx, we expect to be in a range of 9.8 to 10.6 billion cronor. As I previously highlighted, this step up in investment is fully in line with our strategy and our focus on creating long-term value.
Speaker 5: Putting all this together, we're planning for substantial operating profit in a range of 3.9 to 6.2 billion kronor.
Speaker 5: Now, for my final slide, let me provide a few closing remarks.
Speaker 5: In summary, we had an exceptional 2022.
Speaker 5: We created growing recurring revenue streams.
Speaker 5: And that gives us a strong backbone of significant underlying profitability.
Speaker 5: 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.
Speaker 5: And on that note, I'm going to hand you back over to Jan.
Speaker 3: Thanks Anthony, let's move to slide 20.
Speaker 3: As Anthony said, 2022 was an exceptional year for GenMob, as we made significant progress across all areas of our business.
Speaker 3: In 2023, we will continue to work towards our 2030 vision with archival antibody medicines.
Speaker 3: where our Kaiser antibody medicines are fundamentally transforming the lives of people with cancer and other serious diseases.
Speaker 3: We will start with bringing our own medicines to patients.
Speaker 3: Subject to approval, we are enthusiastic about the potential launch of Abcaritamab.
Speaker 3: We are also looking for what to working with FC to expand the developments with new studies.
Speaker 3: We will collaborate with our partner C-JUN to establish TIFDAC as a clear choice for patients with metastatic cervical cancer, and together we will continue to broaden the T-SOTAM or FIDOTAM clinical development program.
Speaker 3: Turning to our world-class differentiated product pipeline, we very much look forward to data from the clinical expansion cohorts and progress to the next steps for both dual-body molecules in development with BioNTech targeting 4,1BB. We anticipate expanding and advancing other early stage programs, including the latest 20 years of Shinemes
Speaker 3: development and business needs.
Speaker 3: Finally, we intend to leverage our solid financial base to support our growth, this could include external opportunities.
Speaker 3: With all of this in mind, we are very excited about the next 12 months. So let's now move to my final slides.
Speaker 3: That ends our presentation of general financial results for 2022. Hopelhätter, please open the call for questions.
Speaker 2: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.
Speaker 2: We will now go to our first question.
Speaker 6: One moment please.
Speaker 2: And your first question comes from the line of Matthew Harrison from Morgan Stanley . Please
Speaker 5: Great, thanks for taking the questions. I guess two for me. Jan, I'm curious, you talked about external opportunities that you may be looking at. Could you just give us a little bit of more detail around what you may be thinking, size, scope, and whether these are technology-focused or product-focused. And then, second, just on the scale?
Speaker 5: as we think about EPCO launch in the second half of the year, I'm not asking for guidance here, but just maybe how should we think about some of the parameters? We've obviously seen multiple late line DLBCL launches from a variety of drugs. How should we look at those as the right kind of comps to think about for EPCO? Or are there other factors that you would highlight for us? Thanks very much.
Speaker 3: Thanks, Matthew, for the questions. I will definitely hand over the second question to Anthony Mancini. Let me start first with the external opportunities, Matthew. We are very much looking at the external landscape, both for components which we can use to build.
Speaker 3: differentiated antibody therapeutics as we have done before. Of course, last year we did a number of deals with different companies like OBT, OREGA, ScanCell to get antibody components that make you to really use in our next generation antibody therapeutic formats.
Speaker 3: But we're also looking at other technologies, new types of ADCs, new types of immune stimulators. And as we already revealed last year, we are going to add at least one significant disease area to our focus area in cancer. And we potentially could do a strategic collaboration that a another party already having a process.
Speaker 3: actually in the coming time. I want to leave it with that Matthew and then hand over to Anthony Mancini to ask, to give a bit more perspective on the APCO launch and how to think about that. Anthony Mancini.
Speaker 7: Thanks, Jan, and thanks, Matthew, for the question. Just to situate you in terms of how we're thinking about the launch landscape.
Speaker 7: There continues to be despite approved options in the space really a high unmet need in part due to the aggressive nature of LBCL based on what we're hearing from prescribers so.
Speaker 7: CAR Ts are clearly a compelling innovation, yet many patients are still unable to get the treatment due to various challenges impacting their availability. Some of the other novel agents that are approved in the space are accessible, yet fall short on some other areas, particularly in efficacy. So-
Speaker 7: You know, despite the fact that it's a modest opportunity as Anthony described earlier with about 3,800 new U.S. patient starts in the third line setting, we still think the unmet need continues to be high and we continue to hear from prescribers in both the academic and community setting.
Speaker 7: that if they could choose a single agent that offers an optimal profile that balances powerful efficacy, manageable safety, and a seamless patient experience with subcutaneous administration that it is indeed differentiating. Of course, this first indication is a starting point. isn't it
Speaker 7: that will build from and hopefully help enable LabCorp to become a core therapy across LBCL, FL, and beyond.
Speaker 7: from and hopefully help enable F-CORE to become a core therapy across LBCL, FL, and beyond. Thanks for the question.
Speaker 3: Thanks Anthony. Thank you. Thank you. Thanks Matthew. Back to the operator.
Speaker 2: Thank you.
Speaker 2: We will now go to our next question.
Speaker 2: And your next question comes from the line of Peter Veddolt from City. Please go ahead, your line is open.
Speaker 8: Thanks. Just a couple of questions. Maybe just apply...
Speaker 8: The language on the Beontek collaboration, I think you've gone from wanting to have at least one.
Speaker 8: of those antibodies in the phase three this year to just 1042 to want to make sure I understand what's changed or anything there. And just the latest full-time, if you're just being a sensible guest, as to when we might see hexibody dates are actually coming in, it next year still.
Speaker 8: likely or should we be pushing out our application?
Speaker 8: And then secondly just Jan, I'm expecting the response to be quite short. Have you got any sort of insight or clarity as to when we might get resolution of the ongoing arbitration on FASPRO? Thank you.
Speaker 3: Thanks Peter for the questions. I think about the BioNTech 4 and V programs and the HEXA Body CD38 data timing and can be brief Peter on my answer to the GH arbitration case. I guess it's full swing.
Speaker 3: We hope that we get a resolution sooner rather than later, but the timing is completely down to the arbitrator. I cannot give you any call on the timing of the potential outcome of the arbitration, but I can say that the process is in full swing.
Speaker 3: and I think all the paper works and all the documents are in place and we hope for a resolution and of course for a positive outcome sooner rather than later. Having said that I'm handing over to Tai to see whether you can get a bit more color. Tai on the two 400b targeted by specific progress with BioNTech.
Speaker 8: and potential timing of data, etc. Ty? We'll try my best. Yes, I would say no, nothing has changed actually. So both of these programs, 10.46, 10.42, the two form will be by specifics that we are developing, co-developing with BioNTech on track on generating the data and as we have communicated before, we expect to have that data in our hands in the second half of the year.
Speaker 8: Janssen in their decision is 24.
Speaker 4: Okay, second time.
Speaker 3: Thanks Peter.
Speaker 3: Thank you.
Speaker 2: We will now go to our next question.
Speaker 2: And your next question comes from the line of Sachi and Joan from Bank of America. Please go ahead, your line is open.
Speaker 5: Hi there, Tach Jain here, Bank of America. Couple of questions please. Just firstly on the dials and legs.
Speaker 5: To add a bit of colour as to what percentage of sales you see in the second line and how you're thinking about risk from the J&J Carti-Tude data which was recently headlined. I just accepted some of Anthony's comments on Carti existing penetration, just really could flesh out your thoughts there. And then two clarification questions for the prior question phase. squished over, figure out which is the
Speaker 5: On 1042, 1046, is it fair to therefore think if you're talking about data in-house second half, but really for a conference presentation we're looking at well into the year, towards the end of the year is that fair? And then for the CD38, if you could just provide a bit of colour as to why you have just added the subcut arm.
Speaker 5: Was that your decision or J&J's and does that delay the decision point for J&J? I know you said 24, but I think the prior working assumption was sort of early 24 for decision, but is that pushing that decision into middle or end of 24? Thank you.
Speaker 3: Thanks Sasin for the questions. I'm going to hand over the first question on the second line sales which looks very encouraging. I can assure you from the latest brand impact data to Anthony Mocini and then Ty can handle the other two questions on the timing of data dissemination for 1042, 1046.
Speaker 3: as well as the timing for HEXA BODY CD38 later. Maybe Anthony Mocini you can start giving a bit more color on the second line, the use of Darfalex asset stance and potential competition from CAR-T. I always say that.
Speaker 7: Thanks Jan and thanks Sachin for the question. As it relates to the second line, I really think there's a question for J&J to be best positioned to answer the composition of their total business, the Darzalek. What I can comment on from a share perspective is that the second line portion of the business continues to perform very well. It's a
Speaker 7: between lines in the multiple mileoma setting. So we do think that CARTs will play a role. That said, the primary growth factor for Garzelec's really continues to be driven by front line, and we continue to see very strong growth in that space and lots of growth potential to continue driven by front line, and share gains both in the US and XUS as reimbursement.
Speaker 8: data. I'll take the city to the first you know you mentioned at the beginning of the call that has been some updates to think about as I've got so we have been progressing the steps that we need in order to generate the data head to head to
Speaker 8: those are the subcue. And we are moving on to that more generated data and we have been, I think, consisting of that, I think. 24 is a time point where we probably will have to date on our hands to make a reasonable decision.
Speaker 8: And that will be true for us at the incident and also as you communicate to the outset. As it relates to. Yes, absolutely correct. The conferences in solid tumor space in the second half are spread more towards the end of the year that's true. The data release for these conferences is probably a little bit earlier. So the end is a function of generating the data and getting it.
Speaker 8: getting it out so we'll have no more to add to that.
Speaker 3: Thanks Tai, thank you Sasin for the questions.
Speaker 9: Thank you.
Speaker 2: We will now go to the next question.
Speaker 2: And your next question comes from line of Jonathan Chang from SVP Securities. Please go ahead, your line is open.
Speaker 10: Hi, guys, thanks for taking my questions. First question on the 2023 revenue guidance. Can you discuss what you see as the key factors that determine where you might land in that range given the lower end suggests little change versus 2022? Are there other key drivers beyond DERA and FX that we should be considering?
Speaker 10: And second question, as you prepare for the potential EPCO launch, what do you see as the key determinants for whether or not EPCO can become the market leader in the CD20 by CD3 class, in the initial relapse refractory DLBCL setting and beyond? Thank you.
Speaker 3: Thanks Jonathan, excellent questions. The first one I will delegate to Anthony Pagano and then the APCO launch questions will go to Anthony Mancini. Maybe Anthony Pagano can start.
Speaker 5: Sure, and thanks Jonathan, appreciate getting a question on the earnings call today. So that's great to let me join the fun. Overall, you know, as you kind of highlighted the revenue ranges 14.6 to 16.1 billion kroner. And the headline numbers you kind of rightly point out on a reported basis, this is just a 12% increase, but as I highlighted, there's a significant FX.
Speaker 5: headwind. So on an operational basis, this is like we're really focused on the execution here, is 25% growth, so significant growth. You already highlighted some of the big swing factors, most notably Darzalex. There we are guiding very significant growth range of $9.4 to $10 billion. Maybe one thing that I didn't cover beyond that on
Speaker 7: in my prepared remarks is really then on the milestones. So here there is a little bit of, you know, let's call it variance between the lower end and the upper end. And here I'll just drill into this a bit for you. So in terms of the milestones for 2020 degree, we have a total range of 1 to 1.4 billion kroner and approximately 70% of this is related to EPCO.
Speaker 5: Now for EPCO on the lower end of this, the lower end of the guide for EPCO, we have three milestones. So we want to associate with the US approval, a second one associate with the EU approval, and then third, we have a filing for a new indication in one territory. So that's for the lower end of the guidance for EPCO.
Speaker 5: And then secondly, on the upper end of the guidance for EFCO, there's an additional milestone above and beyond what I just said. And that additional milestone would be filing for a new indication and a second territory. I think Jonathan, we kind of stepped back the fundamentals of our overall growth story, you know, six products compared to one a couple of years ago.
Speaker 5: clear path to potentially adding number seven and number eight during the course of 2023. And overall very strong 25% operational growth. Looking forward to in the course of this upcoming year.
Speaker 7: Anthony, do you want to take the second question? Yeah, thanks, Anthony, and thanks, Jonathan, for the question. It's a great question. It's going to be, I think, a competitively intense marketplace, but we like where we stand. How do we want to make
Speaker 7: Certainly, we're pleased with the readiness progress we've been having across functions with our partner, Abby. Our field teams are ready across medical, sales, and market access. They're in place and fully trained. Our patient services team is ready to go. And we've already started active discussions with payers through pre-approval information exchange and the reactions have been positive.
Speaker 7: What I'd say in terms of what's key is that we want to ensure very quickly that healthcare providers, whether they are sitting in the community or the academic setting, have a very clear understanding of how to safely and effectively administer FCoR. We think that doing that quickly across sites of care is a key.
Speaker 7: key factor so that we can really start to establish F-caridimab as the optimal treatment choice in the third line plus setting. And we think if we can start our lead there that we can build our lead. So the key will be to seamlessly...
Speaker 7: coordinate across channels and across.
Speaker 7: So that we ensure an optimal end to end customer experience. I'll leave it at that Jonathan and look forward to the continued progress.
Speaker 11: Got it. Thanks Anthony.
Speaker 2: Thanks Jonathan. Back to the operator. Thank you. We'll now go to our next question.
Speaker 2: And your next question comes from the line of Elizabeth Walton from Credit Suisse. Please go ahead, your line is open.
Speaker 1: Hi there, thank you for taking my questions. Just a couple left from me. You note in your 2023 priorities the SBLA submission for EPCO this year. Perhaps you can update us on when we could expect to see the potential pivotal data in relapse.
Speaker 1: for fracturally follicular lymphoma, and if we should think of a possible submission in the second half of the year. And then just to touch back on the CD38 hexabody, are you able to confirm whether the J&J opting option for this aspect does not expire within 2023? Thank you.
Speaker 3: Thanks, Elizabeth, for the questions. I can tell you that the option for CD38 hexamoy did not expire, I can tell you, this year. So, we need to collect the data, and then there is only a few-month option period after we submit the clinical data that J&J can opt in or out.
Speaker 3: on hexabody CD38, so it's still intact. And the first question on the data and in the lab refractory, the fuselage visa lymphoma and also follicular lymphoma, I will ask Judith to give you a bit more color on timing. Judith? Yeah, thank you for the question. So the question was specifically for the...
Speaker 3: Back to the operator. Thank you.
Speaker 2: I will now go to the next question. One moment please.
Speaker 2: And your next question comes from the line of Michael Schmidt from Guggenheim. Please go ahead your line is open.
Speaker 8: Hi, this is Paul. I'm from Michael. Thanks for taking your question. I had one actually on the earlier pipeline on the B7H4 bispecific. I was wondering how are you currently approaching patient recruitment for that phase one study? Is there any weighting towards one of the four blood tumor types?
Speaker 12: and do you envision that sort of biomarker selection strategy down the line? And then maybe a quick follow on, you know, how can we think about the differences between the CD3 bi-specific approach versus some of the ABCs for B7H4. Thank you.
Speaker 3: Thanks, thanks Paul. I will hand over the question to Ty and then the pipe unit can also chip in. I think after Ty has already given his initial thoughts on the B7HOR Bi-specific program which we are very excited about and Ty maybe you can give a bit of insight into tumours strategy biomarker strategy.
Speaker 3: And then maybe you or you can get some further perspective on CD3 T cell engagement versus ADC approaches for B7H4 time.
Speaker 8: So, this is very easy. First part, the question of indications. So, yeah, B7H4, there are some indications where B7H4 is...
Speaker 8: quite consistently and homogeneously expressed. These are the ones that we are currently concentrating in in the study.
Speaker 8: And this is all taken to as a cost. And then other indications for ZB7H4 is expressed, but not necessarily always consistently at a high level.
Speaker 8: And these are indications where potentially a biomarker strategy would be relevant. So right now we're focusing on involving patients in the first new mental health.
Speaker 8: that based on internal and external data, have diseases that are known to have B7H4 expression consistently, and I think the operator for it is consistently here. And then in a future development plan, we'll probably also look at indications where we might have to select based on B7H4 expression because it's not necessarily a consistent A express, and that would be the B7H4.
Speaker 8: general strategy not to give too much away on that. And then on the question of ADC versus CH3, I think fundamentally these are completely different mechanism of actions.
Speaker 8: … that have different opportunities and challenges.
Speaker 8: So that's at least my point of view on how to answer the question in a specific way.
Speaker 8: detail that you would like to know. But short of sharing the B784 has to be in a tumor, they are very, very different both in the expression that they need and the mechanism and potential.
Speaker 8: plus the safety buffer.
Speaker 3: Thanks, Tai. I don't know whether Judith wants to add anything, otherwise we'll give it back to you Paul. Judith, do you want to add anything here? Oh, nothing to add. I think that as Tai alluded, it depends on the expression of the target, the homogeneity of the target and the expression on the target in the tumor disservice normal cell.
Speaker 13: And this is why we chose A3 by Pacific.
Speaker 3: Thank you, Jürgen. Paul, I think that's it for now and then we give the floor back to the operator.
Speaker 3: Paul, I think that's it for now and then we'll give it the floor back to the operator. Thank you.
Speaker 2: We'll now take your next question.
Speaker 2: And your next question comes from the line of Yawen Verber from Cohen. Please go ahead, your line is open.
Speaker 10: Great, thanks for taking my question. I also have a question on 3014, specifically in AML. Can you give us a little bit of a sense of what's the plan there? Is there a chance to test it also in that setting, just given that Darzalexa obviously couldn't show activity there historically? You want to give us a sense of what the plan is in? For me, it's like, make a place in the repl Republic of Mexico in which it's really like –
Speaker 10: And then secondly, is the thought just as you think down the line to go to a darzalex refractory setting in myeloma, or is there a chance to really move up, and how do you do that? Is that pivot on MRD negativity as an endpoint? Thank you.
Speaker 3: Thanks for the questions. I think Ty can handle this. Ty He, ExoBody CD38.
Speaker 8: Sure. First question first. So let's actually start in beginning with this. The hypothesis I want the hexablody C38 program is that hexametrization...
Speaker 8: lead to a lower threshold needed for the expression of epitope density and thus would increase the efficacy of the expression of epitope density.
Speaker 8: both in Baltimore and Longwell, but also open up spaces where Daratoma was unable to elicit signal agent response because the density of CD38 is not that high. And other people, for example, this is USB-C, or as you mentioned, AML.
Speaker 8: So that's how you can think about how we are approaching this.
Speaker 8: And then for the second question, I want where to position what, you know.
Speaker 8: future position will be a discussion of who is in the future in charge of the developing the drug, but having set out the proof of princess generated in patients with RNA-E.
Speaker 8: in a direct comparison between tau to mab.
Speaker 8: in the hexa-seater yet because this is the best way of proving and documenting also that hexa-onization does indeed need to prove the efficacy signal and then run safely profile because Toma, of course, has a very favorable safety profile. And that's probably the place where this darkened the mechanism makes no sense.
Speaker 3: Thanks, Tai. Thanks, Jeroen, for the questions. Back to the operator.
Speaker 9: Thank you.
Speaker 6: We will now go to the next question.
Speaker 2: And your next question comes from the line of Emily Field from Barclays. Please go ahead, your line is open.
Speaker 14: Hi, thanks for taking my questions. I'll just ask two. The first one is just on the Part B expansion of the Hexabody CD38-BASPro head-to-head trial.
Speaker 14: Relapse refractory, CD38-naive patients is what you're looking for. All of the trials that appear to be in the US and Western Europe are finding those relapse refractory Darzalex-naive patients going to be a challenge in those regions, or you're going to have to add more sites to that trial given how successful Darzalex has been. And then maybe just kind of a higher level question on...
Speaker 14: you know, you've indicated the desire to maybe move into a new therapeutic area. Is that something where we would get any insights into what that would be in 2023? Is that something that would be
Speaker 3: who fully organically developed Gen-MAB or supplemented with business development. Just any early color you could give there would be helpful. Thank you. Thanks, Emily, for the questions. I will take the second one for sure. And the first one I can hand over probably to Tahi. So for the new therapeutic disease area...
Speaker 3: That will be a combination of work we do internally at GenMOP. We already have programs in a new disease area active. We will probably start speaking about that, Emily, at the time that the molecules are ready to be moving into the clinic, like we do now also for the cancer programs. But it will likely be supplemented by a strategic deal or strategic deals.
Speaker 3: and potential B details also to basically accelerate the move into the new disease area. We are thinking of adding one very large disease area which can encompass different diseases. So this year you will definitely hear more about that, but probably in the context of strategic interactions.
Speaker 8: Yes, so absolutely correct. You know, the consequence of the dramatic improvement that daratumumab had on the lives of patients with multiple melanoma is indeed that those patients...
Speaker 8: who have realized the fact that it's not yet exposed to what are getting less and less.
Speaker 8: Having said that, we do have probably the best insight partially because on this end we collaborate with our partners.
Speaker 8: on where there are still regions in the world where because of health care access issues or other issues, the optimal penetration in the relapse setting is maybe not as high and then obviously, they are going to focus our work well in the trial in these regions.
Speaker 3: Thanks, Tai. And Emily, we are not worried about recruitment there. That's, I think, safe to say. I think there are some areas where we can indeed recruit such patients and we now know that the active doses of Hexabody CD38, so we're very enthusiastic about progressing that head to head. Yes. All right.
Speaker 3: and hope you have the data by 3000 next year or earlier.
Speaker 3: Giving the word back to the operator now.
Speaker 3: the world back to the operator now. Thank you.
Speaker 6: We'll now go to our next question.
Speaker 2: And the next question comes from the line of Asika Gunawardene from Truist. Please go ahead your line is open.
Speaker 15: Hi guys, thanks for taking my questions. Just want to get back to Hexwatt-CV38. On clinical trials I've got you increase the recruitment target recruitment data into a 270 patients so that's an increase it's about 120. But beyond the two, arms of the head to head component.
Speaker 15: There are the expansion cohorts in other indications. So can you break out how many patients you aim to recruit specifically for the head-to-head arms as well as the expansion cohorts? And then just on EPCO, just want to get your thoughts on which combinations of EPCO and other agents.
Speaker 15: in earlier lines of LBCL, do you see panning out next? Thanks.
Speaker 3: Thanks, Astika, for the questions. And I think I will hand over both to Ty. I don't know, Ty, whether you want to give full transparency on how big the cohorts are, or at least add up to you. And definitely, you can speculate on the potential combinations in LBCL, of course, in the early stage disease.
Speaker 8: Ty? Yeah, so we have not, and probably should not, completed this close, but there is a contractual size to the headset comparison that we are meeting. That's partially a part of the update, not only. So there's the different ports.
Speaker 8: head-to-head comparison, a little bit of a refactoring cohort, an AML cohort, a diffuse HPCO cohort, and some of it is the update in the clinical trials, but I wouldn't go into the details of the size of them.
Speaker 8: On the early combinations, there's a lot of work, obviously done also in collaboration with our partner, Abby.
Speaker 8: both in the relapse and then in the frontline. I think the one frontline study that is going to come up is the one in elderly patients who are not necessarily candidates for full-dose ARCHOP, which we are using as an opportunity to explore novel combinations that are chemo-free.
Speaker 3: Thanks, thanks, Tai. I think that's where we leave it at this moment. Aztec, thanks for the questions.
Speaker 9: Thank you.
Speaker 6: We will now go to our next question.
Speaker 9: One moment please.
Speaker 2: And your next question comes from the line of Etsa Dero from BMO. Please go ahead, your line is open.
Speaker 16: Great. Thanks for taking the question. Just one more on hexa body CD38 if you're not completely exhausted yet on that. So just on the head-to-head study with daratumumab, just wondering if you can help us think about sort of, you know, kind of…
Speaker 16: Yes, because he saved the benchmarks. Yes, you know, ultimately what level of activity would you want to see to move that program forward? Thank you.
Speaker 3: Thanks Edsel for the question and indeed HEXA body CD38 is apparently the winner today for all the questions. So that makes Ty also the winner because he is doing a lot of that for that program. Ty you're on again.
Speaker 8: Okay, I had talked a lot about benchmarks. So the only benchmark that can refer to at this point is the data set of the models data on terms of series study or 5 or 1, there's a slightly different sort of end-of-being.
Speaker 8: to not having a response rate of roughly 30%. That concludes our facilitate for today's session today.
Speaker 8: If you take that and there is one benchmark, the other one to look at is depth of response.
Speaker 8: And then there's another part of the equation that is the uncertainty in data.
Speaker 8: you know, data that was generated in the timeframe 2012-2013.
Speaker 8: ??? as well. 2012-2013.
Speaker 8: may not necessarily reflect the efficacy of the rat filmop in a population that may be treated completely different because centers of care have changed, the combination of image and proteasome inhibitors in combination. Frontline has moved forward. Other mechanisms have been introduced.
Speaker 8: the C1Q mining to enhance CDC and to that to enhance efficacy either by increasing the response rate and or by increasing the depth of response. I think these are both parameters to look at.
Speaker 3: Thank you. Thanks, Ty. Thanks, Atfer. Back to you, operator.
Speaker 2: Thank you. We will now take our last question for today.
Speaker 9: More minute, please
Speaker 2: And the last question for today comes from the line of Matthew Fitz from William Blair. Please go ahead, your line is open.
Speaker 10: Hi, thanks for including me. I was wondering on Gen 1042, you mentioned moving into late stage development, is it safe for us to assume that's head and neck in combo with chemo and primbo like you showed at Esmo IO, or is it too early to jump to that conclusion? And then for the hematologic T cell engagers, we've now seen two quite different.
Speaker 10: labels from the FDA regarding hospitalization suggestions or requirements during dose escalation between linsomeo and tick-valley. I'm just wondering if you guys have any thoughts on where EPCO might land for the hospitalization and LBCO. Thank you.
Speaker 3: Thanks, Matthew, for the questions. I think the first one we can be quick on, the 1042. I think it's too early to conclude how to position it because we're actually doing a frontline combination therapy in four different cancers, Matthew. You've seen some very encouraging early head and neck cancer data.
Speaker 3: which we are also very excited about. But I think it's too early to make a call there, but we will come to that conclusion on next steps this year. So very exciting year for 1042, I'll leave it at that. And then I basically want to ask you to give a bit more color on hospitalization.
Speaker 3: for T-cell in cases because there are indeed different labels as you already alluded to Matthew. We are aware of that for sure. Maybe you can give a bit of color there.
Speaker 13: Yeah, so thank you for the question. And there are different examples. You know, we are very aware, you know, that the safety profile of ECCo is well managed with the current guidances in the protocols. We requested a single-day hospitalization after full dose.
Speaker 13: to speculate which one, but we feel very comfortable with the way it is managed and the safety profile of El Corita mask.
Speaker 3: Thanks very much, Judith. I think that's it, Matt, for now. And then I will get some closing remarks. So thank you all for calling in today to discuss the NOS Financial Results for 2022. If you have additional questions, please reach out to our Industrial Relations team.
Speaker 3: We hope that you all stay safe, keep optimistic and remain healthy. And we very much look forward to speaking with you again soon.
Speaker 2: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.
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Speaker 17: you
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Speaker 17: Don.
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