Q1 2023 Genmab A/S Earnings Call
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Hello, and welcome to the Chatbot first quarter 2023 financial results Conference call.
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I'd now like to hand, the conference so that your first speaker today, Yeah Van Winkle. Please go ahead.
Hello, and welcome to jump ups conference call to discuss the company's financial results for the period ending March 31st 2023 with me today to present. These results is our CFO Anthony Pagano.
Let's move to slide two as already said, we will be making forward looking statements. So please keep that in mind as we go through the skull.
Let's move to slide three.
During today's presentation, we will reference products being developed under some of our strategic collaborations.
This slide acknowledges those relationships.
Let's move to slide four before.
Before we look at our first quarter results I want to remind you of our consistent track record of success.
Our proprietary technology has fueled a robust auto ghansham, it's just spoke expounding on maturing.
By the end of this year.
To put that there is the potential for eight approved medicines powered by our innovation half of which would be due a body based bi specifics.
This is validation of the dual body.
Of the dual body technology's potential to create truly differentiated by specific antibody therapeutics.
Our growing recurring revenue streams allows us to continue to invest in our pipeline and in our people.
Our world class team of experienced and dedicated colleagues drives our innovation motivated by the passion for making a difference in the lives of people living with cancer and other serious diseases that.
Let's now turn to recent accomplishments that will support our future success.
Slide five.
In the first quarter of the year, we continue to lay the groundwork for the potential approval of create them up and we are very excited for the potential upcoming launch and the opportunity to serve patients with third line plus diffuse large b cell lymphoma.
Your line still teams across sales and marketing medical and market access are all in place and having 20 prepare for the launch.
And our patient services team is also in place and fully ready.
Actively engaging with the FDA and look forward to the future a hotbed of may 21st to do so.
Pending approval, we anticipate a greater market benefit top line, just a few slides b cell lymphoma patients where the level of unmet need.
Needs remains high.
This indication will be the first that will enable accurate them up to become the potential core therapy across the few slides b cell lymphoma, Follicular lymphoma, and B O S.
As part of our effort to deliver accretive up to relapsed or refractory diffuse large b cell lymphoma patients together with Hep C. We launched our first pre approval and expanded access program.
This program provides access to accurate about two electrical patients in the U S and Europe prior to potential regulatory approvals.
Looking beyond relapsed refractory diffuse large b cell lymphoma, together with that fee. We are committed to a robust clinical development program evaluating accurate them up in a variety of patient populations and treatment settings.
This includes frontline diffuse large b cell lymphoma, and I'm, just very pleased to say that in February and March. The first patients were dosed in two frontline diffuse large b cell lymphoma studies.
The phase III Upcourt diffuse large b cell lymphoma to study in combination with R. Chop.
And the phase two app called diffuse large b cell lymphoma, three study with or without literally terabytes in elderly patients.
Turning to recent and upcoming data presentations.
Multiple apical eaten up abstracts were accepted for presentation at ESCO, including an oral presentation of data from one of the arms of the <unk> and <unk> are two trial looking at upgrade them up and going.
Combination of introduction of <unk> in patients at high risk relapsed or refractory Follicular lymphoma.
We and our partners also have several abstracts accepted for presentation at last month's ACR meeting.
These include the data from an interim analysis of part C from the phase II innovative 207 study of Keystone to adulthood.
And head and neck cancer, or small cell carcinoma head and neck.
Though the number of patients including this in this initial data for small just 15.
The results demonstrated encouraging preliminary antitumor activity and an acceptable safety profile highlighting desoto after adult its potential in solid tumors beyond cervical cancer.
Regarding programs powered by our innovations telephonics continues to redefine the treatment of multiple myeloma.
As you'll have seen J&J is net.
Net sales for the two of them up are up 22% over the first quarter of 2022.
And that has generated almost 2 billion Danish krone and royalties for us contributing materially to our two our robust financials.
This brings me to the initial resolution of a second arbitration with Johnson relating to adapt to them up license agreements as well.
Announced last month.
The arbitration panel dismissed all claims the one off though one of the three arbitrators test centers.
Subsequently, we announced our decision to file a request or a few of the awards.
The arbitration is confidential, we do not intend to comment further and we look forward to our continued collaborations with your answer.
I would also like to acknowledge the appointment of Athena Farfetched to Chief strategy Officer Bettina has been an integral part of jam up almost from the beginning.
In a new role she will be responsible for overseeing the key areas of corporate strategy corporate development business development and licensing and Alliance management.
I think this addition to executive management further strengthens our already exceptional team and will help us to effectively deliver 30 30 fashion.
Finally, I would like to bring to your attention and announcement in March from Linda Japan.
Are you a F 824 to two which was created by Genmab as part of an agreement at Lundbeck.
<unk> has been granted by any attract designation for the treatment of multiple system atrophy in Japan.
This designation provides further support for the potential of our innovative antibody therapeutics outside of oncology.
Let's move to slide six.
Then we unfilled updates attrition last year, we noted that while we would continue our commitments to antibody therapies for oncology indications.
We would also look.
Moved and additional.
And two an additional therapeutic area, where our antibody expertise could make an impact.
I'm very pleased to announce that we are entering the therapeutic area of immunology and inflammation as a stepping stone to achieving our inspirational 2030 vision.
As we announced in April .
The multi year collaborations with <unk> to jointly discover develop and commercialize novel therapeutic antibodies with applications in immunology.
On quality.
By partnering with <unk>, we will be able to combine our companies deep knowledge of the biology and therapeutic power of antibodies and have an opportunity of dress to address patient needs in oncology and.
In immunology and inflammation.
We look forward to a successful partnership with organics.
And to providing you with updates on the progress of these collaborations once we are ready to bring new product candidates through the clinic. This of course will take some time.
I'm pleased to now hand over the call to Anthony to take you through our Q1 2023 financial results Anthony the floor is yours.
Great. Thanks, John .
We continue to strengthen our foundation in Q1.
Of course top of mind for everyone is the potential FDA approval of <unk> core later this month.
And as we'll see our financials remained strong recurring.
Recurring revenues grew by 33% in Q1.
This was principally driven by strong royalties from GARS, Alexa and other approved medicines.
Our solid balance sheet growing recurring revenues and significant underlying profitability allow us to continue to invest in our business and our pipeline and a very focused and disciplined way.
And an important part of this has been to continue to build the team and capabilities that we need to succeed.
So, let's take a look at those revenues and a bit more detail.
We saw robust performance for <unk> in the first quarter of 2023.
As you can see in the chart overall net sales grew by 22%.
That's net sales of over $2 $2 billion.
Which translates to almost 2 billion kroner and royalty revenue.
This growth was driven by continued strong market shares, including strong adoption of the sub Q formulation.
For our royalties, we benefited from a higher effective royalty rate and then FX tailwind.
And this is partially offset by negative contractual hedge rate adjustment.
So as you can see <unk> remains a key driver of our revenue.
We grew total revenue to nearly $2 9 billion kroner in Q1.
And as I've already highlighted that included a 33% increase in our recurring revenue.
Here to be clear that's on a reported basis.
Excluding some FX tailwind recurring revenues grew by 28% on an operational basis.
This strong growth was driven by <unk> and cause symptoms.
It was partially offset by lower to present net sales, which according to horizon were negatively impacted by seasonality.
Now taken together this growth really illustrates the power of our recurring revenue.
In line with our significant growth opportunities total opex grew 51% in Q1.
In R&D with accelerate our investment into our product portfolio, especially the advancement and expansion of <unk> and of course other pipeline projects.
We've also further strengthened our team to enhance our commercial capabilities and support our expanding pipeline and of course that includes the potential launch for <unk> Corp.
Now, let's take a look at our financials as a whole.
Here you can see our summary, P&L for Q1.
Revenue came in at nearly $2 9 billion kroner.
It's up 35% on last year.
As mentioned previously that's favorably impacted by small FX tailwind.
Total expenses were about $3 4 billion with 72% being R&D and 28% SG&A.
And here, even with the increased investment we're still delivering over 430 million kroner of operating profit for the quarter.
Moving to our net financial items.
Here, we have a loss of around $150 million, which was primarily driven by two partially offsetting items.
First we've got the weakening of the U S dollar against the Danish kroner in Q1, and this is negatively impacting the value of our cash and investments.
On the other side of the Ledger, we have an increase in interest income due to higher effective interest rates.
Then we have tax expense of $60 million, which equates to an effective tax rate of 21, 2%.
And that brings us to a net profit of over 220 million kronor.
So as you can see very solid financial performance to start the year.
So with that let's take a minute to revisit our robust financial framework.
First off our revenue profile on the left.
There are currently six products on the market that are generating significant recurring revenues.
And we see a clear path to potentially expand the number of approved products with the potential approvals for EMCORE and Jensen calculate a map.
Taken together, we expect significant cash inflows in the years to come.
Now moving to the right.
We remain focused in our investments as we evolve our organization for continued success.
At the top of the list is accelerating and expanding at court.
But that's just one of the exciting opportunities that provide us with a compelling rationale for increasing our investment.
As we told you before if we want to seize these meaningful opportunities we've got to invest and that's exactly what we're doing.
So with that background, let's now take a look at our guidance.
To start we're on track to meet the financial targets that we outlined back in February .
As a reminder, note. These projections are based on an assumed U S dollar Danish kroner exchange rate of six eight.
If you look at our revenues were off to a strong start with marketed products that are generating significant recurring revenues.
So we continue to expect our revenue to be in the range of $14 six to $16 1 billion kroner and most of this is made up of recurring revenue, where we're expecting 25% of operational growth.
And as I just noted for Q1 were at 28%.
For operating expenses, we expect to be in a range of $9 eight to $10 6 billion kroner as I previously highlighted this step up in investment is fully in line with our strategy and our focus on creating long term value.
Putting all this together we are on track to deliver another year of substantial operating profit and a range of $3 nine to $6 2 billion kroner.
So with that let me provide a few closing remarks.
So with that let me provide a few closing remarks.
In summary, we've had a very solid start to the year.
We've created we've created growing recurring revenue streams and that gives us a strong backbone of significant underlying profitability.
And we're investing those revenues and a highly focused way to realize our vision and to capitalize on the very significant growth opportunities in front of in front of us.
And on that note I'm going to hand, you back over to Jan.
Thanks, Anthony and the first quarter for 2023, we continue to work towards our 2013 patients where our queso antibody medicines are fundamentally transforming the lives of people with cancer and other serious diseases.
As we near the producer date for accurate them up we are we are enthusiastic about its potential launch.
We are also looking forward to working with that fee to continue to expand <unk> development with new studies.
We are collaborating with our partner <unk>.
Established <unk> as a clear choice for patients with metastatic cervical cancer and together, we will continue to broaden the T cell tumor for adult and clinical development program.
We also very much look forward to data from the clinical expansion cohorts in progress to the next steps of boats do a body molecules targeting <unk> that are in development to kind of a biotech.
And we anticipate expanding and advancing our earlier stage early stage programs, including the potential for multiple <unk> or Cta this year.
Fundamental to our success is having the right team and culture in place.
We intend to continue to scale, our organization on our plant portfolio development and business needs.
Finally, we will continue to leverage our solid financial base to support our growth we.
We have a lot to look forward to in the coming months.
So that ends our presentation of Genworth financial results for the first quarter of 2023, operator. Please open the call now for questions.
Thank you if you wish to ask a question you will need to press star one and one on your telephone and wait for your name to be.
To withdraw your question. Please press star one again.
Again, please standby, while we compile the Q&A roster.
Your first question comes from the line of Michael Schmidt. Please go ahead. Your line is open.
Hey, guys. Good morning, Thanks for taking my questions are good afternoon in Europe .
As we head closer to the current amount due for dead. Here. Later this month could you just talk about your expectation for <unk>.
Potentially required in patient monitoring around <unk> and hospitalization that may be required.
It might affect commercialization and any other expectations.
So we look forward to seeing the FDA approved label for their therapy.
And then secondly could you just remind us of your go forward plans for filing in other indications. This year, perhaps for example in Follicular lymphoma or other cancer types. Thank you so much.
Thanks, Michael for the questions that can handle boats.
With regard to the potential label and hospitalization said that that is of course, a question for the Alpha <unk> for the FDA. We are actively discussing with the FDA how to ensure that both safe and appropriate.
Use of <unk>.
I can tell you that's actually.
You will see it from the label discussions what the what the outcome will be as it relates to hospitalization I think we're in very productive discussions with your therapies and it's up to them.
The site and then we'll come back to that once we hear the label that we are very pleased with the progress of the of the discussions and we look forward to basically the coming weeks, Michael I think it will be exciting times.
And as it relates to further.
Further submissions.
The Follicular lymphoma data and our.
Data will come this year and we are fully scheduled to actually submit.
Based of course on positive data from the from the study due to the regulatory the regulatory authorities.
And potentially in different territories. This year, we'll give you further updates Michael during this year once you have the data.
Great. Thank you yeah.
Alright.
Thank you we will take our next question.
Your next question comes from the line of Jonathan Chang. Please go ahead. Your line is open.
Okay.
Yeah.
Hi, guys. Thanks for taking my questions.
On the appeal of the second arbitration resolution or you provide any color on how we should be thinking about timelines and your level of confidence on the outcome.
And then second question would be just.
More specifically on Gen 10, 47 can you discuss how the study is progressing and when we might see initial clinical data from this program. Thank you.
Thanks, Jonathan for the question Sir Unfortunately, we cannot give you too much information on the appeal.
Definitely we will file an appeal to the second arbitration.
Timeline should still allow for a verdict on that appeal.
This year it probably after the summer immediately after the summer that is of course up to the to the Arbitrators said, Jonathan it's inherently uncertain, what the exact timing will be that we hope definitely for a outcome this year.
Our levels of confidence.
He believes that we are ethically and morally on the right side of the line and actually we believe that's the.
The award from the first arbitration is very very clear and that's actually on the standards.
Elite.
So the conclusion that actually the subcutaneous formulation of <unk> as a separate product. According to the contracts and that is exactly what you asked.
Arbitrators and the second arbitration to two to judge on.
And so I think we are confident that we're doing the right things, but in the end is down to the legal system I cannot give you any further.
Back on that that's a <unk> 47, who are still doing dose escalation.
Going well and once we have the whole dose escalation data set enhanced Jonathan we will actually.
Present, the data as we usually do now for all of our.
Early stage clinical program to you we want to collect all of the data for the dose escalation and Dan Bill actually present at a medical conference and also flagged up to the outset wells. So it's going well and we are progressing with the dose escalation. That's all I can say at this point.
Understood. Thanks for taking the questions.
Thanks, Jonathan.
Thank you we will take our next question.
Another question comes from Peter Welford. Please go ahead your line is open.
Hi, Thanks, so much I've got three quick ones, if you get behind a firstly just coming back to our Caribbean map on the third line Follicular Wonder if you could possibly set the scene for us as to what you think could be the fall that to enable a regulatory filing this year and presumably again, we're talking response rates completely.
Striking the duration that complete responses. It maintained a curious if you can give us an update as to what you think the minimums.
Volume of data rates is Quebec regulators, particularly FTA.
Secondly, just on the our journey there are actually more broadly immunology is this should we think if this is your big stepping Jimmy apology. If you like and then theyre going to be I think you've sort of talked about bolt on deals where we look at targets.
<unk> targets and other sort of technologies et cetera that you bring into that or should we still think there's likely to be a delta, perhaps even larger in scale and concept deal to come on as you move into this new therapy each carrier.
And then just finally on the I guess.
Mandatory question, if you'd like to 10, 42, and 10 46 any updated thoughts on when we could potentially get data, whether it's likely to be by the end of this year or next year and for the dose escalation expansion cohorts. Thank you.
Thanks, Peter for the questions 40 year clients Nicola form of data I don't think we have discussed the bar that you want to hedge basically of it occurring at a greater more but it will definitely be at the level of all the overall response rate and the duration.
So we are very excited about what we see in the various.
Legal and a former settings, both monotherapy and combination as you know from last year's Ash spectacular data I think the data actually gets better and better but we haven't seen the readout from the on the third line plus cohorts yet.
Once we see data Readouts, we will definitely.
Presented data and also <unk>.
<unk> discussed MBT with regulators in both U S and in Europe , potentially a sell in Japan, but we haven't given the the bar, we're aiming for that publicly.
At this moment.
As it relates to the organic deal that is indeed, our first step into the <unk>.
Our immunology and inflammation information fields, and we intend to indeed brought on that.
Further <unk>.
The activity of the company.
Both organically and Inorganically organically by getting access to targets, we want to actually use our proprietary technology platforms for to create better differentiated antibody based medicines.
But also potentially involving inorganic type deals SaaS, we said publicly there.
We can bring in other technology in the immunology and inflammation fields of proprietary technologies that we think complement our suite of sales technology platforms all of that.
Even product candidates.
Our pipeline to accelerate our move into the interim.
The immunology and inflammation skills.
Separate from that we already have a number of preclinical programs actives, which are entirely genmab programs that we already are creating or have created the.
The clinical candidates.
In our preclinical pipeline, we will actually update you sort of pizza ovens.
Our ready to move into.
A cta filing of an IND.
The IND filing.
We as we will progress on multiple fronts.
Activity profile to get broader and broader in the immunology and inflammation CRT are very serious about that.
Beauty care area.
<unk>.
The organic scale was simply the first step into a strategically working with a leading a company with a similar science based focus and purpose driven approach as we have which we know very well and actually working already on two dockets bonfire immunology and inflammation one for cancer and.
50 50.
Strategy better maybe other partnerships following basically sort of a bolt.
Bolstering our concentrated immunology and inflammation field. So more updates are likely to come in the coming time and $10 $42 40, 60, a very rapidly progressing all with recruitment and different arms, but then 42 tenths for the section you will see data likely in the second half of this year for both Paul.
Hopefully, allowing us to move forward to late stage clinical development potentially even for boats.
By specific programs. So it continues to be very very.
And pressed by the profiles of boats.
And by specific antibodies, but we need more data also to have productive discussions with the regulators because ideally Peter you will first.
Share the data with the regulators already have feedback on the potential move to potential late stage development and then present the data at a medical conference with US a number of medical conferences in the second half of 'twenty three I think it would qualify for some of these data sets are.
Multiple.
Data have been worked on for 10 42, we are working on frontline melanoma lung cancer head and neck cancer and pancreatic cancer.
Added together with Tampa, Opdivo, plus chemo, depending on what the standard of care is.
You will probably not see all of the cohorts. This year some of the costs will likely come next year cause some more quickly than autos.
And generating more robust data sets.
And for 10 46, VF also multiple cohorts, we are recruiting as we speak.
And I can tell you with positive data in several of the cohorts, but not all of these data are likely to become available. This year, Peter Youll, probably do that once we have enough data to allow us to draw a conclusion on potential next steps in those lines of treatment and dose cancels.
We are getting more and more enthusiastic about these programs and.
I think the second half of this year will be the beginning of a data rich year for these for these programs.
That's great. Thank you.
Thanks Peter.
Thank you we will take our next question.
Your next question comes from the line of Emily Field. Please go ahead. Your line is open.
Yeah.
Hi, Thanks for taking my question maybe.
Maybe just some logistical questions around <unk>.
Approval on May 21st.
And how quickly after that do you expect to be launching.
And then.
When do you imagine that you would start.
Closing revenue or kind of early launch metrics.
Hopefully an approval.
Then.
Another question on the <unk> partnership.
It sounds like that that sort of could produce either immunology targeting assets or oncology targeting assets is that the right way to think about it this morning guys.
Binding complementary technologies or should we think about this really as geared towards producing.
Thank you.
Thanks, Thanks, Anthony for the questions.
We hope that we actually get the approval from the U S authorities quite quickly and hopefully at the latest by Meda twenty-first thesis and the weekends.
Hopefully before that so and what I understand from the team is that we are actually ready to launch very very quickly. After we get our potential approval almost ready to go but of course it depends on on how ready we are based on the feedback on the on the package inserts are quickly beacon lawsuits that could be likely bid in a matter of weeks if not.
It's shorter.
Stance.
The revenue reporting.
I think we will get some some color I think in Q2 hopefully.
On revenue and I don't know, whether how our details we will do the reporting was we'll definitely give you color Emily on the hallway. The launch initial launch is going to there's a lot of positive feedback from the from the hospitals and from the doctors and we are already in discussions yet.
Health care providers.
On the positioning of the Toyota and on the need for that medicine.
For some time, so I think there's a pretty good feeling for what the level of enthusiasm, but I think we will probably in the second half of this year start to give some sort of detailed color on the launch under the assumption that the products will be approved in the United States and our generics. This is basically all about combining.
The seats, our proprietary antibody technology. So it's a non overlapping they're complementary between both companies and then to get to work on part face.
It could actually.
Until boats immunology targets as well as oncology targets and we actually started already Emily on Laurence oncology and immunology to talk on as we speak so I think it will treat both pipelines for both the cancer and the <unk>.
Immunology and inflammation.
Franchise for both companies and this is a true 50 50 of them would.
Equally share the expenses and upsides from these potential products that we already having broken on concrete programs as we speak.
And.
I think there's great complementarity VF of course, a lot more cancer models and cancer expertise based on <unk> track record up to now and organics has very very good to immunology.
Expertise in models already operational so this will actually accelerate I think can synergize the activities already ongoing a new activity for both companies. So we are very excited.
Only about this strategic partnership I think theres, a very good alignment in the scientific focus.
And so I think this bodes scribes also the future.
Thank you.
Thank you we will take our next question.
Your next question comes from the line of Walter. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my questions.
Yes, I wanted to just maybe touch on the question on <unk> just want to clarify something you said you already have one oncology asset.
You're sort of working on right now if this goes into a full fruition and maybe the market is there is there a scenario that our Jacksonville actually act on that and co promote this product with you given that they don't really have much of an oncology franchise.
And then one back up on the question on 10, 42, and $10 six and make sure I heard this right did you say that by the end of the year that.
You are optimistic that the path forward for both dose assets to go forward just wanted to make sure I heard that right because I think there was some understanding that it might have been one or the other.
Just want to clarify that too thank you.
Alright.
That's very nice questions. Thank you very much now let me start with your Genex a partnership we exited have very well defined who will take the lead of its programs and very likely for.
For our cancer products, we will definitely share the upside to us ticker epogen will likely be the.
Leading the commercialization, but he auto party. So our Jackson. This case can kokomo for sure and the same for immunology and inflammation, it's very likely that said that initially organics will lead the <unk>.
The commercialization of <unk> in that area and immunology area, but gentlemen would be entitled to co promote in a 50 50 basis. So it would be actually for both disease areas of both companies, but the leads will likely be.
Language, one of the parties and it has been very clearly defined in the agreement here, so but with both companies have the option to actually sort of a scale up and commercialization.
Andy disease area, very clearly not very active in that.
As it relates to 10 42, and <unk> 46, we hope that at least one of those programs can be moved to late stage clinical development, if not boats and what are set and I am I answer too I believe <unk> is that both of the programs are doing very well and of course, we need more data and as I already explained before.
Data is not only response rate is also depth of response and duration.
The various cohorts for both of the bi specific approaches but also good.
And so it actually bodes would move forward to our late stage clinical development based on data, but it's entirely data cliff in Africa, So well, let the data speak for itself.
And then take a rational decisions.
Also potentially after we already have shared the data with the regulator.
And I'll have some feedback on potential next steps.
Great. Thanks, so much better clarity yet.
Alright, you're welcome.
Thank you we will take our next question.
Your next question comes from the line of Matthew. Please go ahead. Your line is open.
Good afternoon. Thank you for taking my questions. One on <unk>, just curious how much more data you would want to see in head and neck to make a decision on moving that forward and the rationale for a different dose and head and neck versus cervical is that exposure or safety related and then kind of lastly, if the tender.
Sejant acquisition make it a little bit more difficult to cover these joint decisions.
That development near term.
So thank you very much for the questions two questions basically TAFE deck.
Data is very very encouraging its early data in head and neck in second line plus our head and neck. We by this time, we already have more data and I think that pattern is entirely consistent with what we presented recently.
We will actually collect a bit more data and then decide on next steps together with CGM.
We monitor the frequency of dosing is actually a bit higher.
He has done in the labels.
Dosing for cervical cancer and that has exited to get actually.
A higher amount of the of the medicine and the patients.
More effectively but still acceptable safety profile.
So we're very encouraged by this data.
And we think that we actually will collect in the coming months enough data to allow us to make a rationalization on next steps and reaffirmed plans, but that together with CGM.
I can also tell you is that we heard from season by this time that.
Potential acquire Faisal.
<unk> is also very excited about the data in the meantime, I think we have already spoken with some of the colleagues from <unk> from Pfizer and assuming that that.
That said that transaction goes through I think that actually are.
I think there was a very very good.
2000, and Fortis that can move to the next stages in the second solid cancer outside of cervical cancer and then in the second half of this year. We also hope to see frontline data in cervical cancer and in combinations and triplet.
Regimens, but also there I think the data shapes up very nicely, so I think that.
Hopefully bits of it <unk>.
<unk> of its season.
Ultrashape Youll actually more not only to second line plus adding that council.
In the course of this year, but potentially also to first line cervical cancer later on perhaps even first line head and neck cancer.
Pittsburgh from that so we are actually very encouraged by the profile of the of the medicine is very very potent and very manage it very well managed manageable safety.
I believe that.
That said, we have a good chance of creating a medicine, that's more impactful to our Madison here with just back in the coming time excision and also with the potential new one also of the of the assets from <unk> from the U S perspective.
Thank you we will take our next question.
Okay.
Your next question comes from the line of James Gordon. Please go ahead. Your line is open.
Hello, James Corden at JP Morgan, Thanks for taking the questions two questions. Please.
What was it about CD 38 and competition. So can you just remind us how much of those sales are still coming from use in refractory patients and I ask because some people have been a bit worried about COVID-19 <unk> competition do you think of it could have any impact on <unk> in the next couple of years as it moves into earlier treatment lines and assuming we do get competition in the frontline potentially around 2027.
How much of a headwind do you think that would be given that there were some manufacturing issues and administration issues. So how much of a threat.
Another part of that question also just through a new therapies coming along in multiple myeloma, including car T. He didn't that does mean J&J or any less likely to want to go for hexcel DCD 38, if there's other things like car T that maybe look more promising.
And then the second question was on M&A.
In terms of the inorganic and Dealmaking do you have what you need in house to do you own a D. C. Because I know you did a deal there or might you actually hunt for getting a linker and payload adcs might be where you want to expand into and a final clarification just on dealmaking.
Done intensive immunology in terms of looking for a larger partner could you also as well as our genetics trying doing immunology deal with a large pharma company.
Thanks, James So I think these guys are more than two questions for sure.
Let me try to.
Let me try to go off of that and all of US at all so first Atlanta or.
Our selection CD 38 competition.
What I clearly see is that actually.
Maybe I should go first over the Brent It back data because you asked about our base.
Basically.
Second line.
Overall in the U S. In March there was 40% of the patients are treated with <unk>.
But 39% of the new patient starts in the frontline 36% of the patients are getting treated with the daas that extra 39% of the new patient starts in the second line at 53% of the patients in the same 53% in the.
In the third line setting so theres still a lot of usage.
And in combination.
And what I understand is that actually doesn't exist the perfect combination.
Not only for the bi specifics like <unk>.
<unk> now take violet and potentially soon talk create them up.
Also for the potential combination of it with car T and Youngstown is already having a phase III trials combining.
Car T with das.
So I don't think that actually.
That there will be a lot of competition for the position of our CD 30, H and then a question for you or Cisco with Johnson be interested in extra body CD 38, I think so because.
Several reasons one is if extra body CD 38 would be much smaller bolt ons and.
In the clinic than then.
<unk> that could be a fantastic next generation combination partner for all of these although our medicines in multiple myeloma and also the context of Iowa legislation and complexity from that perspective, it could be very smartphone for your answer to actually ships at some point also explore a next generation.
<unk> CD 38 targeted medicine, so I think the interest level should go up and not go down.
We are now doing a head to head trial against <unk>.
As of year reflective in the Q1 repo James So I think of it more data next year I think the interest level should potentially go up rather than go down and we're not that worried about competition. So docile exiting conflicts has.
So onto places of core therapy, as a backbone therapy in multiple myeloma and not only that.
The current agents that have activity amidst an proteasome inhibitors, but also with the bi specifics the new bi specifics.
And potentially even with car T.
Then your second question as it relates to M&A.
<unk> actually having a lot deals in place for Adcs.
And reflect a several actually not only vorhauer apps like <unk> and <unk>. We also work together with IFC in the ADC field, but also.
We actually also have access to immune activator feed the bolsa therapeutics interaction and actually a number of other deals have been done in the ADC field. This we have not even inflect up perfectly because they were early stage deals on building blocks and components, we need for a full building.
<unk> next generation antibody therapeutic with Adcs are a very very.
A significant part already of our preclinical pipeline James so potentially we could go broader.
Because we like Adcs I just you just heard my enthusiasm about <unk>.
Total off of Dalton ADC together with CGM, It is doing better and better and this will become a very meaningful medicine, we believe not only for cervical cancer, but also for other solid tumors in the future that we see actually a lot of potential for Adcs and we already have a fair number and all of that.
And our preclinical pipeline and some of them will likely move to the clinic in the.
In the coming time and your third question is about our immunology and inflammation potentially deals with large cap.
That would be possible I think there is a lot of interest for our technology platforms. I mean that is one of the reasons that we move into <unk>.
Immunology and inflammation. So we believe that by having access to our proprietary antibody technology platforms. James we can actually make much better therapeutics for immunology and inflammation that equivalent generation also of naked antibody approaches this already make a big impact in some of these areas to think about the TNF Alpha blocker Sal <unk>.
<unk> blockers IL 23, the targeted antibody therapeutics, we believe that by having smart use of our proprietary technology blocks, what we can actually make much much better targeted medicines for immunology and inflammation.
The thesis.
I can tell you that there's a lot of interest from also from large cap pharma and working with us in.
In these areas, but today of course, the pitfalls that we are not going to do any deals unless we actually can hold onto 50% product ownership to react if not more James said that is going to be more difficult and challenging we believe for the large cap pharma because they would likely.
Like to own more of the of the of the products that we are willing to give that to them. So in that context, I think it is actually likely that you'll see more deals or more activity from Jeb Bachmann with box even in the M&A field.
But not.
Not necessarily with large cap pharma, because they are likely not going to be very enthusiastic of giving up 50% of the upsides or more to a biotech company that times are changing I think we will see more activity in this area. We're very enthusiastic of salt snow more robustly marching into the human honestly.
Inflammation therapeutic area.
More to come in the future James Thats, probably where I want to leave it at this point.
Thank you.
Thank you we will take our next question.
And the question comes from the line of P. Ticker Tel. Please go ahead. Your line is open.
Yes. Thank you figured out 52 questions. Please first with <unk>.
Just with the <unk> approval now in frontline <unk>.
Done and dusted.
Could you remind us.
How quickly do you intend to initiate frontline <unk> study with delivery and Pepco. That's question number one and then question number two.
Honestly I think I know the answer, but just with the cash flow growing of a bigger.
Is there a point in time going forward is there a tipping point, where there'll be a change in your capital allocation priorities.
Or do we should.
Should we just assume that you continue following up the cash so if it gives you full flexibility to follow the science.
And of course thinking into phase III in EPS wanted to know whether there's a tipping point, where you would perhaps consider.
The capital allocation priorities. Thank you.
Great. Thanks, Peter for the two questions I can tell you that we are planning a number of online studies as we speak.
And we will absolutely detailed them at a point at.
We get regulatory feedback so that we can initiate dose study center and that actually is.
Also not already.
Auto antibodies or antibody.
Click on <unk>, but also small molecules.
And even chemo and some some emphasis so they know that's in the <unk> T cell lymphoma, we already have the R. Chop combination with <unk> ongoing and recruiting as we speak.
There will be more frontline studies, we will give you further updates once we get feedback from the regulators on the on the on the combinations in the in the exact way you want to combine a bit of clarity.
Clinical programs for <unk> to quite a bit broader in the coming time. So then.
Handing over to Anthony for the second question.
Yes, Thanks Pete.
To be clear our capital allocation priorities absolute remain unchanged as you highlighted as we continue on this.
The growth trajectory and looking at the the really exciting growth opportunities that we have we think having that full flexibility of our balance sheet that strong balance sheet to be absolutely essential to make sure. We have the capital to invest in all of the exciting organic opportunities and as John highlighted if the right opportunity presents itself from a BD and el perspective, or otherwise that we have.
That balance sheet and deploy that capital appropriately so the headline message Pete to answer your question directly is that our capital allocation priorities remain unchanged and again that balance sheet strength is going to be important as we continue to build out our business on multiple fronts for the next couple of years and potentially beyond.
Thank you very clear thank you.
Thanks Pete.
Thank you we will take our next question.
The next question comes from the line of Alan Weber. Please go ahead. Your line is open.
Hi, This is gino on for year round going back to Gen. Three on one floor that wanting to be 38 can you give us any more details on the trial designs, Jeff how many patients you have in your head to head and other arms for the trial and then also what you can already outperformed benchmarks to move that program right now I've got a follow up call.
Second question going back to Jan one or two in one of my stock given that you think that there is a possibility for advancing both Stephen to late stage clinical have you thought about how you want to position. These two assets relative to each other or perhaps what indications are setting.
We'd be marching it for one versus the other thank you.
Okay. Thank you for the question so with extra bonus CD 38, or 30 14.
They have to have to say it says two two arms.
She is 38, the east collapsed refractory multiple myeloma.
We haven't specified the size of the of the arms, but we hope that we actually can recruit them boats. This year and actually recruitment is going well at this at this moment and you'll hear next year, the clinical data very likely or solve that.
I have to ask on the textbook CD 38.
Then second question as it relates to 10 $42 46 to 412 on VB targeted by specifics we.
We believe that we can actually position them differently in different solid tumors in different lines of treatments.
As you know we are testing 10, 40 to inform line melanoma frontline lung cancer phone line head and neck pancreatic at this moment you have owned machines few patients data and had a neck.
But very likely 10, 42 will be positions in the frontline and frontline area for one or more of these solid tumors and then 46 I think the most likely is that we will actually go initially for lung cancer non small cell lung carcinoma collapsed the factory after checkpoint inhibitor.
For that.
Once we have the most impressive data theyre up to now, but there's also other cancers. This year, if not yet specified services very good responses for 10 46. So we have no worries about the positioning of these two bi specifics we'd take the deal they will be positioned in the ads and different tumors in different lines.
Lines of treatments multi.
More to come this year.
Great. Thanks, so much.
Thank you.
Thank you we will take our next question.
And the question comes from the line of John <unk>. Please go ahead. Your line is open.
Hi.
Thanks for taking my questions first one just on Opex and could you just help us think about kind of phasing.
Through 2023, and if there could be potentially a peak quarter through the year.
And then secondly, just on Dawson and could you provide any color.
Yeah on kind of what proportion of revenues.
<unk> in Q1, and how you see that progressing through the course of the year. Thank you.
Thanks, John I will hand over both questions to Anthony Anthony Please.
Yeah sure sure thing I mean, maybe it's worth stepping back and looking at our overall investment profile, particularly the.
Yeah.
The drivers as we sort of thought about transitioning from 22 2022 to 2023.
I highlighted back in February four key areas, where we're really looking to deploy that capital and what was the drivers of the increase in opex year over year. As a reminder, those four areas number one was the portfolio advancement.
That was making up around $1 3 billion kroner or the increase on a year over year basis that our guidance mid point.
We then had the further build out in market build for U S and Japan of around 400 million Kroner, then we had really investing and scaling up our world class discovery engine, including the investments to move into new therapeutic area of around $100 million and then finally in the enabling function some very important foundational investment.
And these functions to require to achieve the required scale. So these are the four areas that we highlighted as part of the the reasons behind the growth drivers.
Between 2022, and 2023 and I look at the results in Q1, so far that's exactly where that increase is as I look at the year over year figures as I sit here today that absolutely remains true now, particularly in your question on on phasing look this can be lumpy as a function of various <unk>.
Band CMC or manufacturing investments, so no explicit quarterly phasing guidance other than to reiterate our full year guidance and the overall range of $9 eight to $10 6 billion.
Billion kroner.
In terms of the sub Q.
In Q1.
Here are our commentary is gonna be very limited to just limited to the U S market and more recently, we've seen that in the high eighty's, where around 88% being sub Q now outside of the U S.
Our visibility is much more limited and they're not in a position really share that information what I can say is that in terms of the 88%.
That's in line with our overall thinking and projections for a year again, what I highlighted back in February when we gave our full year guidance as we're expecting to be on a full year basis globally in the 90% range.
Thanks Anthony.
I think we can go to the next speaker.
Next.
Question.
Having no further questions at this time, so I'd like to hand back for closing remarks.
Okay.
Thank you all for calling in today to discuss general financial results for the first quarter of 2023, if you have any additional questions. Please reach out to our Investor relations team.
We hope that you all stay safe keep optimistic and remain healthy and we very much look forward to speaking with you again soon.
This concludes today's conference call. Thank you for participating you may now disconnect.
Yeah.
[music].
Okay.