Q3 2023 Genmab A/S Earnings Call
Okay.
Hello, and welcome to adjourn mobster quota Twenty-twenty three financial results Conference call. As a reminder, this conference call is being recorded during this telephone conference you may be presented with forward looking statements that include words, such as believes anticipates plans.
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Now I'd like to hand, the call first I'll go to your first speaker today, John Thunder Winkle. Please go ahead.
Hello, and welcome to Jackups conference call to discuss our financial results for the period ending September 32023.
With me today to present. These results is our CFO Anthony Pagano for Q&A, we'll be joined by our Chief Development Officer, Kalinowski, Our Chief operating Officer Anthony Mancini.
Chief Medical Officer, Todd you Marty.
That's already such we will be making forward looking statements. So please keep that in mind as we go through this call.
During today's presentation, we will reference products being developed under some of our strategic collaborations.
This slide acknowledges those relationships.
So how much storm foundation is built on our consistent track record of success.
Near the end of the year, it's a good time to reflect on how far we have come as a company.
Even in the last 12 months.
You can tell two expand our pipeline with new R&D and new product candidates in the clinic.
It's a mature pipeline of new clinical trials and positive data readouts.
And very Excitingly now eight approved medicines that are followed by our innovations half of which are created a proprietary dual body technology.
I can read them up which we are co developing with that fee. It is also our first medicine to be approved for patients in territories outside the U S.
These advances are possible because we have a dedicated talent stoppable team at <unk>.
An international team that has grown to enable us to continue to evolve into a leading integrated biotech innovation powerhouse.
That's not our two recent key company events.
September was an exciting one for upgrade them up as we have not really received approvals in both Japan as Kelly and Europe are stuck Kelly.
Likely approval in the U S earlier in the year. These approvals are important milestones both for a patient that needs and for general pass a company.
The approval in Japan is especially significant as we are just not a commercial lead spot can be there.
He began growing our presence in Japan in 2019, So we would we would be ready for just such an opportunity.
So we are very pleased to be launching our own product there, especially their SAP Kelly is the first and only by specific antibody approved in Japan to treat adults with certain types of relapsed or refractory large b cell lymphoma, after two or more lines of systemic therapy.
And we are excited to note that in addition to the U S. Japan and Europe have create them up has now been approved in Canada and the U K.
I'm also happy to announce that once again, the broad potential of upgrade them up to become a core therapy for b cell malignancies will be on display at this year's Pistachios Ash conference at.
At the end of at the beginning of December.
We have had 15 total abstracts accepted for presentation at Ash, two of which are all presentations.
Of the accepted abstracts for there'll be initial disclosures of clinical data for our create them up including an oral presentation of data from the upcoming NFL five trial of our creative up in combination with Lenalidomide as treatment for patients with relapsed or refractory diffuse large cell b.
B cell lymphoma.
This data is further support for at Costco buying ability and highlight its potential to move into earlier lines of therapy.
Extra body sit at 38 will also be recognized at ash with a poster presentation of preliminary results from the expansion cohort at the recommended phase two dose of the ongoing phase one two trial.
We are actively enrolling at the head to head portion of the trial.
We are very encouraged by what we're seeing and I see such a previously we anticipate to have to have data in 2024.
If you look beyond our own pipeline and include all abstracts involving products that are powered by John Knox innovations. There are nearly 200 total abstracts accepted for presentation at this year's Ash meeting 36 of them oral presentations.
No I want to turn to some additional exciting updates on the progress of our maturity proprietary antibody product pipeline.
Okay.
First John 10 46.
It is clear the high bar that resets.
We are very pleased to share that we are now engaging with health authorities to determine next steps.
Previously we share data from the from an expansion cohort of patients with non small cell lung cancer, who failed prior checkpoint inhibitors. We saw encouraging single agent activities activity with responses are not durable.
Based on clinical and strong preclinical data that showed that the combination of Gen 10, 46, plus checkpoint inhibitor resulted in improved efficacy we embarked on a scientific question.
How to most optimally engaged for one will be activation with checkpoint inhibition.
The phase two study of Gen 10, 46, a combination of a Tam police them up in patients with PD Lone PD lone positive non small cell lung cancer, who fail standard of care therapy.
<unk> checkpoint inhibitor address this question.
And the emerging data from this study has provided us a clear answer.
So far the.
The data from this study indicates that we can combine these two mechanisms and that this leads to improved efficacy.
Based on this we believe there is a clear path forward and we are engaging with health authorities to determine next steps.
We look forward to sharing the relevant clinical data at a medical conference in the first half of 2024.
As a reminder, we are developing Gen 10, 46 with biotech.
Moving to <unk>.
We're very pleased that we along with our partner season presented a late breaking results from the innovative 301 trial of the sorts of adult and in a recurrent or metastatic cervical cancer during the presidential symposium of the ESMO Congress in Madrid in October.
This follows the announcement by us in Sika in September that the trial met its primary endpoint of overall survival.
As a reminder.
The results of this trial are intended to serve as both the pivotal confirmatory trial for <unk> accelerated approval in the U S as well as to support global regulatory applications.
Likewise, they are duck tape that is also clear the high bar that we set.
We are optimistic about the data we've seen and have enough cancer post standard of care have you been actively engaged with health authorities on next steps in this indication.
Moving to Gen $10 42.
Co developing with biotech.
And we remain very encouraged by the clinical efficacy data that we're seeing across several tumor or tumor types.
We are currently taking the learnings from Gen 10, 46 on how we can optimally dose schedule 10, Gen 10 42.
We need more time to do this so we now anticipate that we will that we will have the data we need to determine next steps for this program in the coming months.
Looking at some of our earlier stage programs.
A brief update on Gen 10, 47, or do a body CDP b seven H for.
We have now completed dose escalation in the phase one two trial and have transitions transitions to dose expansion.
This is an important step in progressing our CD three based bi specific platform.
Solid tumors.
Yeah, John 2017, or do about the CDT CD 30, a program that we announced last quarter has now started recruitment for a first in human clinical trial.
We're also very pleased to announce another R&D submission for 2023 jumped 10, 59 or dual body outcome timed for one program maybe.
The first preclinical disclosure for this program. This will further leverage our knowledge of <unk> will be also took place at ESMO and in October and MFS.
This bispecific antibody, which we are co developing with biotech has potential in solid tumors.
We anticipate that jumped $10 59 to enter the clinic in 2024.
Finally, as we work to progress these new and existing programs. We have also made the decision to cease development of Gen 3009, or <unk> 37.
Decision was made following its strategic evaluation of the program within the context of our entire portfolio and was not based on any safety or regulatory concerns.
Our goal of transforming the lives of patients is always at the center of all decisions and we look forward to continuing to create and develop truly differentiated antibody products.
The power of our innovation is reflected in programs that apply our duopoly technology. Two of these products are youngsters don't see and try both arms.
In August don't favor was approved in both the U S and Europe for relapsed or refractory multiple myeloma, making it the fourth approved dual body based bi specific antibody.
Also in August the answer submitted an S. BLA for high performance followed by a type two extension to the EMA in October.
Both of these submissions are based on the confirmatory phase III pop alone study.
So overall, you can see plenty of progress across our business with lots to be excited about as we look forwards.
And that's a good note on which to hand over to Anthony panel and he will take you through our financial.
Anthony the floor is yours.
Great. Thanks, John.
We continue to strengthen our foundation over the first nine months of the year.
Of course top of mind for everyone or the multiple regulatory approvals for <unk> Kenley.
And as we'll see our financials continue to be strong.
Recurring revenues grew by 22% on a reported basis.
And impressively, 30% on an operational basis.
This was principally driven by strong royalties from <unk>, along with significant growth from our other seven 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 we need to succeed.
So.
Let's look at those revenues and a bit more detail.
We continued to see strong performance for <unk> during the first nine months of the year.
As you can see in the chart overall.
Overall net sales grew by 22%.
That's net sales of nearly seven $2 billion.
This translates to over 8 billion kroner and royalty revenue.
This growth was driven by continued share gains and strong performance in the frontline setting.
So <unk> remains a key driver of our revenue.
We grew total revenue to almost $11 8 billion kroner in the first nine months of the year.
And as I've already highlighted that included a 22% increase in our recurring revenue.
And to be clear that's on a reported basis.
Excluding some FX headwinds.
Revenues grew by 30% on an operational basis.
Last year's results make for a somewhat tough comparator as we saw pretty significant FX tailwind, particularly for our royalty revenue.
As a reminder, under our <unk> agreement for purposes of calculating our royalties.
Sales outside the United States are translated to U S dollars at a specified annual hedged foreign exchange rate.
Operational growth in the first nine months of this year continued to be strong.
Driven by higher <unk> royalties as well as royalties from our other products and its really illustrates the power of our recurring revenue.
We also recognized the first full quarter of sales for <unk> in Q3.
And we're very pleased with how the launch is progressing so far.
With around $22 million and net sales for the quarter and 28 million year to date.
Overall, our strong recurring revenue growth enables continued highly focused investment as you can see on the next slide.
Back in February we were very clear that we will continue to invest to capture the opportunities we see in front of us.
And that's exactly what we've done.
With total Opex up 42% in the first nine months of the year.
At that time back in February.
Outlined our top four investment priorities.
First securing a successful <unk> launch by investing in our two key markets.
The United States and Japan.
Second continuing to advance our pipeline.
Here the lion's share of our investment is being directed to our most advanced programs, including our kinley tip that $10 46, and $2 42, which are all exciting opportunities for us.
Third investing in our World class discovery engine, including focused investments to expand our therapeutic focus so include ini.
And fourth foundational investments in enabling functions to achieve required scale.
As you can see our investments continue to be fully aligned with these priorities and as always we continue to focus on long term value creation.
So with that let's now take a look.
At our financials as a whole.
Here, you can see our summary P&L.
Revenue came in at close to 11 8 billion kroner.
Up 26% on last year.
As mentioned that is negatively impacted by FX headwinds.
Total expenses were around 8 billion with 71% being R&D and 29% SG&A.
And even with the increased investment and significant FX headwinds, we're still delivering around $3 7 billion kroner of operating profit.
Moving now to our net financial items.
Here, you have a gain of over $1 billion so far in 2023.
This is driven by an increase in interest income due to higher effective interest rates as well as the strengthening of U S dollar against the Danish kroner in the first nine months of the year.
Then we have tax expense of about $1 billion, which equates to an effective tax rate of 21, 2%.
And that brings us to a net profit of over $3 7 billion kroner.
As you can see.
Continued strong underlying financial performance.
With that let's take a minute to revisit our robust financial framework.
First off our revenue profile on the left.
With the approval of <unk> in May and Toby in August there are now a product's on the market that are generating recurring revenues for us and we expect significant cash inflows for the years to come.
Moving to the right.
We remain focused on our investments as we evolve our organization for continued success.
At the top of the list is accelerating and expanding at Corp.
But that's just one of the exciting opportunities that provide us with a compelling rationale for increasing our investment.
As we've 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 take a look at our guidance.
Okay.
As you can see we are adjusting our 2023 financial guidance.
In summary, we are lifting the bottom end of our revenue and Opex ranges.
This is due to current year to date performance and the strong U S dollar.
This of course has the effect of tightening the ranges across the board.
We now expect our revenue to be in a range of 15, 9% to $16 5 billion kroner.
One of the drivers of this increase is higher <unk> royalties. So we've increased our guidance here to 11, three to 11 5 billion.
Turning to our investments.
As always we remain focused on executing against our strategy and key priorities and at the same time, creating long term value.
So we're investing to capture the significant growth opportunities in front of us.
And here, we're increasing the bottom end of our Opex guidance to a range of $10 six to $10 9 billion kroner.
This was primarily related to increased and accelerated investment in our career to map clinical trials and the progression of other pipeline products, including $10 46 and tape deck.
Putting all this together we are on track to deliver another year of substantial operating profit and a range of $4 eight to nearly $5 8 billion kroner.
As a reminder, note that these projections are based on an assumed U S dollar Danish kroner exchange rate of six eight.
And finally to give you a bit more color on FX every 10 basis point move in the exchange rate relative to our guidance rate is worth around 80 million kroner in operating income for the balance of the year.
Now before I wrap up I do want to take a moment to zoom out a bit and take a look at a very high quality of our revenue profile and the power of our discovery engine. We believe this powerful combination sets us up very well for the long term.
First let's think about the eight approved medicines you can see in the box in the top right hand side of the page.
That are powered by our innovation and technology and that are currently generating significant revenues for us.
The top three are already blockbusters.
The remaining five all have meaningful growth profiles and have the potential to become blockbusters.
I can say this with confidence because we have the clinical development plans and with our partners, we're investing to make this happen.
The six royalty generating products are marketed by pharma and biotech powerhouses, J&J Novartis and Amgen.
And our two proprietary products are co marketed with Abbvie and CE Gen and moving forward, we anticipate Pfizer.
So we're confident we will realize their potential.
Now, let me turn to the power of our discovery engine.
Of around the 40 programs, we've moved into the clinic eight are already proved and.
19 are currently in active clinical development.
That's a pretty strong hit rate and it's no accident.
We understood very earlier, we understood very early on the competitive advantage that our deep antibody science and focused discovery engine could provide.
So we've invested more in discovery to increase the number and quality of our product candidates.
This includes investment into our proprietary technology platforms.
We believe that these diverse tech platforms are key to our success.
They allow us to select the most appropriate modality from our toolbox to tackle a specific disease target.
We have four proprietary tech platforms, including dual body and hence the body and we also have access to a suite of other technologies through our partners.
This unique position allows us to bring only the products with the best potential through to development.
It's our deep insight into antibodies and our proprietary platforms that have helped us discover.
Build or design the eight products that are currently approved.
If all eight currently approved products were wholly owned by Genmab, We would have the potential to generate estimated revenue here in 2023 of over $14 billion.
As we move forward to our model in the future, where we have 100% ownership of our products. We believe we can continue this track record of success and further solidify our position as an innovative biotech powerhouse.
Now, it's a really wrap up let me provide a few closing remarks.
In summary, we've had a.
Solid first nine months of 2023.
We've created growing recurring revenue streams, including now two of our own products on the market.
And that gives us a strong backbone a 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 us.
And on that note I'm going to hand, you back over to Jan.
Thanks, Anthony we continue to work towards our goals for the year and are especially excited about the multiple approvals for a greater mop. The positive data 40 shows about for Dalton and for the next steps in the development of our earlier stage product pipeline.
I'm also pleased to announce that we will hold our annual R&D update at Ash data review.
Event on December 12, two.
To ensure the event is accessible to as many people as possible. This year's presentation will be fully virtual <unk>.
Details are available on our website and we look forward to a likely event.
So that answer presentation of general financial results for the first nine months of 2023, operator, Please open the call for questions.
Thank you as a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced did withdraw your question. Please press star one on one again.
We will now take the first question.
Coming from the line of Vikram for Rohit from Morgan Stanley. Please go ahead.
Great. Thank you for taking our questions we are too.
First on June 32014, so as you mentioned there was some clinical data that was recently featured for this program through abstracts that were posted for Ash and we were wondering what you think are some of the appropriate benchmark to compare against here on both efficacy and safety. It really framed these initial results and secondly.
Just to clarify for the R&D update youll be hosting alongside Ash should we expect to see any updates for Gen 10, 42, Virgin 10, 46% at this event. Thank you.
Thanks for the questions I will hand over the first one to two <unk> and can give you further perspective on the benchmarks, which you need to think about for the extra body CD 38.
Program and then the question on <unk> 40 to <unk> 46 to give a bit more color around and.
I will hand, it over to units, so, but let's start with tie for the January 2014 diet, yes.
Yes. Thank you for the question so.
Yet in.
Principal of course, and a $4 two a month.
Benchmark would be the 501 study that is serious study and then also for the subcutaneous administration the Columbus study.
Gives you a range of efficacy of somewhere between 30% to 40% with.
19%.
To follow up a little bit more than 90% of the patients, having a btu BGP or better.
But it's also important to understand that this data was generated in a setting with completely different treatment paradigms.
And.
The data in today's world with patients that are more heavily treated with other mechanisms may look differently, probably less favorable that's why there is a head to head so annualized data set that we're generating but broadly speaking thats the efficacy benchmark and I think it's important as you think about comparison from a legacy product is not only.
Plus also the depth of response is going to be very important.
Certainly for us as we look at the data that we have at all and the same with safety and I think that safety data issue of course is like small datasets in a different environment.
There are some some.
Factors that are different than today. So that's for example, one of the patients that had a great classic went towards the patient cohort that was certainly not a virus existing at the time when the.
Reference data sets that generated some eight years ago.
So again, they I would say the comparison will come from the from the randomized asset which is why we're doing randomized study.
Sure.
Thanks, Ty and maybe over the unit, maybe a bit more color on 10, 42 1046 unit at Ash.
Yes, Thank you yeah.
Yeah.
46, I look forward to share today that of Paddy of board.
Scientific Congress, that's a little and we are looking for opportunities with and I am the first quarter or second Florida that next year. So this is why the date that the actual data will be presented we expect at ash they'll give you a little bit more color Directionally why were going bust.
Let's discuss several times you know at <unk> 2021 we presented interesting Dave that of responders in non small cell lung cancer. After failing the current standard of care, which encompass chemo and even when I played at bay and responses like elevate and outdoor travel interestingly enough when.
We analyzed the clinical data that we showed that these are the spun theirs were concentrated in the PDL one positive and we also so that is at this point, there's a lot of most of the patients that received a checkpoint inhibitor in the last eight months.
On the Dallas data points and the strong preclinical synergy between Pampa at 10 46, we design the all four study.
Which dose is hard.
Allow us to discuss include general meeting with health authorities and next steps. So we will see where we are but we did actually add.
2%.
This is down 46042.
Very encouraged with what we continue to see not just align with therefore ASP on the text that we presented there and let's say <unk> in head and neck, but in other tumor types. We are also getting the bad things from <unk> 46 in order to understand better how to dose of <unk>.
For one BB engagement. So we we may give more color, but we need to understand where we are to see two towards equity and it will be more directionally, because we usually present day that in scientific fora before we share with investors on Atlantis, but.
That would've asked to get extra navigate arcata.
Thanks, Thanks here that think of them as you can hear we are literally steaming about all these three programs. So we're very excited and.
And I think when you use the coming months to further.
Further position the molecules for next steps and more to come from Junge up in the coming months for sure.
Okay. Thank you.
Thanks, Sophie Com.
Q.
We will now take the next question.
From the line of Jonathan Chang from Leerink. Please go ahead.
Hi, guys. Thanks for taking my questions. First question can you discuss the progress made with the early at Kelly launch what gives you confidence that it can be it can become the market leader in the CD 20 by CD three class.
And then second question on Gen 10, 46, what could a passport and post Io lung cancer look like.
Discuss the opportunity for this program in endometrial cancer.
Thanks, Jonathan two excellent questions. The first one I will hand over to Anthony Mancini, who will be delighted to speak about.
Kenley launch and next steps and then 10 46, maybe you can give a bit more color on the both checkpoint inhibitor in lung cancer landscape and the way to develop the potentially developed a molecule Anthony and Sidney.
Thanks, Thanks, John and thanks, Jonathan for the for the question.
As was covered earlier, we're seeing a really healthy uptake of <unk> and really strong execution of our launch plans in the first quarter and we're also highly encouraged.
The launch momentum and overall positive feedback that we're getting.
From our customers that are using a camera in the third line plus the RBC offsetting our go to market approach really look to leverage our first mover advantage and the strong early uptake really is driven by a couple of factors that I think gives me confidence that we can continue that through the lifecycle first the solid execution.
And focus on key accounts.
And on key customers from our field based teams across medical affairs across the sales team across our alliance with Abbvie and of course, the market access team that really has yielded.
Strong customer engagement.
And accumulate early uptake and it has also resulted in rapid access so what we're seeing Jonathan is 99% of covered medical lives in the United States with functional access <unk> Kenley.
Which is very encouraging.
It's also.
It's also very clear that there is a high unmet need in later line <unk> Kenley is really filling the void, enabling an off the shelf.
To access the T cell engaging innovation across diverse sites of care.
We feel very good about being the first FDA approved.
T cell engaging bispecific antibody for the treatment of patients with third line <unk>, but we really understand it's an important starting point.
To build some to help accumulate become the core therapy across B cell malignancies. So overall were highly encouraged by the early response in the market carefully and so far uptake has gone better than expected.
Thanks, very much Anthony and Jonathan we intend to actually give further color on the complete development plan.
This year potentially at the post ash event, so you'll talk more about how to further build the <unk>.
Market in the in the landscape for use of our Kelly in the coming coming years now lets move to unit four giving a bit more color on the importance of the post checkpoint inhibitor lung cancer market, because we feel that thats, a very strongly growing market with a need for new medicines units.
Yeah.
Well now you know with a checkpoint inhibitor to move into the first line of single agents, if patients happy that one of about 50% or in combination with chemo for patients with lower expression of PDL one.
Huge unmet medical need for patients that fail.
Papandreou checkpoint inhibitors, and quinoa and what are the standard of care. Unfortunately is tax out there that drives <unk>.
Let's say benchmark barrier, but some 12% to 17%, 18% 20% of the mall.
Betty this matter whatever analysis and this segment is growing.
Now more and more patients will see its first line combinatorial treatment on either sequential.
And it is in these very sad thing, where do we come back tape that randomized Oh force daily.
Setting to the sport in catalysts and even for the sake of the single agent, which gives US a strong foundation for.
A phase III in this very sad thing. So we haven't quoted I talked about today that all of the California all of their science and this is why we are engaging with health authorities.
Coming weeks two to define bad there.
And we wish them all the way to find that that those plans.
Thanks, Thanks, Sheila so more to come in the coming weeks and months Jonathan for sure.
Understood. Thank you.
Thank you.
Thank you.
We will now take the next question.
From the line of Michael Schmidt from Guggenheim Partners. Please go ahead.
Hi, This is Paul on for Michael Thanks for taking our question.
First one is on the pivotal data for <unk> and Follicular lymphoma.
How are you thinking about the opportunity and differentiation from <unk> based on the emerging clinical profile and your conversations with physicians how much do you think that the evolving duration of response or possibly factor in how the two drugs our position and then my second question is sort of building off the prior one on Gen. 10, 46 can you sort of just.
Talk a little bit about your decision to initiate that phase II study for endometrial cancer, whether that was driven by emerging data in phase, one or perhaps non small cell lung cancer combo trial. Thank you.
Thanks, Paul the first question I think can be handled by by <unk> and then the second one maybe you can talk a bit about endometrial and the start of that trial of IV ourselves there.
Hi.
Yeah. Thank you for the question. So so as it relates to the data and silicon former.
You know, there's obviously some public release of all data top lines, but you will see more data and I think he had the most important part will be to pay attention to the optimized schedule that will be presented at ash and then the safety profile of Apple and the optimized setting.
I think very clearly show that Echo then has a profile both on an efficacy, but also from a safety profile that is extremely competitive.
With our best in class safety and best in class efficacy.
Even in Follicular lymphoma duration of responses are sticky once to some degree it's a question a follow up obviously.
Most of this swap has significantly longer follow up echo because they started about three years before us.
And so that is also reflected in the duration of response and then there is other parts of travel that compound is to some degree.
The on the corn basis, certainly played a role in that but even with that I think there.
There will be some data in the future and contingency showing that patients who are and thats basically the truism about this mechanism patients who achieved a deep response, particularly ICR.
<unk>.
Staying very very long.
In the SCR.
In some cases, we will we'll see if that is actually.
Refection of Big words, and canceled let it heal because when we ask patients noncore.
We're approximating five years.
NCR.
So broadly speaking I would say pay attention to.
The disclosure today that will be shared at ash and also the.
The updated data in the optimization dataset.
Thanks, Ty let's move to Gen 10, 46 unit, maybe talk a bit about rationale of Hydrometra cancer why did we start that.
That study et cetera.
Yeah. Thank you so much so we start the study and in the military because it is a tumor type with four one BV is constitute over.
<unk> Express and is a sad thing to test hypothesis beef cut out for.
What we did.
Oh I'd have done in Florida, which I already alluded to so this is the reason to Tiger endometrial cancer now we understand that there are no material Kenneth Edison another single disease, you'll have the MSA high under MSA low.
Mr. D that we hadn't gathering data as we speak.
On the day that we plan to tackle these different subtypes.
From there and so it's a very preliminary to say what is the path for a while because we had a gathering data in this space to put O&M.
Uh huh.
Debate that and where that could be a path for a while.
Yeah.
As another point to two to flag is endometrial cancer in the phase one we saw long do whatever risk policies with down 46, as a single agent, which again is still investigate and more so again, we expect to have this data in coming months.
Yes.
That was to make decisions.
Excellent. Thank you very much thanks, Paul for the question.
Thank you.
We will now take the next question.
From the line of Starwood.
Starwood from BMO. Please go ahead.
Great. Thanks for taking the question first one on sort of Gen $2 46 again.
You have data next next year sort of at a medical meeting.
How are you thinking about sort of the target relative to other IL <unk>.
Agents that we've seen now being combined with PD, one like what we're seeing sort of from the <unk> class just how you see the PD lone for one BB mechanism relative to that and then.
Maybe quickly on the <unk> CD 38, just if you could sort of remind us sort of sort of the opt in rights for J&J with respect to that program. Just so that we could think a little bit about more or less win win that could be triggered potentially by J&J. Thank you.
Thanks for the questions. The first one I will hand over to <unk> to talk a bit about four one repeat targeting versus stature that although.
Immune checkpoint targets and I can take the actual for the CD 38 question myself units why don't you go ahead.
Yes, so I first start to say that there is no precedent of assessing.
As a single agent.
Why do the first part is less policies in patients that failed checkpoint inhibition with PD one in there.
Right.
So if you think about it they are way of <unk> or other targets there that points of eight in patients that failed checkpoint inhibitory is our zero or in a handful. So we the.
PDL one for one BP, we showed in the first cohort that in all of that with less policies.
That was 17% and we enroll all cabinets, Dan we presented in <unk> 'twenty one when we started when did these population based on the PDL. One presents the response rate was high yeah.
So whatever however, we had these preclinical data that show the synergy of the pvt.
Yeah.
And the Dcs what's around.
So do they all fly so too to reinforce the fact that the ideal single agent activity plus I.
Almost unheard of but we saw it with them for the CX <unk> two.
Alright, Okay, David would have EVP.
The trend in mistaken, though they're right next step to combine with Enbrel.
The next step and this is what we have done which Atlas that are emerging and we wish Ed. So there's no precedent of ideal ideal in a post.
P. J, it's our all in all Boeing to first line in PD one high this is where they they.
So that is the stronger activity so even in the hypothetical case that P. J I'd go to their first line it won't change the huge unmet medical needs in a post I a.
Or small cell lung cancer in particular.
Thank you that's I think that's very clear.
Let me take the <unk> 38 opt in rights for J&J. They have the right to to take a decision, yes, or no faulting and so after we give them the data from the dose escalation dose expansion data, which we already have and they have to have data against the shipyard Dara that we are gathering now very very rare.
We believe that we have to have that data next year, and then basically hand over that data package to J&J and then they have only a very limited time to say, yes or no on the <unk>.
<unk>, they're going to work to develop commit to develop that that molecule and any any.
Indication they want to with I think multiple myeloma is now the number one I think indication if I ask about the CD 38 definitely with the new data now from the expansion cohorts and then we looked at a whole another $50 million.
<unk> payments and they pay for all and we get a straight 20% royalty rather than 12% to 20% royalty until some point in 2031, where we go from 13% to 20% in a theater fashion. So so next year will be an important year. Because then we will hand over the Heathrow had data package on top of the.
Joseph.
Dose escalation in the dose expansion cohort data, which you already have in our hands and that will keep following that.
The data at Ash with Euro per center on a poster will be updated data from the abstract so please.
For that entire already.
If you some color on what to look for versus years ago Dara two monotherapy data.
But you can hear from the enthusiasm of the team here that we are really we can't rate there'll be on San Diego and present that data because we believe it's very very encouraging I think we should probably leave it at that actual for the for the time being renewed.
Thank you. Thank you for the additional color.
Alright, thank you.
Thank you.
We will now take the next question.
From the line of Sachin Jain from Bank of America. Please go ahead.
Hi, guys. Thanks, taking my questions just that move follow ons on the same topics if I may so first.
Firstly, just on the CD 38 grade five events.
For clarifying one of the two was <unk> was that.
The respiratory events and any color on the patient characteristics with CV events, just to get some color as to whether that was treatment related or not in your mind.
And then just to follow on on the Great Fives. The abstract was also you may cutoff have you seen any great following events since that May cutoff.
So that's on the Cds.
58 second topic is the 10 46, you said more color ash just to clarify we have met with the regulators by then.
So could you confirm your phase III program at the Ash event and then a follow on on your clear efficacy comments do I infer that there is a response rate above the 20% <unk> you referenced and then any color on the duration of response, you're seeing thank you.
Thanks sessions, and let's see what my colleagues are willing to to give you a information you tie can definitely comment further on the grade five event for <unk> 38, and I will ask you to think.
Think carefully about how to answer the question on the 10 46 in the ash.
This data is as it relates to clarity on a potential phase III.
Trial a seller.
Bar for four responses time, maybe you can start.
Yeah Susan.
I think earlier with.
One patient dose a patient who postulated to cover the other one was a cardiac event neither of the two events web in our adjustment in the adjustment of the investigators and the judgment of the DMC related to that.
So you see it today.
In these studies and if you look at the Columbus study that I referenced Saturday Youll see.
There's roughly like a 7% ish rate of grade five events on these trials patients passing away.
All kinds of <unk>.
I'm not always related to the drug so at this point, we don't really have.
And the assessment of the DMC safety signal with small patients.
In any way or shape, a phone seems to deviate for what is known for the class C 38 antibodies.
Hope that answers it.
Thanks, Ty and then use it on 10, 46% ash potential updates there are further clarity on the program.
Yes. So thank you for the question I think that we will try and do that externally to give you more color just to share. The design, we expect to have more certainty on that and this usually happens after discussions with health authorities. So we give you as much as we can add quite a decade.
Good on where we stand in that process.
As it related to the benchmark.
I alluded to that multiple data sets in this setting that unfortunately for a landfill because they haven't or they didnt <unk>, whereas scientific approach question by question to connect the dots and have the best potential hypotheses.
These allow us to wait a little bit to have not only or that or the air Bud duration, which is critical because.
I am too Evan is that right point.
In the phase III setting.
I mean, I want to reinforce that we will share as much as we can and whenever we can the commitment is there, but you know we had a balance of win decently things would happen.
Thanks, Sharon and thanks for the question Sir.
Thank you.
Thank you.
We will now take the next question.
From the line of cavalry 12 months from BTG. Please go ahead.
Yeah.
Thanks for taking my question.
First question as far as Jen <unk> can you provide any insight into your expectation for its efficacy in CD 38, pretreated patients given that previous studies have shown that these patients develop resistance via overexpression of complement inhibitory proteins.
Second question is for Ken Lee can you provide any color on your plans with molecular lymphoma and any timelines around that also can lead <unk>.
Especially from the safety standpoint are you planning to have some real world data collected that could further differentiate it from its competitors.
Thanks for the questions I think I will hand, the bolt Av to <unk> before <unk> stocks are already stacked.
In an earlier comment that we will and tend to actually describe the compound development plan for <unk> in more detail our updated map I should say in more detail at the post us semillon updates, but time, maybe you can give us a bit more color on the efficacy of the potential efficacy and CD 38 pre treated.
Ah patients.
Yes, Thank you and you're absolutely right.
There was a subgroup analysis work done on the combined dataset for serious and recycle one study that actually looked at the <unk>.
The impact of.
In those cases that are tumor treatment.
On the <unk>, 38, especially which actually gets kind of shredded auto surface. So to speak to a process called <unk> that tells US and then the application of complement individually proteins and that's absolutely correct.
So this is why the study that we're conducting especially AMC iterate naive patients had a comparison against us.
We have had.
Some signals of efficacy in the automotive exposed patients in the dose escalation with two patients who had a response.
But broadly speaking thats, not where were focusing right now because the focus is right now SME original agreement with Samsung to generate data that allows us frankly to elucidate what are the senior point mutation that is underlying ex amortization media has the impact that we had pre clinically C&I we believe.
We'll be seeing in the clinical data so far.
And then also I didn't hear the second part of the question was about positioning of Echo and.
Silicon the former so yes.
To some degree there is already a phase III in combination with the and then in the second line and we have talked about that we are actively working with abbvie on plans on that front line study so there will be.
Some years to come in the near future Medicine.
That is in Follicular lymphoma.
And then enter few such B cell lymphoma, there there are multiple datasets.
Two to generate data both to show also the.
The impact of echo him up.
In comparison to carts.
Alright, and driving home the point that that App.
Actually this this this modality that despite specific antibody the accessibility of it the ease of administration.
The safety of it.
I would say compare quite favorably.
Cart therapies in the real world data.
Hope that answers the question.
I think there was a good question caffery. Thank you very much for the questions.
Thank you.
Thank you.
We will now take our next question.
From the line of Michael <unk> from Nordea. Please go ahead.
Thank you very much just a few follow up follow up Christian especially to timing.
If you take a gen 10, 42 first just needs to understand so I think Judy said some some directional guidance also on 10 42, when do you expect to sort of have more clear data on $10 42, and also for some of the.
Essentially larger indications I think we all had expected to be around to the ESMO Io, but.
Is that also sort of then later in 2024.
Two <unk> <unk> 38.
There was a question earlier are unrelated to the J&J potential opt in timing wise.
Is it most realistic that you need to complete the head to head, which says October 'twenty follow on clinical trials that golf ball.
Could that happen sort of midway in that trial also maybe just to clarify thank you very much.
Thanks, Michael for the question. So I will Lee I will handover to unit for $2 42 to give you a bit further.
I think for timing when do we have the data in hand to be briefer than some of the geos, we actually have the data in the coming months, if not sooner that you can give you a bit further color Michael than facts about the CD 38 timing.
Timing of the potential opt.
Opt in for J&J I mean, they have the right to wait for all of the data from the head to head cohorts.
Michael I don't know, whether they they need though to make a long story short because we think the data is shaping up very nicely as you can see from the expansion cohort, but it's up to them. So it's very difficult to actually to give you an estimate of when of when J&J, we'd like to aten.
Because it is basically in their in their corner, but the full head to head data will likely come in the second half of 'twenty four not before that.
There'll be a lot of data already by that time in the first half first half or whether that's enough it's up to J&J, but maybe I can hand over the 10 42 timing question and some of the tumor cohorts to two units units.
Yeah. Thank you so as you know and Michael we are collecting data to assess the hypotheses that are checkpoint inhibition penumbra and.
At September 32, and this is part of that potentiate. It by the addition of chemotherapy and the creation of Immunogenic cell death. This is the basic hypothesis that guided us to collect two to address in different tumor types among them.
Neck.
Non small cell lung cancer squamous and non squamous mainly these hypotheses is the same so the datasets are complementary from one each other so the goal is still have it kind of it.
It grew the number of patients with some labor evergood IBD for more than one cohort because this would make the day that is stronger. So this is why there is no firm and Congress to when we are presenting at but I can tell you that enrollment is going.
Very well.
So it would be in 'twenty 'twenty four it depends on when the dam.
Abstract is closed close to submission and debate that we're having had to decide the venue. So I cannot provide you a firm date at this point.
Okay. Thank you.
Thanks, Michael.
Thank you.
We will not take the last question.
From the line of Emily field from Barclays. Please go ahead.
Great. Thank you so much for fitting me in I will ask a quick financial question.
I believe that.
For Opex going into 2024, I think consensus is modeling about half the growth rate of Opex.
For 2023, obviously, it's going to be off of a larger base for next year, but maybe Anthony if you have any comments on just how we should think about modeling opex going into 2024 before you officially guide for it.
Thanks, Emily for a question and Anthony will be delighted Anthony persona to answer a question on finances. So Anthony floor is yours.
Yeah. Thanks, Thanks, Emily and thanks John.
Youre right I mean of course, we will.
At the appropriate time in the year to take the time to really contextualize, our overall guidance, including our investment levels.
For you know, though.
Really what our message has been through consistently throughout 2023 about how we should think about our overall opex levels moving forward I will take the next minute or two to summarize that.
As always given our strong position, we're going to continue to invest in the significant growth opportunities in our focused and disciplined way, it's something that we do take very very seriously as I think about that investment profile moving forward, particularly as it relates to let's say call. It the transistor transition through 2023 to next.
In the midterm there are three drivers here now, particularly as it relates to R&D.
First <unk> R&D is still in growth mode. So I fully expect <unk> investment to go up as we add new phase III trials over the coming years and here, it's really important to remember that this is grounded in our conviction of <unk> potential to help a large number of people living with cancer and of course, we'll continue.
To be data driven and here I mean looking at the clinical data and the landscape and also resources and sizing our investment. According accordingly, given this potential very meaningful opportunity.
Second again still thinking about R&D and this is kind of a swing factor, which additional programs will transition to later stage development.
As a reminder, you heard about a lot about this today, we're doing some significant let's call. It phase two work for both CD 44, when BB and PDL 141, BB. During the course of 2023 and you just announced the emerging data from $10 46 leads us to believe there is a path forward here in terms of late stage development.
Also for <unk> based upon what you've heard today. We also believe that there is a path forward here, particularly in terms of expanded development into head and neck, which also we think warrants further late stage development now with that hopefully will come a larger revenue opportunities in the medium term sticking with R&D in the third factor, we're going to <unk>.
You need to invest and maximize the value of our current tax.
Tech platforms and here, we're going to continue to invest to generate the next wave of IMT candidates as well as progress some of our early stage pipeline and yet John shared with you some of the exciting progress there.
So that takes care of.
R&D now, let's talk about SG&A and starting on the G&A side here, we are starting to increasingly approach scale based on our existing footprint. So growth here is already starting to moderate we expect it to further moderate here as we transition from Q4 'twenty three into 2002.
For now.
Now if we think about the S part of SG&A as it relates to <unk>. There's a couple of things that you should all be thinking about as you start to model for 2024 and beyond.
First for the U S to be clear the 2023 P&L reflects nearly a full year of costs for the initial indication there will be some amortization impact next year, but that's going to be more on the moderate side and here as we potentially build out the <unk> label over time of course, theres going to be some incremental investments.
<unk> however.
We will be able to leverage existing investments in many cases are shifting to our other priority market.
In terms of Japan, the same for what I just went through for the United States. Also applies however, everything is just pushed out a bit based on the potential approval date or the approval that we have now seen with <unk> in Japan is coming at a much later point in the year. So the incremental impact in 2024 will be higher so maybe just a.
Wrap up the comments on our investment levels. So everything I just covered of course is directional in nature as always were to continue to be very focused and very disciplined in our approach and we're going to continue to take a detailed bottom up approach and make sure that we're putting the appropriate amount of resource into our most important.
Priorities priorities and certainly look forward in.
In February in conjunction with our full year results are really sharing what our investment priorities will look like for 2024, but we heard today hopefully was conveyed a lot of excitement across our entire entire pipeline.
Yeah.
Thanks, Anthony Thanks, Emily for the airport.
Actual question question.
Thank you I would now like to turn the conference back to John <unk> for closing remarks.
So thank you for calling in today to discuss <unk> financial results for the first nine months of 2023.
If you have 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 speaking with you all again soon.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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Okay.
Yeah.
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