M.Stanley takes neutral stance on Genmab ahead of portfolio, execution updates

Morgan Stanley initiated coverage on Genmab (GMAB) with an Equal-Weight rating and a $24 price target, citing limited near-term upside as the most impactful catalysts, particularly key Phase III readouts for Epkinly in earlier-line DLBCL, are not anticipated until 2026. The bank highlights Genmab's strategic transition from reliance on Darzalex royalties to its proprietary pipeline, including Epkinly, Rina-S, and acasunlimab, with significant data updates and pivotal trial initiations expected throughout 2025. While acknowledging sound management and pipeline strategy, Morgan Stanley projects material stock re-rating will primarily occur in 2026, with the near-term focus on development timelines and commercial execution.

Analysis

Morgan Stanley has initiated coverage on Genmab with an Equal-Weight rating and a $24 price target, reflecting a cautious near-term outlook. The core thesis is that significant, value-driving catalysts for the stock are not expected until 2026, limiting potential for a material re-rating in the interim. Genmab is in a critical transition, shifting its focus from a heavy reliance on Darzalex royalties to its proprietary pipeline, a move underscored by Johnson & Johnson's decision not to opt into the HexaBody-CD38 program. While the pipeline shows promise, key data readouts are on a longer timeline. For its lead asset Epkinly, a supplemental BLA has been submitted, but the most significant Phase III data in earlier-line DLBCL is not due until 2026. Similarly, for acasunlimab, a pivotal Phase III readout is anticipated in 2027. Near-term progress points include pending progression-free survival data for Epkinly and positive, albeit early, ASCO data for Rina-S, which saw response rates of 50% and 47% in endometrial cancer cohorts. Despite acknowledging a sound management strategy, Morgan Stanley's rating suggests the market will remain in a holding pattern, focused on commercial execution and development updates throughout 2025 before the major inflection points.

Key Decisions for Investors

• Given the Equal-Weight rating and the 2026 timeline for major catalysts, investors should view Genmab as a long-term holding, as the analysis suggests near-term upside appears limited.
• It is prudent to closely monitor near-term operational milestones, specifically the commercial performance of Epkinly in its current indications and upcoming interim data releases, as these will serve as crucial validation points for the company's pipeline strategy.
• Investors should assess the company's ability to successfully transition away from its Darzalex royalty dependence, as the stock's future valuation hinges on the successful development and commercialization of its internal assets.