Genmab A/S (GMAB) 2021 Q4 法說會逐字稿

Hello, and welcome to the Genmab Q4 2021 Conference Call. (Operator Instructions) And just to remind you, this conference call is being recorded. During this telephone conference, you may be presented with forward-looking statements that include words such as beliefs, anticipates, plans, or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless it's required by law. And please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities in order to update you on Genmab going forward. Please refer to our website for more information on Genmab and our privacy policy.

Today, I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

Hello, and welcome to the Genmab conference call to discuss the company's financial results for the period ended December 31, 2021. With me today to present these results is our CFO, Anthony Pagano. For the Q&A, we will be joined by our Chief Operating Officer, Anthony Mancini, and our Chief Medical Officer, Tahamtan Ahmadi.

Let's move to Slide 2. As already said, we will be making forward-looking statements, so please keep that in mind as we go through this call.

Let's move to Slide 3. Genmab has a science-focused and innovation-based culture and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference some of the products being developed under the strategic collaborations, and this slide acknowledges those relationships.

Let's move to Slide 4. Due to our extraordinarily solid foundation, Genmab is extremely well-positioned to achieve our ambitious vision of making a difference for patients by transforming the treatment of cancer. I would like to start today with a reminder of some of the many successes that will fuel our future growth.

Beginning with Slide 5. The 39 INDs created by Genmab or with our technologies have led to a robust and expanding clinical pipeline with 5 approved medicines, including TIVDAK, the first Genmab-owned product on the market, which we are codeveloping and co-promoting in the U.S. with Seagen. Royalties from partner-owned medicines plus key partnerships with companies like AbbVie has expanded our revenue significantly. Our strong recurring revenue allows us to continue to invest in next-generation technologies and truly differentiated new antibody therapies in our company, where we added commercialization capabilities and are further strengthening our unstoppable world-class team with key talents. Our growing internal competencies are enabling us to evolve into an integrated end-to-end international biotech led by an experienced and diverse leadership team. We built on this solid track record with the events of 2021. So now let's move to Slide 6 and take a look at some of our recent achievements.

2021 is our ninth year of profitability with an impressive 48% increase in revenue versus 2020, excluding the one-time AbbVie upfront payments. Our strong balance sheet allows us to strategically invest in our capabilities as a differentiated product pipeline, including our first product launch. While we are evolving into a fully integrated end-to-end biotech, we know that we can accelerate innovation by strategically investing in collaborations with partners across the pharma and biotech ecosystem, which can provide us with building blocks that support our future pipeline expansion, novel targets, novel payloads and technology that complements our own.

In 2021, we entered into more than 10 collaborations that will add to the breadth of our suite of technologies and support the rapid growth of our innovative next-generation pipeline of antibody therapeutics. For example, we partnered with Bolt on a immunostimulatory antibody drug conjugates, or ADCs, and with Synaffix on its topoisomerase 1 inhibitor ADCs. We are seeing the results of our investments in collaboration and capabilities in our expanding and progressively maturing pipeline. Examples of recent investigational medicines entering the clinic are HexaBody CD38 and DuoBody CD3B7H4, both the products of our highly productive R&D engine.

In addition to growth, our product pipeline also matured over the past 12 months. The highlight of the year was undoubtedly the FDA's accelerated approval of TIVDAK, our first regulatory approval and a much-needed new potential treatment for patients with metastatic cervical cancer. With our partner for TIVDAK Seagen, we have a robust development plan for TIVDAK, including the first Phase III study initiated in 2021, which is intended to confirm TIVDAK's benefit in recurrent and/or metastatic cervical cancer and to support global regulatory applications.

Epcoritamab also entered Phase III development in 2021, the first of multiple Phase III studies that we and our partner AbbVie are planning for epcoritamab. Both of our investigational medicines under development with BioNTech also advanced last year with the first Phase II study for DuoBody PDL141BB and multiple expansion cohorts initiated in the Phase I/II study of DuoBody CD4041BB. New and updated data from all of these programs and others were presented at a variety of prestigious conferences throughout the year, and we are anticipating additional data presentations this year, including data from the tisotumab vedotin innovative 207 study, which is scheduled to be presented in a plenary session at the upcoming Astro head and neck cancer symposium in Arizona on February 25.

In addition to our own pipeline, Genmab's innovations are applied in the pipelines of multiple global pharmaceutical and biotechnology companies. In particular, our DuoBody technology platform has powered a variety of bispecific antibody therapies and developments. The most advanced of these amivantamab and teclistamab are the result of our DuoBody collaboration with Janssen. In 2021, Janssen's amivantamab was approved as RYBREVANT in the U.S., Europe, and other markets for the treatment of certain patients with non-small cell lung cancer with EGFR exon 20 insertion mutations. These are the first regulatory approvals for a therapy that was created using the DuoBody bispecific technology platform. Subsequently, at the end of 2021, Janssen submitted a BLA to the FDA for teclistamab for the treatment of relapsed or refractory multiple myeloma.

Last month, Janssen furthermore, submitted a marketing authorization application, or MAA, for teclistamab to the European Medicines Agency. These events provided further validation for our DuoBody technology platform, which also powers the majority of our own product pipeline. Janssen's DARZALEX, which has redefined the treatment of multiple myeloma continues to evolve in 2021 with new approvals, including the approval of the subcutaneous formulation of daratumumab as the first and only approved therapy for AL amyloidosis. Sales of DARZALEX for the year was very strong with NGA reporting $623 million in net sales, an increase of 44% over 2020, resulting in 6,135 million in royalties to Genmab.

I will now turn the call over to Anthony. Anthony, Please go ahead.

Great. Thanks, Jan. Let's move to Slide 7. We've never been in a better position to achieve our vision of transforming the lives of cancer patients. My objective today is twofold: first, to explain why 2021 has been another remarkable year for Genmab. And second, to provide our guidance for 2022, which is set to be another very strong year.

Overall, we continue to strengthen our foundation and drive towards our 2025 vision. We executed our first commercial launch, bringing TIVDAK to cervical cancer patients. We grew recurring revenue by 48% in 2021. This was driven by strong royalties from DARZALEX and other approved medicines. And as Jan said, that's ensured our ninth consecutive year of profitability. Our strong balance sheet and growing recurring revenues allowed us to continue to invest in our business and our pipeline in a very focused and disciplined way. And an important part of this has been to continue to build the team and capabilities to enable us to succeed. So let's look at those revenues in a bit more detail on the next slide.

We saw continued strong performance for DARZALEX in 2021. You can see that in the chart on the left. Overall, DARZALEX sales grew by 44%. That's net sales of over DKK 6 billion, which translates to DKK 6.1 billion in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and the continued uptake of the subcu formulation. So DARZALEX remains a key driver of our revenue, as you can see on Slide 9.

Our recurring revenues grew by 48% in 2021. We've already spoken about DARZALEX and the very strong performance there. We're also encouraged by the growth of Kesimpta and TEPEZZA, which generated DKK 828 million of royalties for 2021, and that's an increase of more than DKK 500 million compared to last year. This growth really illustrates the power of our recurring revenues. So our revenue profile continues to get stronger with increases both in recurring and nonrecurring revenue after excluding, of course, the AbbVie one-off. And we're taking our strong recurring revenues and investing in a highly focused way, as you can see on the next slide.

Total operating expenses grew by 44% in 2021. And here, you can see where we invested. We accelerated our investment into our product portfolio, especially the advancement of both epco and DuoBody CD4041BB. We've also spent more on expanding our team to support our growth in commercialization, enhanced technology and systems, and other areas related to our expanding pipeline. That includes supporting the launch of TIVDAK and preparing for the filing and potential launch for Epco. Finally, we're leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further expand and accelerate our partnership programs.

Now let's take a look at our financials as a whole on Slide 11. Here, you can see our summary P&L. In 2021, revenue came in at approximately DKK 8.5 billion. That's up 48% on last year, excluding the AbbVie one-off. Total expenses were about $5.5 billion with 77% being R&D and 23% SG&A. And we reported a very strong operating profit at around DKK 3 billion. Our net financial items amounted to an income of DKK 965 million, which was primarily driven by the strengthening of the U.S. dollar against the Danish kroner on our U.S. dollar-denominated cash and investments. Then we have tax expense of $975 million, which equates to an effective tax rate of 24.5%, and that brings us to our net profit of around DKK 3 billion. So as you can see, extremely strong financial performance for 2021.

Let's move now to a reminder of our robust financial framework on the next slide. First off, let's think about our revenue profile, which you can see on the left. At the beginning of 2020, DARZALEX was the only product on the market. And today, we have 5, and that provides us with expected recurring revenue growth of 39% in 2022. And there's a clear path to potentially expand the number of approved products with Janssen's recent BLA for Teclistamab and our planned submission for Epco in 2022. Taken together, we expect significant cash inflows for us in the years to come.

Moving to the right, we continue to be focused on our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding the development of Epco. I'll come back to this and some other exciting opportunities, which provide a compelling rationale for increasing investment shortly.

So with that background, let's take a closer look at DARZALEX sales on Slide 13. Here, we're on a clear path to market leadership in multiple myeloma. For 2022, we anticipate that DARZALEX sales will continue to ramp up, and we expect sales to be in the range of DKK 7.3 billion to DKK 8 billion.

There are 3 drivers underpinning this growth. First, there is significant opportunity for further market share gains in frontline.

Second, we expect the continued conversion to the subcu version.

And third, with 10 approved indications in the U.S., we anticipate continued strong market shares across all lines of therapy. So DARZALEX is really continuing to deliver.

Now let's take a look at the components of our strong recurring revenue on Slide 14. For 2022, we anticipate another year of strong revenue growth. Looking at our total revenue, we are expecting to be in the range of DKK 10.8 billion to DKK 12 billion, and the majority of this will come from recurring revenues, which are anticipated to increase 39%. We're projecting DARZALEX royalties to be between DKK 7.7 billion and DKK 8.5 billion, an increase of 32%. As a reminder, consistent with how we handled this last year, our guidance reflects around a DKK 700 million reduction in royalties due to the ongoing arbitration. Recurring revenues also include a 71% increase in royalties from TEPEZZA and Kesimpta.

Turning to nonrecurring revenue. The growth here will be driven by reimbursement revenue from our collaborations and other milestones. In particular, our 2022 guidance does include a significant milestone associated with the filing and acceptance of a regulatory submission for Epco.

Now I said to come back to our ever-stronger rationale for investment and this next slide shows you why. What you can see here on the left is a powerful combination of both our technologies and our pipeline. And these are what underpinned are imperative to invest. And then on the right, you can see the real progress we're making. 2021 was a great year with more than 20 active clinical trials as well as bringing our first product to market with TIVDAK. And then building on that foundation, 2022 is going to see another real step-up in terms of our opportunity set, with more than 30 active clinical trials anticipated and prepared for a potential Epco regulatory submission and commercialization in the U.S. And to be clear, based upon the work we've done so far and the data we've seen, we're convinced that Epco is a drug that has the potential to make a real difference for patients. And as we've told you before, if we want to seize this meaningful opportunity we've got to invest, and that's exactly what we're going to do. And that, of course, also includes investing in our team, technology, and infrastructure to deliver.

So let's take a look at that in a bit more detail on Slide 16. Our total OpEx is expected to be between DKK 7.2 billion and DKK 7.8 billion. This fully reflects the evolution of our pipeline and indeed, our entire business that I just described.

There are 4 near-term investment priorities for us. First is initiating new Phase III Epco trials to maximize its potential.

Second is the filing and standing up our commercial organization for Epco.

Third is generating the next wave of data for DuoBody PDL141BB and DuoBody CD4041BB.

And priority number 4 is continuing to build our infrastructure, teams, and systems. This is essential to our continued success in realizing our full potential. So these are our immediate priorities. But we're not just focused on today.

In line with our vision, we're also very focused on long-term value creation. So here, we're investing to progress our early-stage pipeline and to generate the next wave of IND candidates. We're also investing to ensure that we maximize the value of our current technologies and that we stay right at the forefront of antibody science.

Now having looked at the framework and the constituent parts, let's look at how this all comes together on Slide 17. Here, you can see our 2022 guidance. We expect our revenue to be in the range of DKK 10.8 billion to DKK 12 billion, and most of this is made up of recurring revenue. For operating expenses, we expect to be in a range of DKK 7.2 billion to DKK 7.8 billion. 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're planning for substantial operating profit in a range of DKK 3 billion to DKK 4.8 billion.

Now to my final slide, let me provide a few closing remarks. In summary, we have a clear path to reach our 2025 vision. We've created growing recurring revenue streams, and that gives us a strong backbone of significant underlying profitability, and we're investing those revenues in a highly focused way to realize our vision and capitalize on the very significant growth opportunities in front of us.

And on that note, I'll hand you back to Jan to discuss our key priorities for 2022.

Thanks, Anthony. Let's move to Slide 19. Beyond strong revenue, 2021 was an excellent year for Genmab. As we continue to focus on our core purpose, we are preparing for an equally momentous 2022. Let's start with our most advanced products. For epcoritamab, as I mentioned, we are very much looking forward to expanding its development. We are excited about the data, and we anticipate filing in the U.S. and/or in Europe this year. Further, the Genmab and AbbVie teams are hard at work and gearing up to initiate new Phase III studies to maximize epco's potential. As part of these preparations, we are going to collect more data on Epco dosing due to the recent FDA guidelines recommending that sponsors perform more formal dose evaluation studies. This means that for some of the Phase IIIs, the first patient dose could be pushed beyond 2022.

But as Anthony noted, the investment will start this year. We will work with Seagen to continue to broaden the clinical development program for TIVDAK and establish it as a clear choice for patients with metastatic cervical cancer with disease progression on or after chemotherapy. And we very much look forward to data from clinical expansion cohorts and progress to next steps for both of our first-in-class bispecific next-generation immunotherapy candidates in development with BioNTech.

Beyond these maturing programs, we anticipate expanding and advancing our other early-stage programs, including the potential for additional INDs or CTAs. Finally, we intend to continue to scale our organization based on our planned portfolio development, and as Anthony just discussed, we will use our solid financial base to support our growth. We have a lot to look forward to in the next 12 months, and we very much look forward to sharing our progress with you.

Let's move to our final slides. That ends our presentation of Genmab's 2021 financial results. Operator, please open the call for questions.

(Operator Instructions) Our first question comes from the line of Kennen MacKay from RBC.

Maybe just a housekeeping question for Jan or Anthony. Wondering if you could help us with updated expectations towards when we might expect resolution of the ongoing arbitration and litigation with J&J around subcu DARZALEX?

Thanks, Kennen, for the question. Unfortunately, I cannot give you further color there because the outcome and the duration of these proceedings are heavily uncertain. We hope, however, that we will see a resolution soon. Thanks, Kennen. I think we can go to the next analyst.

The next question comes from the line of Peter Verdult from Citi.

I am Peter Verdult. Just one clarification and one question. Just wanted to make sure, given your comments about the change in the FDA guidelines, just a clarification that an Epco filing in DLBCL is still scheduled for 2022? And could there be any other potential upside filings this year? And then my question, sorry, An to test your patience. I'm just going to follow on from Kennen. I mean it's pretty clear from attending ASH and seeing (inaudible) going to be a much bigger drug than everyone thinks and the pipeline is progressing. The problem is when you speak to incoming investors or new investors on Genmab, the fly in the ointment is this arbitration overhang and that puts people off. I realize you can't go into the details, but can you at least frame as to whether you think are hopeful that you say that every quarter. But I mean, is it really how long is the piece of string could this rumble on into next year? Or do you think that a strong chance we might see resolution sooner than later, sorry if I could push you on that? And sorry for testing a patient, that would be helpful.

Thanks, Peter. Let me start with the easy one with the Epco question. Yes, a filing in the U.S. and Europe is absolutely on the schedule for the diffuse large B-cell lymphoma and perhaps even in other indications, but it depends on when the data become available, Peter. So we continue to be very, very excited about filing this year. So that's fully on schedule. Then the more complex question is the arbitration. We also hear that this is an overhang, and we, of course, understand that. What I already said before publicly is that all the materials and the positions have been exchanged and now it's up to the 3 judges to come with a resolution. And I'm actually fairly confident that it will definitely come this year and hopefully soon, Peter. I cannot give you any further indication on timing because it's not under our influence at all.

And the next question comes from the line of Wimal Kapadia from Bernstein.

Can I just push a little bit on timelines for data, please, particularly the earlier pipeline. So CD38, CD37 and the DuoBody CD4041BB molecules, when exactly in 2022, could we get updates? And is there any conferences you could start to point to where this data is most likely? And then specifically on the CD38, will we get enough data this year to really begin to have a view that this product could be superior to Dara. Will we really need to wait longer term, so maybe a 2023 debate?

Thanks, Wimal. I think the timelines will only get clear once we note a bit conferences, we have submitted the data. But we will -- let's ask Tahamtan Ahmadi who is on the line, our Chief Medical Officer to see whether Tah is willing to give a bit more color on CD38, HexaBody CD38, the dual HexaBody CD37. Tah, maybe you can give a bit more color there.

Thank you. I will try. Let's take CD38 first. I think there were 3 parts in your question. The first part is one, will we see any data? I think Jan pointed that out, that will be a function of an appropriate conference and I think we have before publicly stated that this is probably a second-half '22 event where we will be able to share the dose escalation data and it's worth noting that we only started dosing patients last year. We, I think, already publicly said that we will achieve a recommended Phase II dose. I'm very confident in getting the recommended Phase II dose in a very timely manner and then we'll engage in the second stage of the data generation where will be comparatively to do subcu. Whether or not that data will be available this year. I think this is too premature to comment on because this is really a function of generating the data and then having it in the hands.

On CD37, I think is in a very similar time line than C38, I would say, we are very close to determining the recommended Phase II dose, I would say that with some of the changing environment, as Jan has also touched on the project Optimus, these things will also probably impact the time by the data that is needed to define the recommended Phase [IIs of] some of the earlier trials. But I think we're pretty confident we're going to get this within the first half of this year and then share the data in a very similar time of the CD38 [per se].

Thanks, Tah. I think that's all we can say at this time, Wimal. The timing of the data submissions to conferences are clear. We will, of course, update you right away.

The next question comes from the line of James Gordon from JPMorgan.

James Gordon and JPMorgan. One on the 41BB bispecifics, I saw the line about generating data to determine the potential move to late stage. So the question is, how likely do you now see it that one or both of these bispecifics? Does that actually move to late stage? Which of the 2, so PD-L1 and CD40, do you think is more likely to be taken forward? And is it fair to read that you are a bit more cautious on these assets than 18 months ago?

Thanks, James, for the questions. I'll hand over the question first to Tah and see whether I can add on his characterization. Tah, maybe you can share a bit about the 2 PDL141BB and the CD4410B programs and then give some color on the likelihood of moving them either separately or both of them to late-stage clinical development this year.

Okay. Let's take one at a time. So PD-L1 maybe we had shared data in 2020. And then also in 2021 at SITC helping us put it now down understanding of the biology, but also the observation of single-agent activity with limited durability in the post-IO space, we have already announced, and this is now in the public space that the next step for us would be the interrogation of the combination of the engagement of form together with a full blockade of the PD-1/PD-L1 access. And this is happening for PD-L1 for maybe in 2 distinct experiments. One is a separate study that is actively enrolling, which is interrogating various schedules of either sequential form or concomitant form of PD-1 activation inhibition, respectively, in the post-IO setting, that's the 04 study, as I said, actively enrolling. -- separately as an amendment out of the original Phase I study, we have cohorts that are interrogating the combination of PD-1 -- in this case, the (inaudible) with the PD-L1 for the 1046 in the non-small cell lung cancer treatment naive population. And this product study is also actively onboard.

And these are the data sets independent of each other, but then also in conjunction with each other, that will inform the next steps for 1046. For 1042, very similar, we had shared data for the first time at SITC that showed the dose escalation would also be biology. We had flagged but very early that by mechanism of action of engaging APCs and then engaging [form we record] the T cells. We didn't really anticipate a lot of senior agent activity in a meaningful way in the post-IO space, but are very confident based on some of the (inaudible) models. So we're also shared that you see that the combination with checkpoint inhibition will be very powerful.

These experiments are ongoing in the clinical trials in both non-small cell cancer have made the safety part is already concluded, and we are now in the after the expansion, where then this is again disclosed public in clinical trials go where we're interrogating the combination of 1042-plus pembo in PD-L1 high and PD-L1 low non-small cell lung cancer, in head and neck cancer and then also in Panga combination in (inaudible) and headed information chemotherapy and all of these courts are typically enrolling as we speak. As it relates to the decision, that is, of course, like always a function of, A: getting the patients in and then, B: getting the data in hand to make those decisions. We will look at this very carefully, and we'll try to make the decision as efficiently as possible when we have to there. So I hope that helps you a little bit to understand where we are in the timeline. Thanks, Tah. Thanks, James, for the questions.

And the next question comes from the line of Sachin Jain from Bank of America.

I just got a bunch of clarifications, if I may. So if I just follow up on the last 1042 and 1046 question, on 1042, I think Judith had said on the third quarter call or the ASH call for the combination cohort data may be during the coming months, that was obviously a couple of months back. So is 1042 data possible in the combination cohorts in 1H? Or are we now thinking that data for all of the assets you've referenced, 38, 37, 1046 and 1042 or M28 -- is that a clarification one. Clarification 2, Jan, is on Epco. You mentioned in filing additional indications possible depend on data. I wonder if you could just clarify that comment as to what other indications may be possible. And then my final clarification is on the CD38. Again, you've referenced the data, but I just wanted to be sure, is there enough data in '22 to drive a potential partner position from J&J? Or is some of that data into '23?

Thanks, Sachin, for the questions. I'm going to hand over the 1042 question to Tah, but you can think about answering that one Tah. Let me first start with Epco. I said, well, definitely diffuse large B-cell lymphoma Sachin is the most advanced cohort with treatment, but we also move very rapidly with follicular lymphoma and mantle cell lymphoma. -- and potentially follicular could also be ready for potential filing. But it depends on how quickly we can get actually to the data. And that is the cohort I was mentioning when I was answering that question. Then for CD38 data, your third question, Sachin, I mean it depends to Janssen. As I said before, publicly, I mean, how much data do you need to take a decision, I believe, Sachin, that they want to see, for sure, some data on the head-to-head was the subcu data because I think that is, of course, what it is about whether this HexaBody CD38 is actually clinically superior to subcu data, which is setting the benchmark here.

And I don't know whether they want to see all the data from the study, then clearly, that will not be available in '22 Sachin, that is not possible. But when we see a number of patients were already it's very, very clear that potentially the HexaBody CD38 is clinically superior, they could actually exercise their option and then actually develop the program further. What I said to you before, is that basically when we were in licensing discussions on daratumumab, the IV formulation of daratumumab in 2012, we had data less than 26 patients in total worth of clinical data. And what I heard is that Janssen actually took their optimization basically on 2 patients, which are both triple refractory multiple myeloma, which both went into a stringent complete response. So they didn't need more data basically to base their decision to partner in 2012. So it depends on Janssen and you need to ask them. But I think some data could become available this year already, Sachin, but the majority of the data from the head-to-head against subcu will likely move into '23. And then that's probably where I want to leave at that and then ask Tah to give a bit more color on 1042, the different cohorts and the expansion cohorts and that data could potentially come or some data could comment first half Tah or whether we should guide for the second half for the data.

Yes. Again, I think this is a little bit of a discussion on data is available and when we are making data public in what form we're going to make it publicly. As I mentioned before, I mean just think about by the time Juliet gave that commentary the safety cohorts that just started. And I -- just to be in response to the earlier question, I already flagged that the expansion cost. So we will have data in our hands before the end of the first half of this year. Whether that data is going to be sufficient enough for us to then treat the next decision that's going to be a function of that data to some degree. There's -- but I don't think there's an anticipation that we will be able to share the data in a public form in the first half of this year.

Thanks, Tah. That's clear. Thanks, Sachin, for the questions.

And the next question comes from the line of Michael Schmidt from Guggenheim.

This is Paul on for Michael. Just one for us on TIVDAK and the upcoming innovative 207 data. The study has been running for a couple of years now. So hoping you could set expectations for the scope of the beat out, maybe whether the data will be restricted to head and neck? And if so, if we could potentially see data from other solid tumors at some point down the line? And lastly, maybe how you're thinking about how the data will form next steps for the program beyond cervical.

Thanks, Paul, for the questions. And I will hand over these to you, Tah.

I think we'll make it a busy call for you. Thank you. And I think the answer here is like (inaudible) studies operational (inaudible), we have said before that we will look forward to some sharing of data on the head-neck space, which we will do in one of the upcoming conferences. And we are very quite excited about the data that we've seen there that will potentially allow us to expand the development of TIVDAK also into that space.

Thanks, Tah. And then further updates, Paul will come from Seagen because they operationalize in those studies, but we are very confident that we move to earlier lines of treatment with TIVDAK and cervical as well as in several solid cancers. So let's await the date on February 25 and then await further update from Seagen on when to actually present further data on solid cancers.

And the next question comes from the line of Elizabeth Walton from Credit Suisse.

Elizabeth Walton from Credit Suisse. Just a couple of questions left at this point. Firstly, can you update us on the penetration of subcutaneous Darzalex that you're seeing? I think the last data point we have was a comment that was made at 2Q that you were seeing about a 64% penetration in the U.S. Can you update us as to where that got to at the end of the year? And do you have any data of what penetration looks like for the subcutaneous version outside of the U.S. and potentially what you think the ceiling could be for the penetration of the subcutaneous version? And then just one quick one on TIVDAK. We saw DKK 6 million of sales reported this year by Seagen. Consensus expectations are around DKK 30 million for this year. Just wondering how comfortable you are with those consensus expectations? And anything you can share on how the launch is tracking versus your internal expectations? Thank you.

Thanks, Elizabeth, for the questions. And these are like perfect questions for Anthony Mancini, who we have on the line. So Anthony, maybe you can basically address both questions. First, the penetration of the subcu data -- and then also the TIVDAK question, let's see what you're willing to update on the launch and on the -- how well we -- how comfortable we are with the consensus expectations for TIVDAK, Anthony.

Sounds good, and thanks for the question, Elizabeth. Just on the penetration of subcu DARZALEX. First, as you discussed, the Q3 number was 72%. We ended the year at 77% in the U.S. in terms of the exit, subcu penetration. That's based on IQVIA data based on weekly gross sales. We are continuing to see strong share gains. And so we're confident that growth will continue. And because of favorable reimbursement of subcu, what I can tell you around outside of the U.S. is that we've now got confirmation that all 5 top European countries are reimbursing subcu with Italy just being achieved in December. So we continue to see favorable subcu penetration across European markets. So that is continuing. I won't give you a specific number around where we think subcu is going to land. But what I can tell you is that the trends are very favorable and really the only places that are going slower than expected are when there's practice economics or system dynamics that make subcu conversion difficult. So that's really the question on subcu DARZALEX.

And as it relates to TIVDAK, we're really pleased with the TIVDAK launch to date and the launch is really going as we planned. It's important to note that although the population in this initial indication is pretty modest, that we're hearing from providers in this early stage of launch that TIVDAK really is an important treatment option for this patient population. It really is also the only non-IO therapy that's achieved a category QA NCCN guideline recommendation in this population. So the feedback we're getting on the launch from the GynOncs and MedOncs in the community has been really positive. And with our partner, Seagen, we're navigating the eye care requirements. We've implemented a patient support program that helps connect patients to eye care providers in their geographies and in their health care plans. And we continue to strengthen our educational efforts and support in this area. So launch is going really, really well.

Thanks, Anthony. Thanks, Elizabeth, for the question. Let's move on.

The next question comes from the line of Asthika Goonewardene from Truist Securities.

I got a couple of quick fire ones, if I may. Anthony, Anthony, what proportion of your -- that 2022 nonrecurring revenue is related to the Epco filing milestone. If you can give a little color on that, that would be great. And Tahi, just want to confirm, the 2 studies that you described in post-IO non-small cell lung and in the treatment-naive non-small cell lung. Are you waiting for those 2 to complete before you start doing other studies in other tumor types? And then Jan, very quickly, our arbitration KOL checks pointed to a clause that does allow for an appeal. And I just want to check, do you think that will -- they will go into appeal, and does your expectation for this to be resolved in 2022, take this into account? Thanks, guys.

Thanks, Asthika, for the questions. And I'll let my colleagues think about the questions, Anthony Pagano and Tahi. But as it relates to the appeal, the product is binding from the 3 judges Asthika, but the parties can appeal one more time with one judge and that has a finite time line. And we think that even if that would happen, we -- of course, we cannot predict whether that would happen, that it would still be concluded in 2022. And that's probably where I need to leave at that for now. And then maybe ask Anthony Pagano to answer the question on the Epco milestone.

Great. Yes. Thanks, Jan. As everyone knows, regarding milestones, the timing and outcome are really inherently a little more uncertain. As a reminder, for 2022, our guidance assumes that nonrecurring revenue is expected to be around DKK 1.7 billion. Again, that has 2 components, the reimbursement revenue and the milestones. And as I highlighted during the call, our guidance does include a significant milestone associated with the filing and acceptance of a regulatory submission for Epco. Now I'll zoom in on that just a bit. In total, for EPCO in 2022, we have around DKK 500 million of Epco-related milestones, and the majority of that DKK 500 million does relate to the filing and acceptance of the regulatory submission. So hopefully, that gives you a little bit more clarity in terms of the magnitude of this milestone.

Sorry, Tah.

Yes, I'll take [step] in trying to answer the question on what I believe was a question about 1046. And I think, I mean, the short answer is we view these data sets are being generated as biological experiments that answer distinct biological questions. So for 1046, the biological question is, can you enhance durability and increase efficacy by complete blockade of the checkpoint access either by doing this in a sequential manner, first activating form will be then or in a concomitant activated form will be and blocking the (inaudible). And we do this experiment into settings. One is the post IO, which we believe is a very different setting. Patients who have failed immunotherapy have a completely different biological makeup in a setting. Depending on what the answer is that we will get, we will -- and of course, it also depends on the strength of the answer. We will then take that answer and apply it biologically to other indications. So it may not necessarily be that we have to wait for the entire dataset to mature. But that's also a question or a function of the quality of the data that's being generated in these distinct clinical experiments so that being said, I hope that helps you.

Thanks, Tah.

Thanks, Asthika. Operator?

The next question comes from the line of Peter Welford from Jefferies.

Just going back to epcoritamab, I just want to point a clarification on the recent FDA guideline changes regarding dose-finding that we're discussing. Just to be clear, do those relate to Phase III initiations in combination studies, presumably? And is it the extent of dose-finding that you need to do before you can initiate those combination trials. And just to understand that perhaps can you give us a bit more color in terms of what the Phase III development plan? Obviously, diffuse large B-cell lymphoma is initiated. I mean presumably, we should think about the other follicular and MCL as other potential indications. But should we also be thinking about potential indications that you've yet to start studies potentially going underway during the course of this year or next? Or perhaps you could just talk a little bit about how broad in terms of the recurrent indications you epcoritamab could potentially be during the course of this year, by the end.

Thanks, Peter, for the questions. I think these are perfect for Tah. Tah maybe you can give some further color on my remarks on the further dose-finding studies needed and the contact force of Phase 3? And then also in a bit broader context, the expanding epcoritamab development program for Peter.

Right. And let's take the step by step. So the first point is we continue to be extremely excited about the data that we're generating, both as a senior agent and in combination in the (inaudible) -- but the [cohorts] on then was around a regulatory shift that asked for a limited generation of data in combination to interrogate whether they are potentially opportunities to lower the dose in combination. And that's a relatively limited data set and it's a data set that answer for the totality of the program. And that obviously has some impact on the ability to sell Phase IIIs in combination. We will obviously operationalize it as soon as possible. And I think we have very clear plans and are very active engaged process with the agencies in order to manage and the ability to initiate the Phase III that we are having planned with our colleagues and partners at AbbVie.

Thanks, Tah.

The next question comes from the line of Laura Sutcliffe from UBS.

I'd just like to go back to the HexaBody CD38, please. Given it seems like J&J are quite optimistic about teclistamab (inaudible) and the dara combo those entail, it's right for them to be interested in the HexaBody-CD38. -- wouldn't only have to look better than dara, it would likely have to play nicely with those 2 molecules. I realize you can't comment on J&J's intentions, but from a CRS standpoint, is there anything wrong with the potential HexaBody CD38 plus teclistamab or tisotumab combination?

Thanks, Laura, for the question. That is a perfect question. Yes, no, but I will let Tah give you a bit more color on the potential combination theoretically, of HexaBody-CD38 and teclistamab and tisotumab targeting BCMA or GPRC5D dye.

Yes. So these are good questions. I think that Seagen was saying there is at this point because the ex program until the moment that Janssen opts in as a (inaudible) program that is still in the dose-escalation as a single agent. There are no plans for these combinations, but it's also, I think, fair to say that at this point, we have not seen anything as it relates to the safety that would, in any shape or way, indicate that it would be a lesser support and than (inaudible).

Thanks, Tah. Thanks, Laura, for the questions. Let's move on to the next one.

The next question comes from the line of Xian Deng from Berenberg.

It's Xian from Berenberg. So I have a question on the epcoritamab Phase III trial design in frontline DLBCL. So really just wondering if there's any color you could give us on the potential trial design for frontline DLBCL. Anything you could share in terms of combination partners or control arm? And actually, logistically, just wondering, can you actually run a frontline trial involving Polivy? Or do you have to wait on to FDA approved for use of Polivying frontline DLBCL? Is that by any chance of gating item for you?

Thanks, Xian, for the questions. And the question, I will hand it over to Tah to see what you're willing to say about our plans for frontline diffuse large B-cell lymphoma tied with Epco.

I'm going to make 2 comments. Number one, if you look into the data that we have generated and actually have already publicly shared, it is with R-CHOP and that is what the experimental arm will be. It will be R-CHOP and epco. And we have been consistent with -- we commented on this post ASH as well that in the near future, and really this is the only relevant future for the start of the Phase III that we're talking about, we believe R-CHOP to be the global center of care (inaudible).

Thanks, Ty. I think that answers the question, Xian.

Yes. Actually, just wondering, is it possible to actually run the trial, including (inaudible) it's actually approved in frontline -- it is logistically possible?

Okay, Tah. Do you know whether it's theoretically possible?

Yes, theoretically.

Theoretically, if you wanted to run a study with a nonapproved drug, you need a drug supply agreement.

Understood. Thank you very much.

Thanks, Xian. Thanks, Tah. Let's move on to the next question.

The next question comes from the line of Matthew Harrison from Morgan Stanley.

This is Charlie on for Matthew. I just want to get maybe a little more clarification on the 41BB and CD40 bispecific data in terms of the timing of potential competitor studies? And maybe a follow-up to that is for [that kind of study] what's your kind of expectation in terms of population and whether there will be kind of biomarket-driven subset? Or would be -- the goal is to target a big broader population? Thank you.

I don't know that I caught your name correctly, but I'll hand over the question to Tah. A bit more on 41BB and CD40 Tah and planning of studies.

The current data that's being generated is in essentially 5 buckets. In non-small cell lung cancer, frontline PD-L1 high in combination with pembro in non-small cell lung cancer, PD-L1 low, meaning between 1 and 49 in combination with pembro, mutation 6 bucket. So in head and neck and (technical difficulty) PD-1 positive in combination with pembro and chemotherapy, and in pancreas cancers in combination with chemotherapy and P1 or in combination with lPD-1chemoterapy and just (inaudible). These are the data sets that are being generated, but as we speak right now in expansion cohorts. -- and they are chosen based on where we thought we would be able to see, obviously, the signal of synergies between checkpoint inhibition and 10.2, 10.6 and/or where we had reasons to believe that the biology of CD4 engagement with (inaudible) will play a particular role. And they will obviously then be the driver depending what the dealers for follow-up activities, including late-stage activities if the data such supported. It will not be necessary restrictive, but this will obviously be the first wave.

Thanks, Tah. Let's move on to the next question.

And we have one final question from Emily Field from Barclays.

Just 2 quick ones. One on DARZALEX. I know you don't break this out in the content of the ends, but versus our own estimates, Europe has doing -- been doing consistently better than our expectations. I was just wondering, is that also the case relative to your own internal expectations? And I know you've given us sort of the -- in the past, the brand impact share across the lines of therapy in the U.S. But I was just wondering if you could compare to kind of how that tracks in Europe across maybe first-line and second-line multiple myeloma? And then also just a quick one on the SG&A projected increase for 2022. It's almost the same order of magnitude as R&D. Is that primarily the build-out of the commercial sales force or epcoritamab? And is the bulk of that heavy lifting going to be done in 2022? Or -- I know you're not going to talk about 2023, but how should we think about sort of SG&A trending beyond '22? Thanks.

Thanks, Emily. These are perfect questions for the -- for Anthony Mancini and Anthony Pagano. Anthony Mancini, maybe you can start with DARZALEX and the European sales versus COS sales and how to track them and how it fits with our own expectations. Maybe you can give a bit more color there.

Yes. Thanks, Jan. Thanks, Emily, for the question. I would say that we're -- our thinking is in line with your thinking on this. But just remember that really most of the changes and fluctuations in share relate to reimbursement decisions. And so one of the ones I highlighted earlier with the major EU5 reimbursement and coverage decisions for some indications and some formulations like subcu really drive sales. And what I can tell you is that the trends look very strong from a share perspective, but there is some variability that system -- that's health care system specific there. But I think that's where I'll probably leave it as it relates to European or rest of world sales relative to U.S. sales on DARZALEX. And maybe I'll pass the next question over to Anthony Pagano.

Great. Thanks, Anthony. Thanks, Emily, for the question. So first of all, talking about and gave some additional color and context around in 2022. I think there's 3 things you should be thinking about. One is we'll have a full year of, let's call it, the TIVDAK commercial expenses, so that would be one thing. Second, as you highlighted, really starting to make sure that we're prepared for potential filing and approval of Epco. So that would be number 2. And then third, as I mentioned in my remarks, is just sort of making sure from looking at the broader evolution of our business that we have the right technology systems and team in place to really make sure we're well-positioned to support this growth and manage risk along the way. So that's how you should be thinking about 2022. And I think it's probably premature to talk about 2023, what I would sort of say is just thinking about what I already said, as I kind of talked about our overall opportunity set, I continue to be very, very pleased with the overall progress we're seeing in terms of building out our pipeline. I talked about in 2021, having more than 20 active clinical trials and seeing that expand to potentially more than 30 moving forward and taking more of our medicines towards the market. So I think we'll provide you guidance for 2023, Emily. But I think what the message you should take away from today is that our opportunity set is very strong. But this team will continue to be focused and disciplined as we evaluate where we want to kind of pull the trigger on certain investments.

Thanks, Emily. Thanks, Anthony and Anthony. Let's see whether there are any further questions, operator?

There are no further questions at this point.

So thank you for calling in today to discuss Genmab's financial results for 2021. If you have any additional questions, please reach out to our Investor Relations team. We hope that you all stay safe and remain healthy and optimistic and very much look forward to speaking with you all again soon.

This concludes the conference call. Thank you all for attending. You may now disconnect your lines.