Genmab A/S (GMAB) 2004 Q3 法說會逐字稿

Good morning and welcome, ladies and gentlemen, to the Genmab 9 month results conference call. [OPERATOR INSTRUCTIONS]. During the conference, you may be presented with forward-looking statements. Actual results may differ materially. Genmab is not under an obligation to update statements regarding the future, nor to confirm such statements in relation to actual results, unless this is required by law. I will now turn the conference over to Ms. Lisa Drakeman. Please go ahead.

Good afternoon and thank you for joining the Genmab conference call to discuss the 9 month results. If any of you have seen our filed results now, they were in line with expectations of our previously issued guidance. Genmab's operating loss was DKK314.7m, which is approximately US$44m. And 84% of this was spent on research and development year to date, with 16% spend on G&A, which is the target that we had set for ourselves, over 80% for R&D.

Our net loss was DKK289.7m, which is approximately $48.3m. At the end of September, Genmab had approximately DKK1.36b in cash and cash equivalents, which would be approximately US$216m. Based on year-to-date spending and expectations for the fourth quarter, including increased expected clinical trial costs, we now believe that our overall loss is likely to be at the low end of the guidance. Consequently, we believe operating loss will be closer to DKK450m than the higher number of DKK490m. We currently expect the year-end cash number to be more in the range of the DKK1.135b that is the low end of our guidance.

The financial picture is only part of the story for the third quarter, however, as Genmab had a number of business and scientific achievements as well.

We successfully completed an international private placement, with net proceeds to the Company of approximately DKK447m. We also announced considerable positive news related to HuMax-CD4, including the US FDA Orphan Drug designation and the launch of a phase II study for a new patient population - those with T-cell lymphoma that originates in the lymph nodes. We estimate there are 8,000 to 10,000 patients in the United States with this type of T-cell lymphoma. As these patients have a relatively short life expectancy and no specific therapy approved for them, this is a serious unmet medical need and a potential market expansion beyond the cutaneous T-cell lymphoma segment that we are targeting with the upcoming pivotal study.

Also with HuMax-CD4, we announced that cutaneous T-cell lymphoma patients in the phase II study experienced long-lasting responses of 6.6 months. For the higher dose patients, we have not yet reached the medium duration of response. We are continuing to follow this group and will have results of that follow up available at a later date.

In other clinical news, positive safety and efficacy, AMG 714 data, was presented at the American College of Rheumatology meeting.

Finally, in the Roche collaboration, Genmab achieved proof of concept with 2 antibodies in 2 different disease areas. These are the third and the fourth antibodies to reach this stage in the collaboration. So it has been a very productive quarter for Genmab. With that, I would like to open to your questions. I am joined today on this call by our Chief Accounting Officer, Bo Kruse.

[OPERATOR INSTRUCTIONS]. We will take our first question from Sally Bennett with ING. Please go ahead.

Hi Lisa. A few questions. If I just go 1 by 1. Just on HuMax-CD4. Is it fair to say -- well, it's my understanding you were due to start the pivotal study in the fall, so I'm not sure it's quite, well, fair to say you were a bit behind schedule there. I'm just wondering, are you still confident you can start that study before the end of the year, and if there is a delay, what it is you're actually waiting for is the first question.

Okay. I'm happy to answer that question. We have said that we expect to start before the end of the year and we did, in fact, hope to begin before now. What I can say is that we have done our preparatory work. The sites are initiated. We have had the investigator meeting. The drug is ready. We are using a special protocol assessment process with the US FDA. And this is not a speedy process. When we send information to the FDA, they have 45 days to evaluate it and if they ask a question, we need to come back with answers and they have another 45 days to consider your answers.

So at present we are working on that process. We believe it's a good benefit to have it in place. What it means is that you have a written agreement with the FDA that if your trial has results as expected and you follow the protocol, that you have sufficient data for approval. So we think this is well worth doing. I should also say that we do not expect to delay our ultimate timeline, even though we may be a few weeks behind when we originally hoped to begin this study, because we do have quite a few sites. And we expect that we will be able to accrue the patients. Assuming things go as we hope, which is the study will start before the end of the year, we do expect to accrue the patients in a timely manner.

Okay. Thanks Lisa. Just secondly, just on CD20, on the phase I and II study, have you submitted data to ASH, is it -- might we see data there?

We expect that the ASH abstracts will be published very shortly and we can't give you any more details until then. But of course that is the obvious target constant for us.

So you have had the abstracts accepted? Is that --?

I think we need to wait until ASH publish the abstracts before we comment on what's happening there.

Okay. Just on IL15, do you know, in terms of the extra 70 patients that Amgen were planning to recruit, was that at the top dose, do you know?

It is our understanding that that is their plan, although they haven't made an announcement as to how many of those patients are in which dose group. But that is what we believe is happening.

Okay. Sorry, just finally, nothing against your Chief Accounting Officer, but I'm just wondering what your plans are in terms of recruitment for a CFO?

We actually have an active search ongoing. We have engaged a headhunter. And we will expect results some time next year probably.

Okay. Thanks very much Lisa.

Our next question will come from Peter Welford with Merrill Lynch. Please go ahead.

Hi. I have 3 questions, if I can. Perhaps the first question. Have you entered yet into negotiations with IFI, or how is that progressing to get European rights?

The only thing I can say, Peter, is what we have been saying publicly, that we are actively pursuing those rights and that we would very much like to consolidate the rights. Beyond that, I can only say that we think this is [fine].

Okay, and perhaps follow on to that, if I can, have you spoken to the European regulators about the phase III design for the CD4 study as well as the FDA? So are you trying to get a study that is suitable for both regulatory authorities?

What I can tell you about this initial pivotal study is that it's for the fast-track indication in the U.S., which is patients who have failed Targretin and at least 1 other therapy. That indication, although we could file it in Europe, would probably not cover a major segment of the market because Targretin is not used very much in Europe. My understanding is that physicians in Europe believe that the toxicity, or the potential toxicity, may outweigh the benefits.

So we do have Orphan Drug designation in Europe. And assuming we are able to consolidate those rights, we would focus on a study for patients who have not been treated with Targretin. But this would also be a study that we could file in the U.S. to have a potential label expansion. But the drug use outlook plan really will not change very much if we want to also have a European filing with the studies we have planned now.

Okay. And finally, if I can, when is the next milestone in the Amgen collaboration due to you?

We haven't publicly disclosed exactly when milestone payments are made, so I don't think I can comment on that beyond what you already know, that there are significant milestones due to Genmab as the product progresses.

Okay. Thanks.

Our next question will come from Annette Larson with HSH Gudme. Please go ahead.

Yes, hello. It's Annette Larson from HSH Gudme. I have 2 questions, if I may. The first question relates to the guidance. I now understand that you look to the low end of the guidance. And I wondered what has changed, since I know it's in the range of the guidance that you have given, but what has changed since you changed the guidance after the first half? I wonder whether it's, of course, because of any delay in the CD4 project or what this relates to.

And the second question is regarding HuMax-Inflam. You state that you expect to announce data in the second half. And I wonder whether you, at this stage, can confirm that you will also give information about which target and which disease you're going after with the Inflam compound.

Let me start with the guidance. We don't expect the cost of the CD4 trial to be lower than we originally projected because we do think that we will continue to accrue our patients as expected and that's where most of the additional costs will be there. What I can tell you Annette is that we are being very, very careful with our money. And that -- the guidance range was there because we knew we could fall within the range. We're happy to say now that it's November that we're comfortable with the low end of the range, and that it's simply a case of really watching our spending, which we will continue to do in the future.

Okay. So it's not just a postponement of the spending --?

It's not because of any reduction in expected activities. It's because we're squeezing every penny that we can.

Then to go on to HuMax-Inflam, we do expect to talk about it before the end of the year. I don't believe right now that we will say what the target is, because, if you remember, this is an Orphan Drug candidate and I have to be very thoughtful about whether we have any competition since it is the first to file. So I can't promise you that we will talk about either the specific target or the disease.

Okay. Great. Thank you very much.

[OPERATOR INSTRUCTIONS]. And our next question will come from Samir Devani with CODE Securities. Please go ahead.

Hi Lisa. A couple of questions. On the HuMax-EGFr trial, could you tell us when we can expect to hear the TIM response data.

I can't tell you exactly when that data will be available, Samir, because if you saw the safety data release, you noted that we didn't have a maximum tolerated dose, so we are including some more patients at the higher dose. This gives us an opportunity to collect a little more information, since there weren't that many patients in each dose level. And I don't believe that we will have all of those patients available by year end. So right now, I would prefer not to predict exactly when all those patients will be in and we can give you a full readout of the efficacy data on this study.

Okay. And then just 1 final question. The genomics payment to Medarex, I note that you paid that in cash this year. I was wondering, A, why you chose to do that. I think you paid in equity last year. And B, can you tell us or just remind us how many more payments are still due?

This year I think that we felt that after the successful private offering that we had the cash available. And we preferred not to use the remaining equity that we could issue under our existing authorization. As to the number of patients -- excuse, me, payments, we actually did say publicly when we did the offering that we did not expect to renew this collaboration, since the August payment was the last payment.

Okay. Sorry, just 1 further question. Do you have any data in terms of how many patients are Targretin failures in the U.S.?

I think we would have to ask Ole that question. The actual -- I should point out that the fast-track is either failures or patients who are intolerant. A lot of patients are not eligible for Targretin because it does raise blood lipid levels rapidly. So the Targretin failure or intolerant group is bigger than the patients who have taken Targretin and who either didn't have a response or who had a short-lived response and have stopped taking the drug.

That's great. Thanks a lot.

Our next question will come from Astrid Samuelsson with Handelsbanken. Please go ahead.

Hi Lisa. I wonder if you can comment on the status of the phase I and II study on HuMax-CD20 in CLL. It wasn't quite clear to me from the report if patient enrolment is actually ongoing there or not.

Oh yes, we started -- I think we announced that study earlier this year. We are enrolling patients in it. I can't tell you exactly when we will finish accrual, but we are actively recruiting patients and treating them in the study.

Okay. And also a second question on HuMax-CD20. Starting an RA study. Is that also scheduled for this year?

We have made all the preparations, Astrid. I can't, again, tell you exactly when the first patient will be treated. I think currently we're saying that it will be early next year that we will start treating the patients. But the work has all been done. We have drug available. It's really just a question of when all the regulatory steps are in place, the sites are initiated and the first patients agreed.

Okay. Thanks.

Our next question will come from Patrick Fuchs with DZ Bank. Please go ahead.

Hello everybody. I have a question regarding the pivotal HuMax-CD4 trial in CTLC. Will it be a controlled trial? That means do we have a placebo group with that in the trial? This was the first question.

The second question is on the revenue side, despite the milestones and everything that you achieved with Roche and also that the phase II now with HuMax-IL15 is finished, you stick to your guidance of non-significant revenues for 2004 for that?

My second question is you somehow are in the planning of the budget for next year. Will the spending there be on a similar level than this year or do you expect a slight increase there following such multiple trials there? Thank you.

Sure. Let me start with the HuMax-CD4 question. We do not anticipate a placebo control group. All patients will be on active therapy. So hopefully we will be able to get a feel for how the study is going since it will be treatment patients only as it unfolds.

In terms of revenue, we have given guidance that we expect modest revenue this year and that has not changed.

And then finally, the '05 budget. We have been saying since we raised the money earlier this year, of course, we wanted to accelerate the development of products like HuMax-CD20, that is why the planning for the RA study is underway. So we have guided probably that we expect we will be spending more next year because we will have more studies going and potentially more than one pivotal study next year as well.

Okay. Thank you.

[OPERATOR INSTRUCTIONS]. And we will go next to Mattias Haggblom with ABN Amro. Please go ahead.

Good afternoon. I had a follow-up question on the EGFr program. Assuming that you will have some indication on tumor response early next year or so, what will be your most likely commercial strategy going forward in terms of the fact -- in terms of partnering and so on, given the fact that the space is becoming more and more crowded, even though looking promising in terms of economics?

I think with HuMax-EGFr, we have continued to look for a way for a path through the regulatory system that is relatively rapid. We already had neck cancer in this first study. We may choose to go forward in that. But we also know that there are a variety of other indications, where EGFr antibodies or small molecules have worked pretty successfully. I think there are a lot of possibilities beyond head and neck. There may even be a possibility based on some pre-clinical data that's now public, that an EGFr antibody in combination with a small molecule tyrosine kinase inhibitor may have a synergistic effect. So these are the kinds of options we will be looking at.

In terms of crowding in the space, 1 thing we have seen is that when markets start to grow, there seems to be room. The TNF inhibitor product's a great example of that, that Humira has come along and sales are beating expectations. There is a fourth product in development. So it seems that when these markets start to grow, there is room for another product. We saw some data, which I'm sure you're referring to, just this week, that first line therapy in combination with chemotherapy, with the ovotox (ph) antibody, have really very promising results -- very positive results in a clinical trial. So that looks like another possibility for a bigger market.

My general feeling is that the pre-clinical data looks very strong for HuMax-EGFr, when compared to other possible EGFr products. And that we really look forward to the results of the clinical trial, which will help us see how we will position it and help us develop our expectation for what our share of the market could possibly be.

To finally answer your partnering question, we have said that we think that the cancer products are very good candidates for out-licensing. And once we have the data and handled the input -- positions with both HuMax-EGFr and HuMax-CD20, to work very seriously in finalizing partner negotiations.

Thank you.

[OPERATOR INSTRUCTIONS]. If there are no further questions, I will now turn the conference back to Lisa Drakeman.

Thank you all for joining us this afternoon. I can see you had many questions for me and I will encourage you next time we have results to think of at least one for Bo. But we very much appreciate your interest in the Company. We also are very excited about Genmab's possibilities going forward. And we look forward to talking to you all again in the future.

Thank you and goodbye.

This concludes our conference for today. Thank you all for participating and have a nice day. All parties may now disconnect.