Genmab A/S (GMAB) 2006 Q1 法說會逐字稿

Good morning and welcome ladies and gentlemen to the Genmab Conference Call. [OPERATOR INSTRUCTIONS]. During the teleconference -- telephone conference you may be presented with forward-looking statements that include words such as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of application 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 return the -- I will now turn the conference over to CEO Dr. Lisa Drakeman. Please go ahead.

Good afternoon/good morning to any of you calling in from North America. Thank you for joining the Genmab first quarter results conference call. I expect most of you have seen either the interim report or the press release by now and you know that results are definitely in line with our guidance, and that we've actually posted US$7 million in revenues in the first quarter. These revenues are derived from various partnership arrangements.

In addition we show a significant increase in cash primarily due to the successful follow-on offering that we concluded on February 1st. Despite the fact that we were pretty busy working on the offering Genmab had a very productive first quarter. We received Fast Track status from the FDA.

We have very promising and encouraging HuMax-CD20 Phase I/II RA data. We heard from Amgen on AMG 714 and their plans to move forward with a more commercially viable cell line. We also reached a milestone with Serono in the HuMax-TAC program I should point out. And licensed in some targets and we're very happy that we appointed a new Head of Business Development.

So altogether a busy quarter and a lot to look forward to in 2006. I have on the call with me today Bo Kruse, our Chief Financial Officer, and we'd like to open the call up to your questions now.

[OPERATOR INSTRUCTIONS]. And we'll take our first question from Erica Whittaker with Merrill Lynch.

Oh hi there. I just had questions about the revenues in the first quarter. And I understand about US$1 million is from the milestone from Serono from the HuMax-TAC and about DKK 19 million were from deferred income. Could you go into a bit more detail about where the other revenue came from and whether the Serono milestone was booked fully in the first quarter?

Let me give you a quick summary and we'll ask Bo to answer the question about how we booked the $1 million. The other revenue is coming either from Serono where we are carrying on as you remember both the Phase III and the Phase II trial.

Yes.

And from Roche where we continue to receive some revenues related to the research work we're doing for them. Bo, is there any other source of revenue besides those two and can you answer the question about how you booked the $1 million?

Yes the HuMax-TAC milestone was booked in the first quarter and on top of this we also have Serono paying for the development of expenses on the ongoing trials with the HuMax-CD4 antibody so that's also a contribution to the revenue line.

Okay and would you expect a similar level of Serono revenues for those costs going through the rest of the year?

I think they'll vary, Erica, depending on how much activity there is. Because I think -- Bo, am I correct that we pay bills on behalf of Serono, for example, depending on how many patients come into the studies? Don't the contracts flow through us?

They do flow us and that way it will vary a little bit, yes.

Okay and what -- I mean what proportion of the revenues in the first quarter were for the HuMax-CD4 clinical trials or am I getting too detailed?

I think that's probably more detail than we do release.

Okay and the second question I have is just on the R&D costs because they went down a little bit from the fourth quarter of '05 to this past quarter, and I'm just wondering why the costs decreased and what programs were ended? And what the outlook is for the rest of the year in terms of R&D spend?

I don't think that any programs were decreased. I think variation and cost has to do with when we pay for things like manufactured material.

Okay.

Or throughout the flow of patients in and out of the clinical studies. Bo, do you have any comments beyond that?

No ordinary fluctuations I would say.

Okay and I was wondering if you could give us any update if that's possible on how the partnering discussions are going for HuMax-CD20 and EGFr?

I think we can repeat what we've been saying that these are very unusual products, products that will soon enter Phase III and because of that there's very significant interest. It's a lot of work for not only the business development team for R&D and our development teams to pass over information and that kind of thing. So I would say that it's very active.

We expect that the activity will continue but we can't predict right now when we'll select a partner and finalize an agreement.

Okay thank you very much.

Thank you and we'll take our next question from Mattias Häggblom with ABN AMRO.

Mattias Häggblom: Good afternoon. Thanks for taking the question. Lisa, could you confirm that your ambitions to bring both the EGFR and CD20 into Phase III during the first half of '06 is an ambition you still have and is committed to? Or are there anything that's happened over the last few months or so in terms of getting manufacturing in order and finalizing discussions with the FDA that could have an impact on that?

And then secondly could you comment on and if yes, how the relationship with Serono has been impacted by their initial ambition to come out and potentially sell the company and then concluding they're coming back that they are rather looking into some aggressive situation. And telling how impacted your long-term view of how to position CD4? And I know you -- they take all the expenses and so on but has that anyhow impacted the teams working on the CD4 and the HuMax-TAC for that instance?

Okay let's start first with the timing. Current thinking is that we hope to start the HuMax-CD20 studies first and we expect they're coming very soon. I don't believe we've had any manufacturing issues that have affected that. It's really always a question of working through the regulatory system not only at the FDA or the European oversight authorities but the local system, the IRBs, the ethical committees.

So those are on track. The HuMax-EGFR I also think is moving along very nicely. We always projected that that one would come a little closer to the summer. And so right now all the plans for Phase III studies for both of them are on track and we expect those studies to start in the relatively near future.

In terms of the Serono relationship one of the nice things about this partnership is that it was our job to keep running the ongoing pivotal study as well as the existing Phase II. I can't comment on what was happening internally at Serono, but I do know that the Genmab team during this period where Serono talked about finding a buyer just continued to do their job, working on the clinical studies, making plans for other studies in combination with the Serono team.

So I think that in the longer term it's good for us to know that we expect Serono will be the partner at the time of launch, and also it's always possible that someone might have bought Serono that wasn't interested in cancer. So I think we feel comfortable now that they haven't sold the company and that we have an idea of what the future will bring in terms of the commitment to the launch, and the ongoing capabilities that Serono being available for HuMax-CD4.

Mattias Häggblom: Excellent, thanks.

[OPERATOR INSTRUCTIONS]. We'll take our next question from Steve McGarry with Goldman Sachs.

Hi good afternoon. Just a quick question on business development and developments in the sector generally. I mean specifically looking at the acquisition of Abgenix by Amgen has that impacted your thoughts at all in terms of the partnership structure that you may negotiate on either the EGFr receptors or the CD20 product? And has that in any way impacted your value expectation for either one of those deals?

You know that's a really interesting question, Steve. I think with the EGFr antibody in particular the fact that Amgen is so bullish on panitumumab and believes the potential market at least as I read in publicly available comments is in excess of 2 billion. Certainly I think should make everyone think hard about what the final value of the EGRr antibody can be especially because our preclinical data suggest that our antibody could be better than the two antibodies that are -- one's on the market, and one's filed.

So when we think about both HuMax-EGRr, HuMax-CD20 we want to make sure that we keep as much of the value of the program inside Genmab as we can. And our current thinking is that we ought to try to have co-development and co-promotion agreement so that really we're participating on the upside for both of them. That could change. People could always make us an offer that would change our minds. But the current belief is that these are pretty valuable. That we ought be looking for good terms for both of them and that we would really should try to participate in the commercialization.

Thanks very much. Just one follow-up question there, I mean obviously both are oncology products as you meant when you're talking to the same types of partners of both products and from that point of view it is a possibility or a likelihood even that you would partner both products at the same time to the same partner?

You know our current plan is not to sell them as a package deal. I guess one concern I would have if we tried to do that is that people sometimes expect a discount when they buy more than one thing. So I'm not sure that that would be something that we'd be actively seeking. But it doesn't mean it couldn't happen though.

Okay thanks very much.

[OPERATOR INSTRUCTIONS]. And Dr. Drakeman it appears we have no further questions. I'd like to turn the call back over to you for any additional remarks or closing comments.

Thank you all for joining us today to talk about first quarter results and a general update of Genmab. We appreciate your continued interest in the company and look forward to talking to all of you in the future. Thank you and good-bye.

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