Genmab A/S (GMAB) 2006 Q3 法說會逐字稿

Good day everyone and welcome to the Genmab conference call. At this time, I would like to inform you that this conference is being recorded, and that participants are in a listen only mode. At the request of the Company we will open the conference for questions and answers after the presentation.

During this 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 delayed or unsuccessful development projects. 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.

Now I'd like to turn the conference over to Dr. Lisa Drakeman, Chief Executive Officer of Genmab. Please go ahead.

Hello and thank you all for joining us today on the Genmab nine months results conference call. If you've seen the release, you know that results were essentially in line with our expectations, and that we have reiterated our guidance for 2006. Genmab did end the nine months period with DKK1.85b which, at the exchange rate at the end of September, works out to about $315m.

This was also, I think, a very positive quarter for us on the development front. We did initiate a Phase III study in HuMax-CD20 in follicular lymphoma. We started what would become our fourth pivotal study with HuMax-EGFr in refractory head and neck cancer patients. And we also announced completion of enrolment in the Phase II RA study with HuMax-CD20. Subsequently we did have an R&D day, and we have informed everyone of our plans to extend development programs for both HuMax-CD20 and HuMax-EGFr.

Today on the call I'm joined by Bo Kruse, our Chief Financial Officer, and we are now happy to answer any questions that any of you may have.

Thank you. The question and answer session will begin at this time. [OPERATOR INSTRUCTIONS] Our first question comes from Sally Bennett with Piper Jaffray.

Hi. Just a couple of quick questions, Bo, probably first one for you. Just in terms of R&D, I think you spent about $25m in the third quarter. And if I go by your guidance being maintained for the full year, I get that your fourth quarter R&D could increase to 29 to -- up to $36m. Is it too simplistic or too aggressive? If I annualize that for 2007, then that gets me to a minimum R&D spend of $120m. Is there any reason why I shouldn't annualize that, or if you could perhaps give some comment on that?

And then just secondly, Lisa, I don't think you said Klaus was there, but I just had a question on -- obviously you said you're expanding the HuMax-CD20. You've got two studies in frontline use. I'm just wondering if you thought about beyond that strategy for route to market in the frontline setting? I guess in particular I'm thinking in non-Hodgkin's lymphoma. Rituxan's now approved in the U.S. and Europe in the first line setting. I was just wondering if you'd thought about your strategy for route to market in frontline? Thanks.

Yes. Let me actually pick up on your first question, Sally. We really haven't made any announcement of our 2007 budget, and the amount of the budget is going to depend on a lot of factors. Like when we sign a partnership, for example, for the program. I think it's entirely possible that the development plans would extend then. But I don't think at present that you can estimate the R&D budget, because obviously an R&D budget of $120m plus our G&A expenses, would be a pretty significant increase.

We have signalled than we expected and more next year, but I don't think that we're prepared at this point to explain exactly where we'll be, just in case the spending will go up. I think what happened this year is we have a lot of studies that are starting, as we explained on the R&D day. And then, of course, subsequently we've already announced the initiation of one of them. So we have a lot of expenses coming in this fourth quarter related to that.

In terms of the HuMax-CD20 ongoing effort, I think that we are putting a lot of time and effort into thinking about frontline indications, and how we can have the broadest possible label for HuMax-CD20. Now the reason we have started the Phase II studies that we're discussing in frontline, is to see what we can learn from them.

We are also looking forward to the data from the first Phase III studies. Because that will give us some ideas of what the profile of HuMax-CD20 is starting to look like, and how we can portray what we hope will be the strengths of it. And also have ongoing clinical studies to show that.

So what I can tell you is that this is the subject of a lot of thought and a lot of discussion with advisers. We do need to see the results of some of the existing studies before we can make a final plan for frontline development. Or I should say, for frontline label, there will be ongoing frontline development.

Okay, thanks.

Now to [Lisa Gardner] with Lehman Brothers.

Hi, good afternoon. I just have a couple of very quick questions. Are we still expecting to hear something on HuMax-Inflam by the end of this year?

And then the second question, just on HuMax-CD20 in RA. Are we likely to hear anything on that before we get the data next year, please? Thank you.

Sure. HuMax-Inflam, it's still our goal to tell you about that program, a little bit more about it and our plans for it before the end of the year. So that is certainly something on our agenda.

HuMax-CD20 RA - I don't think we have any plans to discuss the results until we see the full results, which will be sometime in the first half of next year.

That's great, thank you.

[OPERATOR INSTRUCTIONS]. We'll turn next to Erica Whittaker with Merrill Lynch.

Hi, there. Just a quick financial question regarding financial income. And in your report it said -- I think it implied that it's mostly interest income, but I was wondering if you had any foreign exchange gains in the quarter as well?

I think the development on the dollar rate to the Danish krone has been very flat in the third quarter. So what you saw in the report on the third quarter is essentially interest and the increase in fair market value of our securities. So there's no exchange rate contribution in this.

Okay, thank you.

And now we'll move to Kari Larsen with APM Health Europe.

Hello, this Kari Larsen. I'm wondering -- I've got two questions. Why is it that your R&D expenditure has gone so much up? What specifically has caused that?

And also, you mentioned on the R&D update about possible look at new partners and I wondered if there was anything new on that?

Let me start with the partnering question. I don't think there's anything to add beyond what we said at the R&D day, which is that we do have a very significant number of highly capable, potential partners. We're working very hard to select the best one. I think that the list is shorter than it was over the summer, but that we're still talking to multiple parties. So we can't really predict exactly when we will find something.

Bo, do you want to make any comment on the increase in expenses?

Well, the -- a brief comment in addition to what you explained to Sally a minute ago. When you look at the increase from the -- especially from the second quarter to the third quarter, then I think it's also important to remember that the second quarter was relatively low cost compared to the second quarter of 2005. So doing this kind of trending thing is maybe not the best way to see where we're headed.

Okay, thank you.

I think we have no other questions in the queue. [OPERATOR INSTRUCTIONS]. And no one else has signaled that they have a question. I would now like to turn the conference back to you, Dr. Drakeman.

Thank you all for joining us today. It's always a pleasure to talk, especially when our results are as expected. We look forward to talking to you again in the future. Thank you and goodbye.

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