Genmab A/S (GMAB) 2007 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to today's Genmab conference call. Today's call is being recorded. During this telephone conference you may be presented with forward-looking statements that include words such as believe, anticipate, plan or expect. 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. At this time, for opening remarks and introductions, I would like to turn the call over to Dr. Lisa Drakeman, Chief Executive Officer. Please go ahead, madam.

Hello. And welcome to the Genmab first quarter results conference call. Thank you all for joining today.

I think many of you have already seen the press release which tells you that results for the first quarter of 2007 are in line with management expectations. Revenues are up significantly as we are now amortizing the GSK up front and premium to the equity investment they made.

We also had significantly higher net income in this quarter than we did during the first quarter of 2006. Excuse me, net financial income. We ended the quarter in a very strong cash position; $755m, DKK4.223b.

I have on the call with me today, Bo Kruse, our Chief Financial Officer and we would now be happy to take any questions from all of you.

Thank you. [OPERATOR INSTRUCTIONS]. We'll take our first question from Richard Parkes, Piper Jaffray. Please go ahead.

Good afternoon. I've just go three questions, if that's okay. The first question, I think, this is the question probably everybody's got. Just wondering if you can give us an update on recruitment to the pivotal CD4 and CD20 studies. I'm just wondering how that was progressing.

Secondly, there's been additional further positive data for Rituxan in autoimmune indications recently. And I'm thinking of the HERMES data. I'm wondering when we can expect an update on your and GSK's plans to progress to additional indications beyond rheumatoid arthritis. I've noticed that GSK are planning an R&D update in June and wondered if we could expect CD20 to be included in that update.

And finally, on the EGF pivotal clinical program, I think in my timelines I'm expecting a read-out from that trial in the second half of 2008. But I'm just wondering if there are any interim analyses planned in that study. Can we expect to see any clinical data before then?

Thank you, Richard. Let me take your questions in order. In terms of the recruitment, I think it's fair to say that we are every bit as interested in seeing that data as anyone who is following the Company. And we're doing everything that we can to bring patients into this study. And I think it's also fair to say that I pretty much stand over Claus saying, "when are you coming with the recruitment and the data"?

Having said that, it just hasn't been our policy to give interim updates on recruitment; we will let you know when recruitment is finished. And, as I said, we're doing everything we can to speed that process.

And your second question was the positive data in MS with Rituximab. We also thought that data was very interesting and encouraging. We think that MS is a good area to try with the CD20 antibody, particularly, since there was a very significant percent of the patients that had antibodies against Rituximab. So we think our human antibody would potentially be better for the patients.

So we're very interested in that. We have not reached a point with GSK where we have a plan for how we'll discuss the rest of the development strategy. We are working very hard, as I said, with the development teams between the two companies. And we would like to see the indications expand and we'd like to see that process begin pretty soon but I can't give you any specifics at the moment.

The final thing, which is the EGFr study, we have not announced any plans for an interim analysis. This is a survival study and I think it's a little hard to predict exactly when we will have the data, but we don't expect it before next year.

Okay. That's great. Thank you. And I've just got one last housekeeping question, if that's okay, before I drop back in the queue. I know you've probably been through this before, but in terms of your financial guidance, could you just run through what assumptions you've made in terms of revenues in that guidance?

Bo, would you like to answer that please?

Yes. We have not been very specific on the revenue numbers included in our financial guidance. But in line with the results for the first quarter, the revenue does include amortization of the up-front payment and the premium on the equity investment on the GSK agreement, as well has similar aspects of the Merck Serono agreement. And on top of that we would have services provided under our various collaborations agreements included.

And does that include a pre-filing milestone associated with CD20? Is that assumed in your guidance?

We're not being specific as to which items are included in that.

Okay. Okay, that's great. Thanks very much.

We'll take our next question from Brigitte de Lima, Merrill Lynch. Please go ahead.

Hello. Thanks for taking my question. I've just got another question related to CD20. I understand that you don't intend to provide further guidance. But could you just let us know whether the first quarter revenue includes any milestones related to CD20, in addition to the up-front payment and the equity premium? Thank you.

We are not recognizing any milestones that I'm aware of. Bo, do you agree with that?

I certainly do agree, yes.

Okay. I think if we received a milestone we would most likely be disclosing that because it would probably be material.

Okay. Thank you.

We'll take our next question from Philippa Gardner, Lehman Brothers. Please go ahead.

Hello there. I have a couple of follow-up questions to both Richard's and Brigitte's, actually. Just, in terms of the revenues, I was wondering if you could actually split out for us what the source of the revenue was in this quarter by collaboration.

I also just have a question on, given the dollar weakness, what impact does that have on your revenues? And is the revenue that we've seen in the first quarter, is that a good guide for the remaining quarters this year, if we don't assume any additional milestones or deals?

And then I've also got some questions on your development program, so I'll come back to those once I've got the financials out the way, if that's okay.

Bo, could you handle the financial questions please?

Yes, certainly. With respect to the split of the revenue, we obviously have not provided a lot of details, but what you can tell from the report is that the combined up-front payment from GSK and the premium is amounting to almost DKK1.1b. And it is being amortized and recognized as revenue. So the amortization is on a straight-line basis over 60 months. So it means that we would recognize about DKK18m per month, and on a full quarter that would be DKK54m.

Basically, what you can tell is that other sources of revenue will be approximately DKK25m in the first quarter. And with respect to the amortization then, on a straight line, then obviously you would expect the following quarters to be in the same league.

Okay. And then just on the -- what sort of impact do you see from currency, particularly with the dollar. How much impact does that actually have on revenues?

It would only impact revenues denominated in dollars, which is at the moment a small fraction of our total revenues, so a very limited impact.

It's important to point out the GSK contract is actually in kroner.

Okay. Okay. And then, just on your development programs, I've had a look through the ASCO website. Is there -- I can't see anything, but is there any new data coming out from Genmab at ASCO that we should be aware of?

I am not aware of any significant data coming at ASCO.

Okay.

What about you, Bo?

No, me neither.

And then just finally, on EGFr, obviously recently we've seen some new data on the mechanism of action and there's been some recent trials that have been initiated. And I was just wanting to get a sense of has this accelerated or impacted any of the potential licensing discussions that are happening with this product.

I think the data, essentially, because we've been able to show, as far as I understand it, in a way that no-one else has ever shown some new information on the mechanism, helps distinguish HuMax-EGFr from other EGFr antibodies. And we are trying very hard to put together a package of pre-clinical data that differentiates the antibody.

It's similar to the package that we had with HuMax-CD20. Our goal is to be able to show what's distinct about this antibody and how it may actually be better for patients. And, obviously, we need clinical trials to establish that more definitively.

So, I guess that's a long way of saying that I think this data is very positive for any partnering discussions, because the pre-clinical package and the way that we have characterized the antibody was very important in the CD20 licensing.

Okay. That's great. Thank you.

We'll take our next question from [William Van Rentagam], Canaccord Adams. Please go ahead.

Yes. Good morning. Actually, I have a few questions on CD20 in NHL. I was wondering whether you had a timeline for the read-out of the interim data of the Phase II.

And another question was I was wondering what drives this interim analysis. Is it the number of patients or any particular event?

Additionally, is there any statistical penalty for looking at the data now? And I was wondering, as well, if the data you could get actually at interim that will be enough to file to the FDA.

Could you tell me specifically which study you're asking about?

Sorry, The CD20 in NHL, the Phase II.

The one where we're doing --

Sorry. It's the Phase III, sorry. My mistake.

Okay. Yes, that's -- okay, sorry, I was thinking of another study. Yes, the Phase III study, I don't think that we have discussed any possibility of an interim analysis in this study. These are the -- you're asking about the study where the patients are refractory to Rituxan?

Exactly.

Is that right? Yes. I'm not aware of any interim analysis that we've discussed that would be announced for that.

And whether there would be a statistical penalty is probably a question for the regulatory people. My general understanding is in a controlled study that you may have a statistical penalty. This is an open-label study while the patients are on treatment, although, they are randomized to one of two doses. But this is --

So there is no timeline on this Phase III trial?

I'm sorry. What?

You can't give us any detail of the timeline of this Phase III trial?

We have said that we hope we will have the data before the end of the year, although, we can't predict because it's all depending on accrual level.

But this data will be interim data or the final data?

I think any data that we talked about releasing for this study would be final, in the sense that it would be based on the response rates. It's interim in a sense that, of course, we'll continue to follow the patients and see how long their responses last. That's been true of some of our other studies that were -- where the endpoint was response rate.

Okay. Thank you very much.

[OPERATOR INSTRUCTIONS]. We'll go next to Melissa Gallagher, Bear Stearns. Please go ahead.

Hello there. Actually, all my questions have been answered so if you'd like to move onto the next one.

Yes, madam, thank you. [OPERATOR INSTRUCTIONS]. And we'll take a follow-up question from Richard Parkes, Piper Jaffray. Please go ahead. Sir, your line in open.

Hello. Sorry. I was on mute there. Yes, I just had one final question related to the EGF licensing discussions. Obviously, we've seen some significant data from other EGF antibodies, and I'm thinking about the [ritux] pancreatic data and the [PACE] study of [vactadex] that could potentially affect the ultimate market opportunity for an EGF antibody. We're expecting some further data later in the year, I think, in lung cancer.

I'm just wondering if you could discuss how the dynamics of how that data is being perceived by potential partners. Has it either positively or negatively affected the level of interest in the product?

That's an interesting point. I think pancreatic cancer is a very small market and a very difficult disease. The combination with Avastin, obviously, is potentially a bigger market opportunity. And I don't think anyone knows yet exactly why [tantumumab] didn't work well. I guess there's some speculation that it just may not be the ideal combination to use as [an] EGF inhibitor in combination with an EGFr inhibitor.

But, to come back to your partnering question, I think that we're seeing a lot of interest. We're trying to be very selective about the EGFr partnering in the sense that we learned so much about the potential partners in the HuMax-CD20 partnering that we feel that we can approach -- maybe not approach, but agree to talk with certain parties now because we think there's a good fit for a lot of reasons. And we'd like to see someone that's very strong in oncology. We'd like a company that is collaborative, where we can have a co-development type agreement, like the one that we had with GSK.

So, I think the short answer to your question is that we're busy with the EGFr partnering, even though we can't predict the timing of when this will all finish.

Okay, great. Thanks very much.

And we will take our next question from [Michael Whirley], [Dannies]. Please go ahead.

Just wondering if you had an update on HuMax-CD4 and when the Phase III data might be released.

I wish I could tell you exactly when that Phase III data was coming. It all depends on when we complete accrual. So we continue to hope that we will have this data before the end of the year and we will let you know as soon as all the patients are in the study.

Is there any update on the accrual?

There isn't. We haven't given any interim updates.

Thank you.

[OPERATOR INSTRUCTIONS]. And we'll take a question from [Bruce Turner], [Digro]. Please go ahead.

Thank you. Good morning. Just a general accrual question on the HuMax-CD20. What -- there is -- has been some difficulty with accrual to both CLL trials and follicular lymphoma trials, not yours in particular, but in general.

And I wonder your thoughts about why that might be the case, just given the fact that Rituxan refractory and fluderabine Campath refractory patients have no other options. And I would think, given some of the interesting data that you have and other companies, have that those type of trials would accrue rapidly. Are there any thoughts about your general sense of what's going on in those areas?

I agree with you that, based on what my clinical team tells me, these patients don't have options and that they should be very anxious to be in clinical trials and, moreover, that the physicians who treat them are also very interested in finding ways to treat them. I think I can't comment on what's happening with other people's antibodies, and we really haven't, as I said, given any interim read-out on the accrual. I'd be interested in knowing what studies you think have had difficulty accruing.

I think some of your competitors, without going into specific names, but some of your competitors have had difficulties accruing. And I find that perplexing because these patients are, as I said, Rituxan refractory, Campath refractory, there are no other options. And so I would think that these people would be lining up to sign up to these trials.

The only thing I can tell you is that in the Phase I/II studies, which already finished, we found the patients very rapidly. We didn't have any difficulties filling those studies.

That's great. Thank you very much.

[OPERATOR INSTRUCTIONS]. And at this time we have no further questions from the phone audience. I would like to turn the conference back over to Dr. Lisa Drakeman for any additional or closing remarks.

Thank you all for joining us today. We appreciate your interest in Genmab and also the chance to talk to you about your questions and bring you up to date. We look forward to talking to all of you again in the future.

Thank you and goodbye.

That does conclude today's presentation. Thank you for your participation. You may now disconnect.