Genmab A/S (GMAB) 2007 Q4 法說會逐字稿

Welcome to today's Genmab conference call. Today's conference is being recorded.

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

As I'm sure you know if you've been following the Company, 2007 was a very exciting year for Genmab, where we worked toward our goal of bringing new medicines to patients and transformed Genmab into a late-stage Company, late stage development. But, of course, our goal is to build for a commercial future. And with seven Phase III studies underway, by the end of 2007 we feel we've made tremendous progress in that direction.

We also received a 2007 Scrip Biotech Company of the Year Award, and we think that does highlight all the progress that we've made and we plan to keep making that kind of progress at Genmab.

A quick summary of our key achievements in 2007 are that, first, we made significant progress in the HuMax-CD20 collaboration with GlaxoSmithKline. We expanded the pipeline. We have seven Phase III programs at the end of the year, compared to four in 2006, and we also initiated -- seven new clinical studies initiated for a total of 10 clinical programs.

We presented positive clinical data from HuMax-CD20, from HuMax-CD4 and also Roche presented very encouraging data from the product they call R1507. This is an antibody directed against the IGF1 receptor. And you may have also seen that Roche started a Phase II study with that program.

Now, I'm highlighting this because I'm not sure that everyone has followed that story. But we know that Roche is now saying publicly that this Phase II study is part of a registration strategy. They're treating sarcoma patients and they're very encouraged by the Phase I/II results. So during the course of the next year or so, I imagine they will expect to complete enrolment in that study. So I think that, as we look forward, we should remember that the R1507 program is a late-stage development program.

Going on from there, another important point was that we achieved membership in the OMXC20 index. We are now one of the most heavily traded stocks on the OMX in Denmark.

Now, we made all this progress and, of course, in order to do that we had to invest in the Company. We did have very significant revenues in 2007 of DKK530m versus DKK136m in 2006; a very dramatic increase of 289%. Our operating loss was DKK437m and our net financial income was DKK54m. The net loss resulted in DKK383m, and this is lower than 2006 when we had DKK438m.

We did give out guidance expecting our net loss to be lower than that but, because we received a DKK87m milestone payment from GSK in early 2008 instead of at the end of 2007, we were outside the guidance. But the cash did come into the Company shortly thereafter.

Now, when we look forward to 2008, we see an extraordinarily important year. During 2008, we expect to file the first BLA that will be for HuMax-CD20. We also expect to see clinical data from at least three programs and, potentially, a fourth.

So the BLA would be based on what we expect to be positive clinical data from HuMax-CD20 in treating chronic lymphocytic leukemia patients who are refractory to other therapies. We hope to see that data by the end of the second quarter. All the patients were in the study in November, so now it's just our job to complete the analysis and make that data available.

Going forward, we also expect that we'll see data from another Phase III study with HuMax-CD20, and that is in follicular lymphoma patients who are refractory. And we hope to see that late in the year.

In addition to that, we are carrying on the HuMax-CD4 study with cutaneous T-cell lymphoma patients, and we think there's a good chance that we will see an interim analysis of HuMax-EGFr in the late-stage head and neck cancer patients. So current expectations are for three sets of Phase III clinical data, as well as a good chance of seeing a HuMax-EGFr interim analysis before year end.

Now, beyond that, we expect to keep advancing the clinical program. We expect that we will initiate 17 new clinical studies and plan for nine new Phase III studies which would bring us to a total of 16. In addition to that, we will move other programs forward. We expect to find new clinical candidates and we expect the pipeline to grow as HuMax-HepC would enter the clinic.

I think it's very important to point out that, to the best of my knowledge, we have the largest late-stage pipeline of a development stage company, a company that isn't already selling products, and that this pipeline is being developed to bring value to the Company. We explained that in the past as we were working on the HuMax-CD20 antibody, for example, that development does bring value to Genmab. And it is one of our skills to be able to create and develop very exciting new antibody products.

Now, in order to meet these goals and to plan for the future growth in the Company, we do expect to spend more in 2008. And, in addition to spending more, we also have a new manufacturing facility which will add to our expenses this year.

So, as we look forward, we will see an increase in our operating loss and our net loss and we will be using a significant portion of our cash. However, we'd like to emphasize that this is a very important, decisive year for Genmab and that this money is being invested in the future of the Company, both for patients and for the investors and the shareholders who have made this Company possible.

As we move into this year, we look forward to speaking with many of you and we very much look forward to taking your questions and answering any questions that you have for us today.

So, I have with me on the call Dr. Claus Moller, our Chief Operating Officer, Dr. Jan van de Winkel, our Chief Scientific Officer, and Bo Kruse, our Chief Financial Officer. And I'd like to hand this call over to the operator so that we can begin taking comments from all of you who are joining us.

Thank you. (OPERATOR INSTRUCTIONS). And our first question is from Guillaume Van Renterghem with Canaccord Adams.

Good morning, everyone. A question for (inaudible). Three questions for you, please. The first one is on HuMax-CD20, the Phase III you have in NHL. I was wondering, actually -- in my mind, this study was meant to read out in Q2 '08, and apparently it's going to be more H2 '08. And I was wondering how many patients you had recruited to date and when you were expecting to recruit the full patients.

As well, in terms of CD20, I was wondering what was your plan in terms of filing? Do you expect to wait for the NHL data to read out before filing in NHL and CLL, or do you expect to file in CLL as soon as possible?

And my last question is with regard to R&D cost and SG&A. It's kind of hard to forecast your revenue because most of them are [day sale] revenues. And I was wondering whether you could give more guidance on the R&D cost for the year and the SG&A cost for the year as well.

Let me start with the first two questions. We have not given an update on the NHL recruitment. What we have said is that we do expect to see data later in the year. And when the study is -- when the accrual is [accretive], normally we make an announcement about that.

The plans for filing is a really important question, and our current plan and the plan of our partner, GSK, is to file on the basis of the CLL data which we expect to start seeing around the end of the second quarter.

Finally, on the R&D cost, I don't believe we can provide more detail than we have given, but maybe Bo can reiterate, because we have said that 90% of our budget is for R&D. Bo, could you give a summary on that?

Yes. As you said, Lisa, about 90% of our operating budget is R&D cost, so it means that we would be investing DKK1.7b to DKK1.8b in R&D in 2008 and that, of course, compares to about DKK850m in 2007.

The operations of the new manufacturing facility is [a kind of] a part of that and, as we described in our outlook for 2008, we are also expecting to spend about DKK500m in the CD20 program. The expansion of the pipeline in general would mean that the other project expenses would also increase. And the fourth item I would mention is that we are also planning on expanding our discovery [workings].

I would like -- (multiple speakers). I would like to add one comment to that. While I can't give you exact milestone expectations for 2008, what I can tell you is that we do expect between 2007 and 2009 to receive pre-approval milestones from GSK of DKK1.37b which, at the year-end exchange rate, would have been 270m. We have always received $57m, or DKK290m, of milestone payments so far.

Now, I can't tell you the exact timing of these, but this does not include any approval milestone. This is pre-approval milestone that we will be expecting to receive the balance of this year and next.

Okay. Thank you very much.

And our next question is from Peter Welford with Lehman Brothers.

Hello, I've got a couple of questions. Firstly, let me just continue with the R&D spend guidance. I was wondering if you could possibly give us some sort of ballpark figure for the amount that could go on the EGFr program, more particularly, on the manufacturing facility's running costs. I know you've given CD20 guidance more specifically, but just very broadly can you talk about those two costs for those two programs if possible, please?

I don't think that we've provided that level of detail in either case. One thing I should point out about the manufacturing facility is that this year we -- one of the reasons we have higher spend on manufacturing is that, while we are transferring our programs into the manufacturing facility, we are at the same time still using contract manufacturers for the sum of those.

So I think that this year the manufacturing numbers are a little higher, as we said they would be when we acquired the facility and there will be some truth in that next year also. But, as we said before, over time, over the course of four years based on our current manufacturing needs, we expect to save $100m.

I know that doesn't answer your question directly, but that's probably the best we could do right now.

That's fine. Okay. The next question is speaking with costs again. I was wondering what the guidance assumes for the U.S. co-promotion option with GSK. Clearly, the data are coming, you said, by the end of 2Q, so filing could then follow that.

So I'm wondering are you assuming that, whether or not you exercise that option, there will be no build-out of spend this year, or is that a variability in the guidance that we should consider? Because, clearly, with 90% of spend on R&D, it looks as though it was very little being -- very little else, if you like, forecast for this year.

That's a really good point, Peter. We actually don't need to decide to take our option until considerably later in the year. So, you're right that we're not putting costs in there. That doesn't mean we've made any final decisions on the co-promotion option. But, you're right; this budget does not include spending in that direction. And it doesn't affect, of course, our income either from this HuMax-CD20 program.

That was [what I thought], because GSK covers all of your cost anyway. So, from that point, it's somewhat cash-neutral.

It's relatively cash-neutral.

Yes, sure.

They paid the vast majority of the salaries of any sales force that we'd built up under the agreement.

Okay. And, finally, I promise to be very quick. The CD4 program; you mentioned that you should get Phase III data some time this year but you didn't mention filing. Now, do you believe in the current form the Phase III trial is suitable for, at least an FDA regulatory submission, or are some of the additional Phase III trials, do you think, required to supplement that data to then submit to the FDA Regulator?

I think we should hand this question to Claus.

We are very comfortable that we have an FDA agreement with the FDA on this currently ongoing pivotal study. We emphasized this in the fall of last year when we have had a new contract with the FDA and lending the protocol after. We took it over from Serono and expanding the potential patients that could go in. And we got a confirmation from the FDA during that process that the protocol was still eligible for the FDA agreement that we had agreed on with the FDA in the beginning. So we are comfortable that this study, pending positive outcome, will support a filing for CD4 alone.

That's great. Thank you very much.

(OPERATOR INSTRUCTIONS). Our next question is from Frank Andersen with Jyske Bank.

Yes. Hello, it's Frank from Jyske Bank. I have also a couple of questions that is again regarding to the cost structure. To be quite honest, the net loss of 2008 was coming as a little bit of a surprise to me. So I was just wondering if there were any surprises for you, or why it ended in that big, if there's something that I missed.

And second, I would like to know if you could elaborate a little bit on the R&D cost going forward to see if the level that you're expecting in 2008 will be sustainable going forward.

You know, Frank, I think that's a really important question. I'm really happy that you asked it because Genmab is having a very important transitional year. And if you think about adding nine Phase III studies and 17 new studies, plus the manufacturing facility cost to the work that we were already doing, then suddenly we are spending quite a bit of money. But we can't move forward easily without controlling our own manufacturing capacity. We have so many projects now that it's very important to have some flexibility in the timing and also to have this facility available for commercial manufacturing.

We also believe that the products we are working on that are in late-stage development have a lot to offer and, because of that, we're looking at new indications or earlier stage treatment with them. And it's very hard to run Phase III studies without spending a considerable amount of money.

Now, I think that if you were to compare us to other development stage biotech companies that we would have an unusually full pipeline. But you're not used to seeing companies that have three products in Phase III development and 10 programs in the clinic, and are broadly spreading out the development of the projects. We're fortunate that, because we were able to have some financial flexibility after the GSK transaction, that we can make these investments now.

Having said that, we wouldn't be doing this if we thought we couldn't make a business on the basis of these development programs. So, as we look forward, you remember that we talked about the pre-approval milestones. If things go well, as we really hope they -- and expect they will, we will be able to go for approval milestones and also revenues from these products as we start to come to the market with them.

So this is a big investment in the future. But what we hope is that we will start to see an even more significant increase in our revenues going forward and that we will be in balance, because we will now have things on the market. I hope that's helping you.

Yes. Thank you.

And our next question is from Erica Whittaker with Merrill Lynch.

Hello, there. I just had a question about the CD20 CLL Phase III data again. The last patient was recruited at the end of November, so I guess the last patient dose, or the last patient observation after six months, will be at the end of May. Now, you've said you start seeing data at the end of June. Do you expect to release interim data, or are you going to wait until analysis is completed on the entire patient cohort before releasing the full data?

Claus, would you like to comment on that?

I think we can probably -- we get our tranche just because we have independent data evaluation. So, from just after the last patient has been at the last visit, we will start getting the data tranches in.

And we may be able to either decide to wait until we have all 66 patients. It's not that we're sitting waiting for all 66 to be in when we start analyzing those patients that completed the study in June last year. So we will get the vast majority of the data probably [at interval] of just after the last patient has been at the last visit. So we are expecting to be able to give some guidance on how the study outcome is in the end of second quarter, as Lisa said.

Okay, so --.

And it may be that that guidance is based on, maybe just 95% of the patients, but if the data is here, then we might as well be able to -- it may also be that we have the last four patients in there also.

The protocol allows the patients for the last visit to come in, plus/minus two weeks, and -- as you said. So this may as well be June 15, or June 15, or May 15.

Okay. All right.

But, trust me, it's so few patients that we can base [from the top of this as well as] as we want.

Yes. Okay.

Just another important point; we have not seen any of this data. This is still blinded to us, and it's blind --.

No, that's what I'm saying. It goes to an independent data evaluation team, sitting on the data until they have the quantity -- they have received all the packages.

Okay. And, just to understand better how your collaboration with GSK works at this stage, who actually has the final decision on the filing strategy? Obviously, your filing decision is dependent on the quality of the data. And how does this relationship work at this type of situation?

Erica, we have a true co-development, and we have an equal vote when we make the development plan and where we make decisions about filing.

So, what happens if you disagree?

I'm not sure that there should be a basis for disagreement yet, since we haven't seen the data. If we disagree, then we go to the CEOs and we --.

That's you!

-- right.

Okay. Okay. No, I was just curious. And then, just going back to the cost and the new facility cost, I was just wondering if the phasing of the cost savings could be explained a little bit more, because I understand this year the facility costs will be very high.

You mentioned that the numbers will be higher in '08 and '09. Now, do we expect some sort of decline in the facility costs in '09 compared to '08, or will these be about the same, and the phasing really comes in -- of the cost savings comes into more force in the following two years?

Right. I think the way we've tried to explain it is, when we look at the projected cost for manufacturing, we expect to spend $100m less over the coming four years. This year and next year we'll be transferring programs in.

We would expect, for example, HuMax-EGFr to be making consistency batches. And we may also have some additional capacity that we're not using fully in 2008 and 2009. That will not be true, at least to the best of my understanding, going forward from there, and we will also have an ability to go beyond the staffing level we have if we wanted to.

So, for example, if one of our products comes to market and it's selling better than we expected, we could easily start making extra runs. We could hire some more people, we could run an extra shift and we could make some more runs in the facility. So it's a little hard to go out four years and say exactly what our manufacturing costs will be. But, as we look past next year, we see the facility operating fully at the capacity that we have now, with the potential to help us actually increase revenues for any of the products that reach the market.

And what we also see is that the transfer from the contract manufacturers will have finished. So if we have a short period here where we're paying for contract manufacturing and paying for the facility, in that respect, those costs will go away; the double costs will go away.

Okay. So would it be reasonable to assume that '09 and '08 should have similar facility costs, and then the cost savings come in more when you've got that capacity utilized etc. in '10 and '11?

We haven't given that guidance for '09. I would say that probably this year is more expensive than next, in the sense that we're still paying for manufacturing from other manufacturers. Bo, do you have any comments on that?

Yes, I think it's fair to say that in 2009 we're certainly getting closer to break even by (inaudible).

Okay. And then I just had a question about how R&D cost may progress, because we've got a lot of new studies, some studies completing this year, so some costs will go down in '09. But would it be reasonable to assume that further studies would start then in '09 as well, so that R&D would probably be -- R&D costs would probably be at similar levels in '09? Or would you expect the more expensive studies to be finishing this year and less expensive, or less extensive, studies to represent the majority of costs in '09?

I think it's just too early for us to give 2009 guidance. Remember that, even if our costs were to stay the same, we'd hope our revenues would increase because now we're hoping that we reach the market in 2009. So I think we are really in a transitional year where our costs [would be] more like those for a company that is selling programs -- products that completed development, and that hopefully next year we'll see more revenues coming in.

Yes. Okay. That's great. Thanks so much.

And our next question is from [Kitika Gudwadi] from Piper Jaffray.

Hello. Good afternoon, guys. I have just a couple of quick questions, and to change the topic onto R1507. I was just wondering did you give any guidance as to how many patients were recruiting on that -- on the registrational study and when you expect completion.

I think Roche has made a statement about its Phase II program which we have passed along. And I know that it's between 200 and 300 patients, but I don't believe that we should be speaking for them, other than pointing out that they are talking about this as a registration strategy.

Claus or Jan, do either of you want to make any comments about what we know about this study?

Well, I don't think we know very much more. Jan, you?

Dr. Jan van de Winkel: No, it's a combination of different sarcoma patients. And the strongest data which have been presented to date are in young sarcoma patients, which seem to respond extraordinarily well to this antibody targeting the insulin-like growth factor receptor.

So what is entirely possible, but as Lisa has said, this is up to the discretion of Roche and the scientists there leading this trial, that the ultimate filing strategy will initially be done for a sub-set of the patients. But I think we shouldn't comment on that any further. But my guess would be that this is especially interesting to look at the young sarcoma patients there.

Okay, excellent. Thank you. All of my other questions are answered already, so, thanks.

Dr. Jan van de Winkel: All right.

The only comment I would make is to remind people about the Roche transaction. We received $20m on signing. They did provide R&D payments as well, and we created antibodies for them to target that they owned or identified. And they've been responsible for all the development cost.

So this is one where we did use, obviously, our time and our effort, but we leveraged our existing development organization, we made them a group of what we think are very fine antibodies and we are entitled to really quite good single-digit royalty on these that is noticeably higher than they would have paid if they had used just an antibody company that provided an antibody for the service.

The reason for that is they believe that we would add substantially to the value of the program, because our team would do such a good job helping identify the right and creating and identifying the right antibody.

So we're looking forward to really a very nice royalty on this. We did use one of our paid-up licenses for this program, so we don't owe money on to Medarex, who'll re-license the technology to create the antibody. So this is basically something that -- we've leveraged our Group, we don't have any additional cost and the cash from the royalty stream would flow straight to Genmab.

Excellent. Thank you very much.

And our next question is from Poul La Cour with Kaupthing.

Yes. Hello. This is Poul La Cour from Kaupthing in Copenhagen. On CD20, what is the signing on the co-promotion with Glaxo a function of? How long can you drag this position? First question.

Second question, is there a milestone attached to the filing of the BLA for CD20 and CLL?

Second question -- or third question would be has PDL utilized the option to get material delivered from your manufacturing facility, like [bought premium]?

And the fourth question would be on EGFr. I listened in to a recent conference that you participated at and you, Lisa, mentioned there that we would get an update on the partner -- potential partner talks over the next couple of months. Does it mean that we should expect that you would potentially enter into a partnership before the interim Phase III data are out? That's it. Thank you.

I was writing as fast as I could, but I think I might have missed one of your questions. In terms of the milestone for filing, I think that's a reasonable expectation. We can't give you any more specific guidance than that.

Protein Design Labs, to the best of my knowledge, has asked us to make some materials for them, and I believe that we are working on their account.

For the HuMax-EGFr, this is a very interesting program and we believe that it has the potential to be dramatically better than the other EGFr antibodies. And, hopefully, because the design of the first trial is so innovative with the individualized dosing, we'll be able to demonstrate the quality of this antibody when we see the results from the head and neck cancer study.

Because of that, the partnering decision is a more complex one, in that we think that the data could really distinguish the antibody, and we really want to be certain that we don't lose any of the value of this program.

So, we continually have discussions. I know I've been saying that for a while. But, for us, it's really a question of making sure that we develop this program the way it should be developed, that we move it forward, that we continue to be very optimistic about the results of the study and that we find the right commercialization and arrangement for us that brings value to the Company.

So, as I believe I did say at our more recent conference, we're considering a wide variety of options. We could potentially sign some partnerships before the Phase III data comes out. We might sign some partnerships only in limited territories. We -- and the reason for that is that we are evaluating the commercialization option for HuMax-CD20, how we could potentially the sales force, even though it's a limited one, to commercialize other products, including the CD4 antibody.

And, while we are considering all those options, of course, it's useful to know what we might be able to bring in from partnering, both the CD4 and the EGFr antibody. So it's a pretty complicated set of decisions that we're trying to make and, of course, we don't have complete information until we have the Phase III study results from both of those products.

So, the short answer to your question is, yes, it's possible that we could announce a partnership in some or all territories for the EGFr antibody before the Phase III. I think it's not likely that we would do that, because we believe the Phase III data has a chance to considerably increase the perception of HuMax-EGFr's value.

So we are working actively, essentially in parallel, to evaluate options of partnering, potentially just having a distribution partner, having a distribution partner in some territories and not others, and also of thinking about how we can use our other commercial operations option, our resources from the GSK collaborations, our other products that are coming to the market to do the right thing that -- so that our products both reach the market in the best way, so that patients or physicians get access to them, and that it's cost effective.

And this is a huge step for Genmab, and we will spend the next number of months evaluating all of these possibilities. And I don't think that we will tell you about the co-promotion option until considerably after we see the first set of data, just because we have some time before the filing to make any final decision. I hope that's answering your question.

Yes. Yes, thank you.

-- question is from Peter Sehested with SEB.

Yes, hello there. Good afternoon. Thanks for taking my call. I have a few questions in two (inaudible) categories. The first category is regarding manufacturing, surprisingly. I wondered, could you guide us on, firstly, what revenues do you think you'll be generating from this facility in 2008?

Could you guide a bit on the current capacity utilization with 170 employees?

And, thirdly, could you say if you split the employee -- could you say what is the ratio of employee costs to total costs?

And after that I also have some product specific questions. But, if you could answer these first, that would be nice.

Claus, I wonder if you can address the items that we've talked about publicly on manufacturing side there.

In terms of manufacturing capacity?

Yes.

Well, we have said -- of course, it's going to depend a lot on the productivity of the cell line, but we can produce up to 80 batches a year in this facility. But -- and if we do maximum utilization, we can produce in excess of a ton of C -- of anti-monoclonal antibodies with a productivity level of around 2 grams per liter. Now, that would take that we build out the facility with another 120 versions.

Right now, it has a capacity to about 30% to 40% of the full capacity with the staff we have, because they're not running double shifts seven days a week. So, I think that's as much as we can say in terms of capacity.

In terms of potential contract manufacturing, we have that opportunity. It's not a key strategic plan to become a contract manufacturer, but if we have collaboration partners that may need some of the excess capacity we have, we will definitely market prices, be able to help them with that, as we have also agreed to help PDL. I don't think we have given any details on the financial implications on the service what we do for PDL.

Okay. And, lastly, total employee costs to total costs, and how many employees would it take to run at full capacity?

Approximately 300, and we have about 170 now. Employee costs, I think Bo was probably better capable of answering that.

I think, actually, that's not an easy question to answer, because it depends on how -- the total costs depend on how many batches that we're running in a facility and at what capacity, because raw materials, for example, are quite expensive. So, this year, in a transitional year, doesn't give you a very good picture of what it will look like when we've moved our operations over and we're running the facility closer to at least the capacity based on current numbers of employees.

But I think -- my understanding is that materials and utilities are a very significant proportion of the manufacturing costs. Bo or Claus, would you like to -- and they're variable. Would either of you like to comment on that?

I would highlight the employee costs and the depreciations as -- are the key cost drivers in the facility.

But if we look proportionately at all the costs of operating that facility, this year, because we're doing tech transfer, we're not going to have as many costs for utilities and for materials. But, as next year and the year after that go by, we'll start to see a significant cost [and that varies] because we'll be running the batches rather than just transferring the programs in. So those ratios will change, and I think this year is probably not one to base your future guidance for what you think we'll be spending in the future.

Okay. In terms of the top line guidance that you have given for 2008, would you say that you have included, more or less, milestones for all the publicly -- for every party that you have mentioned in public?

The top line guidance includes milestones. It includes other revenues, like any money we might receive from Protein Design Labs. It also includes amortization of the initial payments that we've received from GSK. So we have tried to be very careful to project the milestone portion of that as well as we can, but I don't believe that we've left anything out that we expect.

What I should say is that we have not tried to project -- if you're thinking about Roche, we haven't tried to project from them exactly when they would finish their studies and file for approval, because we don't have enough information to do that.

Okay. Just -- and my last question will be, now that you have, de facto, increased your cost base, and probably also going forward if all projects move into later stages of development, aren't you putting yourself a risk factor executing on a deal to finance the future development strategy, or the future development costs to the Company, because you mentioned earlier that you are going to generate revenues?

But, nevertheless, the first products that you are going to bring to market are going to be in, let's say, quite small indications with the huge opportunities not coming out until very later, perhaps, or five or six years from now.

That sounds a little like the old movie Catch 22, in the sense that if we want to see revenue increase, under your suggestion, we would need to be in the broader market. But, of course, we need to run the studies to be in the broader markets in order to do that.

I think that if you look at our cash position at the end of the year, you will see that we would still have a considerable amount of cash compared to the cash that we use in operations. And that, as we go forward and hope to expand the market for the products that we're expecting will come to the market starting in 2009, it's very hard to predict exactly when people will start using those products for a variety of indications. We can only promote them for the labeled indications, or our partners can only promote them. What we know, for example, with the CD20 antibody that's on the market, that the vast majority of its revenues are from off-label sales for years.

So, I think that our job right now is to do exactly what you've pointed to, which is expand the possible indications, do the best we can to show that our products have utility in a variety, whether it's late stage or early stage patients, but as we look forward I think that we have always been careful with our money at Genmab. We will continue to be careful.

When you consider how much we're doing -- I know we're spending more money this year than last year, but when you consider that we're planning to spend -- to handle 16 or 17 new studies this year, in addition to the ones that we're already conducting, then we actually are doing this fairly effectively.

So, we had to make a decision about to how to build the Company for growth, and it seems to us that our investors have given us their money because they expect us to put it into product development and to carry the Company forward. And we are doing that to the best of our ability. And we will, of course, be very thoughtful when we make plans for spending in 2009 and the years beyond.

Okay, thank you, and that was it.

Our next question is from Brigitte De Lima with Merrill Lynch.

Good afternoon, I've got two questions, please. The first one is on potential partnering for HuMax-CD4. When you terminated the agreement you had with Serono, there was still a possibility that we -- you would decide to partner for some geographic areas, including maybe Europe. Could you please update us on whether you're taking a similar approach to HuMax-EGFr, whether you still consider partnering, or whether you think you can just market the product on your own?

And the second question is on HuMax-CD20. Could you just remind us what are the response rates you're looking for in the CLL and the NHL studies? And maybe also, what level of complete responses within those, or the responses you'd be looking for if you intend to file based on the current studies? Thank you.

Brigitte, I think you've asked a really important question, and it's one of the ones we've thought about pretty hard. When it comes to the CD4 antibody and HuMax-EGFr, if we chose to build up our commercial operations, would we do that worldwide? And I think it's reasonable to say that we would want to do this a step at a time, as we have tried to build other aspects of our Company.

So, right now, when we think about selling the product in Asia, for example, or in parts of Europe, we might say to ourselves it makes a lot of sense, at least initially, to ask someone else to market the CD4 antibody and the EGFr antibodies in those territories.

I think that the U.S. operations are likely to be the first area we would consider, along perhaps with Scandinavia, because we have operations there. So, one of our important options will be to consider either out-licensing or having a distribution agreement in certain territories, like Asia and Europe. But I just want to emphasize, we haven't made any final decisions yet.

And then on the CLL and NHL studies, Claus, could you comment on expected response rates? And any comment at all on what would normally be seen in these patients as to complete responses, and whether there's any possibility that we might see that?

Yes, on the CLL, we are treating compact refractory patients. [Campet] was approved in earlier stage patients than those we are treating, with a response rate of 33%. One of the 33% -- one patient -- one single patient had a complete response. The remainder of the patients had partial responses and that was good enough for approval. The FDA has guided that a 25% response rate would be sufficient for them to consider seriously approving a filing.

Would we have -- need to have complete responses? I think the information on the Campet study speaks for itself. It's definitely not needed. It would be wonderful if we see complete responses and, of course, we are hoping that we can do that with this drug in these patients. But, remember, it is very ill patients where the latest approved product only had a 33% response rate in earlier stage vehicle than to patients that are failing that treatment or -- and are refractory -- sorry, not refractory, but intolerant to it.

In non-Hodgkin's Lymphoma, again, we are treating very refractory patients. If we have a 25%, 30% response rate, partial responses primarily, I'm certain that that would be sufficient to support a potential filing.

Okay, thank you.

And our next question is from Peter Welford with Lehman Brothers.

Hello, sorry, I've just got two, what I promise, will be very quick follow ups. Firstly, on the CD4, can I assume that you are investing on pre-launch inventory this year with your manufacturing facility or CM? Like, I say, it will be the contract manufacturing organization.

And, secondly, the -- it's really a confirmation. The DKK1.37b that you said you could receive in 2008/2009 in pre-approval milestones, I assume here we are talking across all the potential indications for CD20 that could report, or do something, during that period, and we're not talking just the cancer CLL/NHL indications? Thank you.

Let me start quickly with the milestones. That actually includes 2007, because you know we received some milestones then. But, you're right, that we've looked broadly at the program and where we would be eligible for milestones in the 2007 to 2009 window, not including approval, just to give you a sense of the cash flow coming from that.

And then, Claus, could you comment on pre-launch inventory?

Sure, yes. We are already in the process of conducting a launch package and consistency batches, together with our partner in DSM Biologics this year. And, as Lisa has indicated, we are in the process tech transferring to our own facility in Minneapolis, and that work is starting as quickly as we can.

That's great. Thank you very much.

Question is from Guillaume Van Renterghem with Canaccord Adams.

Yes, hello. Just a follow-on question, if you don't mind. With regard to your manufacturing facility, I do remember that GSK was meant to start the building of the new facilities to manufacture HuMax-CD20. And I was wondering whether GSK had already started.

And my second question, related to that, is that I was wondering whether your new PDL facility -- I know it's meant -- it's not meant to do that, but is it big enough to produce HuMax-CD20 to commercial scale?

GSK is responsible for -- you're absolutely right, for this HuMax-CD20 manufacturing, and they have signed a contract for that manufacturing. They have their own [film] finishing facilities, so they'll do that work there.

Now, having said that, if, for some reason, the CD20 antibody sells far beyond the expectations they had when they signed the contract, my understanding is it would be possible for us to provide some additional capacity. Claus, do you agree with that from --?

Absolutely, yes, absolutely.

Yes. So, that's actually one of the benefits of the facility. It provides some flexibility, but if the market looks like it would be larger than they have anticipated in the contracts they have signed, that we would have an opportunity to create some additional supply.

Okay, thank you very much. And one last question, actually, with regards to Medarex shares. We know that Medarex have sold quite a few shares recently, and I was wondering whether there was anything that could limit Medarex from selling the remaining shares it has.

I think that Medarex has to make its own decisions about when it chooses to sell its shares. We don't have any agreement, if that's your question -- any particular agreement about the shares, as they've had them for quite some time now.

Okay, thank you very much.

You have a follow-up question with Peter Sehested with SEB.

Yes, I just remembered a quick follow on. Just an update on the RA program in the U.S.; how are you with the discussions with the FDA? And when do you plan to initiate those trials? And how many arms? And how many patients and duration [of feedback], because I guess you need to include a re-treatment arm as well in those studies?

Claus, do you have any comments on that?

I had questions hearing the answer -- the question [from] the (inaudible) question, but I think you asked what about retreatment in RA for the CD20 studies is that correct?

Yes, the full question was an update on when do you plan to initiate trials and number of patients' duration? And I guess that you also need to include a retreatment arm in those studies in the U.S.

In our rheumatoid arthritis studies we are including retreatment. In the first two studies, the retreatment is not randomized. In the coming studies that we are starting later this year, the retreatment will be randomized. We haven't given details about those studies, but they are definitely very sizeable; in excess of 1,000 patients. And, when the studies have been finally agreed on with the FDA, we will give details on the design of the studies.

All right.

But they are starting later this year.

Yes. Can you pinpoint the third quarter or --?

We need to agree with the FDA on the studies. I think it's more likely to be second or third quarter than fourth quarter.

Okay, perfect. Thank you very much.

And, Miss. Drakeman, there are no further questions. I'll turn the conference back over to you.

Well, thank you all very much for joining us today for the 2007 results conference call. We appreciate the support of the investment community, of our shareholders and I just wanted to remind everyone again, this is such an important year for Genmab.

We expect to file our first DLA at the end of the year. We expect to see clinical data from at least three Phase III studies and, potentially, a fourth, and to initiate many new studies and broaden the pipeline.

So we're looking forward to a lot of important information in 2008, and the Genmab team is working very hard to make all of these possibilities a reality. We're very excited about the Company and its future, and we thank you for your interest and your support.

This concludes today's conference call. We thank you for your participation. You may now disconnect.