Genmab A/S (GMAB) 2012 Q1 法說會逐字稿

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.

Welcome to Genmab Publication of the Interim Report for the First Quarter 2012. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session. Please note that this conference is being recorded.

I will now turn the call over to your host, CEO, Dr. Jan van de Winkel. Sir, you may begin.

Thank you. Hello and welcome to the general conference call to discuss the Company's financial results for the first three months of 2012. Joining me on today's call is David, Eatwell, our CFO.

So let's turn to slide number two, the forward-looking statements. As already stated, we will be making forward-looking statements, so please keep that in mind as we go through the call. Let's move to slide three.

The 2012 highlights; we've already made significant progress towards our business goals this year. We achieved a second milestone in our collaboration with Lundbeck for which we earned a EUR1 million payment as a milestone and we had lots of news on ofatumumab. An amendment to the protocol for the for the Phase III head to head study of ofatumumab plus chemo versus rituximab plus chemo in relapsed or refracted a diffuse large B-cell lymphoma were submitted to the regulatory authorities.

The amendment involved altering the chemotherapy regimen so that all patients in the study will now receive the same type called DHAP and increasing the number of patients enrolled in the study.

The underlying timing assumptions for the study were changed as a result. This means we could see the primary data readout in early 2014 rather than in 2015.

Our partner, GSK, also agreed on a settlement on Genentech's Cabilly II and III patent relating to the protection of ofatumumab. The terms of the settlement were undisclosed. However, this does relieve some uncertainty for the commercialization of ofatumumab.

We were also pleased to announce royalty income of DKK22 million in Q1 Arzerra sales, the highest quarterly royalty to date.

GSK also continues to expand commercialization of ofatumumab and submitted a new drug application in Japan for ofatumumab for the treatment of CLL patients, who had received at least one prior therapy. We are looking forward to the acceptance of the application and potential approval. This could occur in the first quarter of 2013 if all goes as planned.

We continue to make progress in our ofatumumab clinical development program (inaudible) having treated the first patient in the Phase II study of ofatumumab in combination with bendamustine for front line and relapsed CLL.

Let's move to slide four. The quarterly Arzerra Sales; this slide shows the sales trend for Arzerra over the last five quarters. As you can see, sales rebounded in the first quarter of 2012 to a total of GBP12.4 million. This is the highest quarterly sales revenue for Arzerra to date and is a 32% increase in sales compared to the first quarter of 2011. We are pleased with the level of sales growth and hope to see this trend continue throughout the rest of this year.

I will now hand over the call to David to discuss in more detail our financial results for the first quarter.

Thank you, Jan. Let's move on to slide five. The revenue for the first quarter of 2012 came in DKK94 million. That's DKK11 million higher than the corresponding period for 2011. The main reason for the increase was the achievement of the second milestone under the Lundbeck collaboration and the growth in the Arzerra royalty, as Jan mentioned earlier.

The two main sources of revenue in 2012 were DKK57 million of deferred revenue and DKK22 million of Arzerra royalty income.

You can see the R&D expenses for the first quarter of DKK123 million was slightly below the DKK128 million reported in the same period in 2011. As mentioned on the conference call for the 2011 annual report, the increased investment in ofatumumab and Daratumumab in 2012 is offset by the reduction in the Zalutumumab clinical trial expense.

Our G&A expenses also decreased slightly from DKK17 million in 2011 to DKK15 million in the first quarter of 2012. That brings us to the total operating expense for Q1 2012 that came in at DKK138 million, DKK7 million or 5% lower than Q1 2011.

And, with the higher revenues and lower expenses, this brings us to the 2012 operating loss of DKK44 million compared to DKK62 million in 2011, an improvement of DKK18 million, or 29%.

Next, the net financial items in tax at a negative DKK16 million in 2012 compared to DKK39 million in 2011. Most of the DKK16 million relates to non-cash foreign exchange rate adjustment on the inter-Company loan between Denmark and Minnesota. This amount continues to bounce around on a quarterly basis based on the varying exchange rate between the kroner and the US dollar.

Finally on this slide, the discontinued operations, the 2012 amount of DKK10 million is the same as the amount reported in Q1 2011 and relates to the ongoing expense to maintain a facility in a validated state.

And this brings us to the net loss of DKK17 million for the first quarter of 2012 compared to a net loss of DKK111 million for the corresponding period in 2011, an improvement of DKK41 million, or 37%.

Now, let's move to slide six, the outlook for 2012. On this slide you can see the guidance range for 2012 and there are no changes at this stage of the year to the outlook that was published on March 7th earlier this year.

With regard to our current cash position, we ended the first quarter of 2012 with just over DKK1 billion in cash and marketable securities. And you can see that we're projecting that the cash used or burnt through in 2012 will be a midpoint of DKK438 million. That means that our theoretical cash runway at the end of Q1 was approximately 2.4 years.

Finally, our 2012 outlook does not reflect any -- the addition of any new significant deals, such as a potential partnership for Daratumumab.

Now, I'd like to hand the call back over to Jan to discuss the progress of 2012 objectives. Jan?

Thank you, David. Let's move to slide seven, progress on 2012 objectives. The past few months have been very busy at Genmab as you can see from this slide showing our progress on our 2012 objectives. We continue to maximize the value of ofatumumab and expand its commercialization.

As I mentioned earlier, an NDA was submitted in Japan and in addition to moving the time line for the Phase III head to head study in diffuse large B-cell lymphoma forward, we also conducted a planned interim futility analysis of the study. After reviewing the results to date, an independent data monitoring committee recommended that the study continue.

In addition, we expect to report further ofatumumab data as well as updated Daratumumab clinical data from the ongoing Phase I/II study via all in poster presentations at the upcoming ASCO Meeting in Chicago this coming June.

We continue to work on expanding our pipeline with the combination studies of Daratumumab expected to start soon. We also worked to advance our DuoBody technology platform having presented [in vitro] proof of concept data at four conferences so far this year.

[Partnering] of the DuoBody platform also continues to be a major focus area for Genmab.

Finally, we continue to keep our cash burn in focus and are maintaining our guidance for 2012.

We now move to slide nine. That ends our presentation of the 2012 first quarter results for Genmab and we are now pleased to answer your questions.

Operator, please open the call for questions.

(Operator Instructions). And we do have a question from Peter Welford from Jefferies.

Thanks for taking my questions. I've got I guess the boring one that I know you've probably not made your answer or say anything about at all, but I've got to ask for the sake of completeness, which is regarding the manufacturing facility. I guess has there been any change over the last quarter either with regards to your strategy for potentially selling it or alternatively the sort of opportunities you're pursuing perhaps for the facility that have happened in the last few months?

Thank you very much, Peter, for the question. We cannot give you a lot of updates on this. We have a number of signed CDAs in place and it would not be helpful to the process but I can tell you that over the last quarter the strategy has not changed from the previous strategy. It's a very active process and yes there is interest in our facility but it's also a challenging time to actually find a new owner for this type of facility. However, I can restate again and very firmly that we are very committed to execute a sale within 2012.

Okay and then the second question if I can regarding Daratumumab, is there any forum we should anticipate ahead of ASH when we should see sort of more complete data from the Phase I/II and do you think those data are needed to get partners on board and thinking like you or is the amount of data you feel now in house sufficient, if you like, and all essentially that they're where they're going to be to catalyze those sort of discussions and alternately signing a deal? Thank you.

I can tell you, Peter, that we will have an oral presentation of Daratumumab data, the ongoing Phase I/II clinical study at ASCO and also an oral one at the European Hematology Association Meeting, both in June. So we will update the data as analyzed at that moment but I can tell you that we are already sharing data under confidentiality agreements with potential partners. There is massive interest for partnering this asset.

As I told you before, Daratumumab literally takes all the boxes for pharma and large biotech companies. It's a potentially first in class molecule with is very broad spectrum of action. It's very encouraging early clinical data and I fully believe that by being able to share this data from the ongoing study, that that would be sufficient to execute a good deal on a partnership within 2012 for Daratumumab, Peter.

I don't think that we need any further data. Probably later this year there will be a fuller analysis of the first part of these dose escalation study at a major medical conference but it doesn't withhold us from moving forward aggressively with the partnering strategy for Daratumumab.

That's great. Thank you.

(Operator Instructions). Thomas Bowers, Danske Markets.

Yes thank you. First of all, just regarding Daratumumab as well, I just had the impression that you were to start the first of the two planned combination studies early '12 so could you just maybe add some more color on time lines and maybe any changes in expected trial signs?

And then also, based on the figures that you have seen so far on [affected] patients, any new considerations moving forward in any pivotal single arm study, just like you did in with the Arzerra?

And then could you just remind me on the Phase I/II study, you reported from 26 patients previously and now you have 28 and I guess six patients were -- was with four and eight mix so I guess is that correct that you have treated two patients with a 16?

And then I have a question on the Cabilly patent settlement. I guess you can't comment in detail on the percentage but will it have any affect on your royalties going forward, sort of a cost split with Glaxo, and then should we be aware of any future one offs that is pending next year?

And then final question regarding the two pivotal FL studies complement A plus B and, (inaudible) I believe, just wondering if you have any particular reason for the apparent delay? I'm just comparing with the presentation from last year whether you expected read out in mid '15 and now we are sort of looking into late first half '16, so anything we should be aware of in regards to recruitment, for example? Thank you.

Thank you very much, Thomas. I can absolutely confirm that the follow-on combination studies for (inaudible) and Velcade will start in the coming time, actually quite soon in the first half of this year, and we will inform you once these studies will initiate. I believe that already in Europe the protocols have become visible already on one of the tracking systems recently and we expect to start patient recruitment in the very near term, so no delays there.

Have any change been taking place on the Daratumumab development programs? After seeing very encouraging early clinical data, we have indeed started planning studies with a monitor of these studies that could actually lead to a faster way which this drug could become available to the market. We're still in the process of working out these clinical trial protocols and we are already talking with potential partners about such scenarios, so we will update the market once these plans firm out.

But definitely the early clinical data have been so encouraging that we have been motivated to think about mono therapy studies, both control arm and one study without a control arm as potential very fast way towards the market but we validate the market once these plans are getting firmer.

With regard to the patients, we have now updated the (inaudible) reports. The number of patients to 28 patients, I can confirm that two of these patients are 60 milligram per [kick] dosing states and one patient actually fell out of the trial but exactly because of an unrelated event not related to the drug.

That was the third patient in the 60 milligram per [kick] arm. What I can tell you, Thomas, is that we are very close to starting the 24 milligram per kick dose cohort arm in the Daratumumab study, which is the last dosing cohort, which we envisage for this compound and that will start also in the very near future.

With regard to your question on Cabilly, we cannot comment further on the terms of the settlement. I can tell you that this has been a very favorable settlement to Genmab and GSK and the impact will be immaterial on a way going forwards so no offsets at the royalty level or one offs, which you were asking for.

And finally, your fourth question on the clinical lymphoma studies, which are ongoing, there have been no delays. This is just updated timing and partly based on recruitments, partly based on time lines with Glaxo Smith Kline and (inaudible) and these time lines will probably be re adapted and then we can actually move in both directions, Thomas. So no material changes in those two studies.

That's great. Thank you.

(Operator Instructions). And I am showing no further questions at this time.

All right so thank you all for calling in today to discuss Genmab's 2012 first quarter financial results and we look forward to speaking to you again soon.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.