Genmab A/S (GMAB) 2014 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Genmab Annual Report 2014. At this time, all participants are in a listen-only mode. There'll be a presentation followed by a question-and-answer session. (Operator Instructions). I must advise you this call is being recorded today on Monday the 2nd of March, 2015.

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 or to confirm such statements in relation to actual results unless this is required by law.

I would now like to hand over to your first speaker, Mr. Jan van de Winkel. Please go ahead, sir.

Hello, and welcome to the Genmab conference call to discuss the Company's financial results for the year that ended on December 31st, 2014. Joining me on today's call is David Eatwell, our CFO.

Let's move to slide 2. As already said in the introduction, we will be making forward-looking statements. So, please keep that in mind as we go through this call.

Let's move to slide 3. Genmab remains on track to a sustainably profitable future. We continue to create value for shareholders by focusing on differentiated antibodies to treat cancer. We are building a robust product pipeline that includes ofatumumab, on the market as Arzerra for refractory and first-line CLL; daratumumab, for which there is a very extensive development plan; HuMax tissue factor ADC in Phase I development; and numerous preclinical products which will help us build our future product pipeline.

This future pipeline will include products based on our proprietary antibody technologies, the DuoBody and HexaBody platforms, as well as auto technologies, such as antibody drug conjugates, or ADC technologies.

We have a number of important partnerships at Genmab. But, we also seek to build greater value in the Company in the future by holding onto products longer and the potential opt-in deals where we retain a greater share of the product rights. We're also very well capitalized and are well positioned to truly make a difference in the lives of cancer patients.

Let's move to slide 4. 2014 was a very successful year for Genmab. We started the year raising funds for the successful private placements and finished it with exciting daratumumab data at the American Society of Hematology, or ASH, Annual Meeting in San Francisco.

The daratumumab clinical development program broadened considerably during the year. We announced five new Phase III studies of daratumumab in combination with all our marketed multiple myeloma products last year, including both front-line and relapsed or refractory patient populations.

In addition, we announced the Phase II study of daratumumab in non-Hodgkin lymphoma, the first study outside of multiple myeloma.

We also reported positive preliminary data from three of our earlier-stage daratumumab studies last year.

We are very excited about the data. And the sentiment has been echoed by the medical community as well.

Our collaboration partner for daratumumab Janssen has been highly successful at moving the extensive daratumumab program rapidly. And as a result of the progress of this collaboration, Genmab earned $57 million in milestone payments for daratumumab in 2014.

There was also progress during the year with ofatumumab. GSK expanded the label for Arzerra beyond refractory CLL and to first-line CLL and subsequently launched the product in the US and major markets.

We reported positive data in the Phase III study of ofatumumab in the maintenance setting and relapsed CLL and expect a regulatory submission in this indication this year, hopefully leading to a further expansion of the label.

In November of last year, we announced an agreement to transfer the existing ofatumumab agreement to Novartis. The agreement is now effective as the larger three-part transaction between GSK. And Novartis is now closed.

We have also made robust progress with our next-generation technologies. In 2014, we signed the first two research collaborations for the HexaBody technology and six research collaborations for the DuoBody technology, including two in the promising field of immuno-oncology.

The DuoBody collaboration with Janssen has been particularly productive. And at this point, Janssen has activated 10 of the total of 20 possible programs, including in our agreement.

We announced a new preclinical product HuMax-ACL-ADC after signing a license agreement with Seattle Genetics that enabled us to combine their ADC technology with our HuMax-AXL antibody. We are enthusiastic about the potential for this program.

Finally, we have been successful at holding our operating expenses flat for the fourth year in a row while at the same time growing revenues by 28% compared to 2013.

I will now hand the call over to David to discuss in detail our financial results for the period. David?

Thank you very much, Jan. Let's move onto slide 5. Over the next few slides, I'd like to discuss the results for 2014 and share with you the guidance for 2015.

Let's start by looking at the income statement for the year. Revenue for the year came in at DKK850 million, an increase of DKK186 million or 28% over 2013. I'll provide additional details on the revenue on the next slide.

2014, the expenses came in slightly lower than the previous year at DKK585 million for 2014 compared to DKK595 million in 2013. As Jan has just mentioned, 2014 is the fourth year in a row where we've held expenses at around or below DKK600 million.

The revenue growth combined with decreased expenses led to a significant improvement in the operating result. The operating income for 2014 is DKK265 million compared to DKK69 million in 2013, an increase of DKK196 million, our second year of profitability.

Net financial items and tax were a positive DKK36 million in 2014 compared to DKK1 million in 2013.

And of course, there were no discontinued operations in 2014, while in 2013, there was DKK42 million of income related to the sale of the Minnesota facility. And this should be the last time we mention that in one of our reports.

That takes us to our net result, which was DKK301 million in 2014 compared to DKK112 million in the prior year. So, you can see that all of the growth in the revenue dropped through into the net result line.

Finally, on this slide, the cash position, our cash position increased by DKK1.1 billion during 2014 due to the private placement in January, warrant exercise income, and as well as the (inaudible) income from operations. This gave us a cash position at the end of the year of over DKK2.6 billion.

Now, let's move onto slide 6 and the revenue. This slide breaks down the revenue into two different categories. In 2014, the largest portion of revenues was the milestone income of DKK386 million. This was, of course, mainly driven by the daratumumab collaboration with Janssen. The next largest portion of income was deferred revenue at DKK284 million.

At DKK101 million, the Arzerra royalty was 23% lower in 2014 compared to the prior year. As anticipated and previously discussed, sales were negatively impact by increased competition in the refractory CLL market, particularly from Imbruvica in the US.

The marketing authorizations for Arzerra in first-line CLL were approved in April 2014 in the US and in July in Europe. Therefore, these approvals have limited impact on the sales for 2015.

The cost reimbursements to Genmab were also lower in 2014, as Janssen has now executed all of the new daratumumab studies.

The graph on the right bridges the revenue between the two years. The large increase in daratumumab milestones of DKK271 million more than offset the decreases in the cost reimbursements, royalties, and deferred revenue, leading to an overall revenue increase of DKK186 million or 28%.

Next, the expenses and operating income on slide 7. The graph on the left shows the movement in expenses. We are very focused on expanding our innovative pipeline to provide future opportunities to growth. And therefore, we invested DKK33 million more on early-stage research projects.

However, this was offset by lower expenditure and development costs, mainly driven by lower expenses for ofatumumab and daratumumab. Also, as a result of the increase in share price, the noncash warrant expenses increased by DKK16 million year on year.

Looking at the chart on the right, you can see that the revenue growth and lower expenses means we get an impressive DKK196 million increase in the operating result, growing to DKK265 million, slightly above the high end of our last guidance number.

Now, let's discuss 2015 guidance on slide 8. On this slide, we show an overview of our guidance for 2015 compared to the actual result for 2014 and 2013. The revenue range for 2015 is DKK650 million to DKK725 million.

The 2015 revenue includes projected daratumumab milestones at a range of DKK180 million to DKK240 million.

The daratumumab milestones are associated with clinical progress and assume regulatory filings, but do not include any commercial milestones, i.e. we're not assuming that the product gets its approvals until 2016.

It remains difficult to predict the future sales of Arzerra. However, we have included DKK125 million of Arzerra royalties in this revenue guidance. That's an increase compared to the actual Arzerra royalty income of DKK101 million in 2014.

Looking at the center of the graph, we expect operating expenses for 2015 to be between DKK600 million and DKK650 million, a growth of 7% at the midpoint of the range compared to 2014.

Since the transfer of ofatumumab from GSK to Novartis is now effective, we have excluded ofatumumab oncology expenses from our 2015 guidance. However, we have included extra investments to advance our pipeline, including important progression of tissue factor ADC and AXL ADC among others.

The operating result guidance is a range of DKK200 million to DKK275 million. The midpoint would be a slight decrease from 2014, or the upper end of the range would be a very small increase compared to the prior year.

You will also notice that the operating result includes a reversal of the GSK long-term liability of DKK175 million. You will see us reporting that on a separate line in our income statement, as we go forward.

We expect our year-end cash position to be in the range of DKK2.3 billion to DKK2.4 billion. And also, as usual, the 2015 guidance does not include any new potential deals.

Now, I'd like to hand back over to Jan to discuss our 2015 goals. Jan?

Thanks, David. Move to slide 9. 2015 promises to be another exciting year at Genmab. I will outline our goals for the year on the next slide. But, first, let's talk about one of the goals we have already met for 2015.

In early February, we announced positive preliminary results from the Phase II study of daratumumab in double-refractory multiple myeloma. The study included patients who have received three prior lines of therapy, including a proteasome inhibitor or PI, such as Velcade or Kyprolis, and an immunomodulatory agent or IMiD, such as Revlimid or Pomalyst; or are double refractory to a PI and an IMiD.

This is the same indication for which daratumumab received breakthrough therapy designation in 2013.

The results, as determined by an independent review committee, showed a 29.2% overall response rate and a 7.4-month median duration of response in patients treated with 16 milligram per kg of daratumumab.

Daratumumab also had a manageable safety profile in the study. We are very pleased with the data. This indicates a robust, durable activity of daratumumab as a monotherapy.

We plan to discuss the data with different health authorities at upcoming scheduled meetings and look forward to presenting additional data at a key upcoming medical conference this year.

Let's move to slide 10. For the rest of 2015, our goals remain focused on our marketed and late-stage clinical products, progressing our clinical pipeline and on making progress with our next-generation antibody technologies. We will continue to focus on maximizing daratumumab's progress through clinical development.

Together with Janssen, we intend to start new studies in multiple myeloma and begin to make clinical progress in autodisease indications.

With ofatumumab, we presented exciting maintenance Phase III data at the end of last year, paving the way for a potential additional indication. We expect to report more data from one other pivotal study of ofatumumab in CLL in 2015.

Last year, it was announced that GSK plans to start multiple pivotal studies in multiple sclerosis and autoimmune disease in 2015 and plans to file an IND in neuromyelitis optica.

We continue to build our pipeline by progressing the Phase I study of HuMax tissue factor ADC and reporting progress on other preclinical programs.

We expect to enter new collaborations for both DuoBody and HexaBody technologies and in fact have just signed a commercial agreement for DuoBody with the Dutch company BioNovion following a very productive research collaboration started last year.

The commercial agreement gives Genmab 50% of the rights for uniquely differentiated immuno-oncology product candidates targeting key immune checkpoint molecules to be developed with our robust DuoBody platform.

Finally, we will remain focused on controlling our financials so that we can selectively invest in our pipeline to ensure we can reach our goal of becoming a sustainably profitable company.

Let's move to slide 11. That ends our presentation of the Genmab 2014 results. Operator, please open the call for questions.

(Operator Instructions). Richard Parkes, Deutsche Bank.

Hi there. Thanks for taking my questions. First of all, congratulations on an amazing year it's been. Just three pretty simple things really. I'm just wondering when we might be able to see first data from the NHL study of dara. I'm just wondering whether it might be possible to see sort of first few patients treated at the ASH meeting at the end of the year, or should we be waiting for 2016?

Then can we get any clarity on the timing of Janssen's meeting with the FDA? And I'm just wondering how quickly you think our regulatory filing could occur after conclusion of that meeting.

And then finally, you've got quite modest expectations for Arzerra royalties in 2015. And obviously, the transfer to Novartis is going to cause some disturbance. But, I'm just wondering. I think you had to reduce your expectations for Arzerra during 2014. So, is just -- this just reflecting you moving to a much more cautious stance about guiding on where do see kind of upside to that number?

Thanks, Richard, for the congratulations. Let me walk through your three questions and then ask David to step in, in the last one, for additional perspective.

First, the NHL clinical study is going to start in the coming -- within the coming months. There are not very many patients. But, of course, it always depends on how quickly you can recruit patients in such a study with daratumumab. We have not given any guidance on when the first data can be anticipated.

We shortly will have data I think this year in non-Hodgkin lymphoma. And what you may see is already next studies based on that data, very much as you have seen. Before, you could actually see data from the Phase Ib study with Velcade combination regimens and Pomalyst combination regimens in multiple myeloma, Richard.

You already saw that we started the Phase III trials, basically indicating that our data -- the safety data must have looked great there.

You may see a similar effect in the non-MM indications. But, it's too early just to give you further clarity when you can expect the data.

What we will see at the end of this year at ASH in Orlando is more combination data, more data of dara in combination with Revlimid-containing regimens, dara in combination with Velcade-containing regimens, and more -- most importantly dara in combination with Pomalyst regimens, where we now have expanded the Phase Ib to include up to 100 patients with pom-dex-dara, which will recruit very rapidly. And we hope to show a lot of combination therapy data at the ASH conference and then likely focusing ASCO at more Phase I -- for sorry, monotherapy data at the ASCO meeting.

But, non-Hodgkin lymphoma's a little bit too early. But, you may already see indications of how that goes before seeing actual data at the medical conference, Richard.

So, then with regard to timing with the FDA as well as with other health authorities, these are scheduled meetings. I cannot give you further clarity on the timing. But, the meetings have been scheduled. And we -- and it's completely based on the feedback from the authorities or rapidly a filing can then happen.

I can assure that that's at -- all at full speeds, both at Genmab and at Janssen. This is a very high-priority program. And it will depend on the feedback from the authorities how rapidly we can actually file.

When we discuss milestones for 2015, we have included milestones for filing both in Europe and in the United States for daratumumab. So, let's hope that the feedback will be positive and productive, Richard. And we will then hopefully give you very quickly thereafter feedback on potential timing. I cannot do that at this time.

Then the Arzerra estimates, yes, we have increased them relative to last year, but they're still relatively modest Arzerra sales estimates. We will transfer now robustly to Novartis. We already had our first contacts today with the Novartis team. They are very excited about working with Arzerra, and so are we, this oncology expert. But, it will, of course, need some startup in that new interaction with this new partner.

But, I see as a potential growth area for Arzerra is combination therapy with tyrosine-kinase inhibitors. And in that context, I think what is important is that, in the coming months, we also expect a Gilead study to read out, which is a Phase III study combining ofatumumab with Zydelig or idelalisib and run it against ofatumumab, a 270-patient Phase III trial. If that data would be positive, that would be presented probably somewhere over the coming months in more detail, and that could really trigger a increased focus on Arzerra as a unique combination partner for tyrosine-kinase inhibitors.

And if you recollect, Novartis has a number of very exciting targeted drugs, Bcl-2 inhibitor, a PI kinase inhibitor, an mTOR inhibitor, a JAK inhibitor, which could all be potentially combined with a very good CD20 antibody for a market like CLL and probably beyond CLL.

So, we see in the future good prospects for increased revenue generation by Arzerra. On the short term, we tend to be cautious because of the transfer to the new oncology development partner Novartis.

And maybe David can give further clarity on how we see the sales building up over the coming years. David?

Yes, thank you. The main points there, Jan, but as a reminder, in 2014, we did start the year with a guidance of DKK145 million, then lowered it to DKK125 million and achieved DKK101 million. So, it's not always that we're putting in very cautious numbers.

But, I think, for 2015, you have got to consider that you do have a full-year impact of the launch of the Imbruvica, particularly further rollout within Europe, which impacts the double-refractory setting.

Against that, we've got a positive full-year impact, as I mentioned earlier, in the frontline setting, both in the U.S. and in Europe as well.

Looking slightly longer term, then we've got to look forward to the maintenance filing, with hopefully expanding the label there, and also data coming out in 2015 for our Phase III pivotal trial of [OXC] versus [FC], as well as idelalisib that Jan mentioned earlier.

So, I think it really is very difficult to exactly be able to judge where that number goes. We've put in DKK125 million in the guidance. That's 24% increase over 2014. We'll see where that goes and update the guidance accordingly as we roll throughout the year.

Great. Thank you.

Thanks, Richard.

Thomas Bowers, Danske Bank.

Yes, thank you. Just a couple of questions. First of all, well, just as another follow up on daratumumab, you include a milestone for European submission. So, could you just give me some color on the initial talks or sort of feedback from [EMA]? I'm just wondering if we should consider the data as sufficient for marketing authorization, even though you do not have a placebo arm in this study.

Then my next question, could you maybe just give me some color on the potential subcue version of dara? I'm just wondering whether we should see this as a defensive or commercial opportunity or maybe even both. So, any relations to the infusion times and the infusion reactions, or just more related to the potential maintenance use or maybe even autoimmune indications?

And then finally, just on HuMax-IL15 actually, I just saw that Amgen today has outlicensed the program. So, could you maybe just confirm that you're still entitled to mid sort of teens royalties? And then also, how should we see the remaining $100 million plus US milestone package in this program in relation to develop in CD indication? Thank you.

Thanks, Thomas, for the questions. So, first of all, we have a number of scheduled meetings with European authorities on the data. From the fact that we have included the milestone for the European submission, you can infer that we are very enthusiastic about the data. We hope to present them in detail at the medical conference over the coming months.

And it depends completely on the feedback from the authorities, which we haven't yet had, how the -- how they judge the data and how they see that whether they are sufficient for potential marketing application for that drug and as a monotherapy.

So, it's too early to say anything, but from our inclusion of the milestone for filing in Europe, in the current guidance, you can infer that we are -- we and Janssen are very enthusiastic about the data. But, of course, it depends on the feedback. So, we cannot say anything further from that.

But, what we have done is, of course, already discussed some of the data with key opinion leaders, both in Europe and in the United States, and they are very, very excited about the data. So, let's hope that the discussions will go well. I cannot give any further color, unfortunately, there.

I can give some further color on the subque version of dara. We are very excited about the potential to create a subque version of daratumumab. This is based on an agreement between Janssen in December and Halozyme, the only clinically validated technology to infuse large amounts of therapeutic proteins in patients. You can thus reduce a three- to four-hour infusion, potentially to a less-than-10 minutes infusion subcutaneously. We think it has huge impacts when you believe that a drug like daratumumab could be used in multiple lines of therapy, Thomas.

This will have an impact I think in the maintenance setting, in the smoldering setting with the premalignant indication, the high-risk smoldering setting. They will soon start up a clinical study. And we believe this is -- this can be seen both as lifecycle management because you can then significantly expand the tail end of the royalty income for both Janssen and Genmab and also to effectively ward off competition because this agreement is exclusively to CD38.

No other CD38 antibody can use the clinically validated Halozyme technology. And that has been secured by this agreement. So, it essentially locks out competing CD38 antibodies from using this clinically validated subcue technology.

And that can likely end up in much better tolerability of the drug, a significant patient benefit because the infusion times are shorter, potentially a more benign, even more benign safety profile with a subcue version that will probably lead to a lower burden on the clinics for scheduling because you can do infusions much more quickly.

So, what I see and what we see together with our development partners that it's a huge strategically critical potential expansion of a much bigger market by having access to a subcue formulation. And we hope to start a -- probably a Phase I clinical study comparing the subcue with the IV formulation over the coming months. And we are now finalizing those plans. I don't think I can say anything further.

For HuMax-IL15, the anti-IL15 antibody, which is now named AMG714, this has been spun out by Amgen after leaving it on the shelf for a number of years, unfortunately, to a new company Celimmune. What I can tell you is that Amgen has a contractual right to potentially take back that product after the clinical data are generated. And if they would do that, we would keep the exact same royalties and income as in the original contract.

If they don't take it back for whatever reason, we get a very significant part of the payments coming from that company Celimmune. I cannot give you any further detail, Thomas. But, under the assumption that, when the drug works in celiac disease, which is a very large disease actually, and there is good evidence, preclinical evidence, that this is a good target, IL15, for an antibody therapeutic, the economics would stay roughly the same for Genmab.

Okay. Cool. Thank you.

All right.

Michael Novod, Nordea.

Yes, good evening. It's Michael Novod from Nordea in Copenhagen. Just a few follow-up questions. One is to the potential approval milestones or commercialization milestones on dara. Are you still not able to give some clarity on the potential size on these? And maybe also, if you can't give size, maybe give some comment on, will they be split into milestones on an EU approval, an US approval, or only one big milestones on simply US approval? That's one thing.

Another thing is timing of the Phase III relapse space in combination with lenolidamide. Will we be able to get some data already at ASH, or when do you expect that trial to potentially read out? And then lastly, are you still targeting a data release on tissue factor at ASCO in May?

Thanks, Michael, for the questions. Let me start with the question two actually. The trial, the Phase III trial with Revlimid plus dexamethasone with or without daratumumab is recruiting very, very rapidly, much, much ahead of schedule.

Hopefully, we can give you soon recruitment updates on that study. And thus far, the recruitment has exceeded our and Janssen's expectations by a lot I can tell you. Also, the Velcade-dex-dara combination study, Phase III study, is also recruiting very, very rapidly at this moment. We will give you recruitment updates as soon as our patients are in the trial, probably either via quarterly reports or other lines of information. But, we are very excited about progress in those trials.

Then the third question with regard to tissue factor ADC, that trial is progressing very well, that Phase I trial. We're still dose escalating, but now at very realistic doses. And we hope to present data at ASCO.

And we are very enthusiastic about the progress up to now in that study. And hopefully, we'll share that enthusiasm once we have the ability to present data.

Then finally, on the first question, the approval milestone, what I -- I will ask David in a minute to step in there. But, they are going to be very, very substantial I can tell you. And this year, we haven't included them in the current guidance, Michael, for 2015 because it's not entirely up to us, of course. It depends on the speeds the authorities review a potential license application for daratumumab.

In my answer before, you heard that we have plans scheduled then to actually file in both the US and the euro in 2015. If we would get the approval in one of those territories, we would get a very substantial payment. And that would clearly go beyond the current guidance.

David, do you want to give some further clarity or color to Michael?

Yes, so -- yes, unfortunately, I can't give you too much detail on it because, as usual, the pharma partners don't like to give too much granular detail about the milestones in advance. But, overall, what we have said in the past is that we've got around $1 billion of milestones from Janssen on the daratumumab agreement.

And we have said that more than half of that total milestone income is on development and regulatory. And when we say development and regulatory, we are including the first commercial or approval event within that chunk of milestones.

Now, also, when you look at the typical deals between pharma and biotech, the largest milestones do tend to be associated with the approval or first commercial events on our products. That's because that's the real area where the product is getting derisked somewhat from it overall.

Also, we have said in the past, when you look at our milestones overall, we've got them split up on many different events, mostly related to multiple myeloma. And -- but, we've also got them split on geographic events as well. So, those are milestones and split between US, Europe, and also Asia. So, yes, you would expect to see on commercial events or approval that you would see it broken down into the different regions.

Probably more than that, I can't probably say much more than that at this stage.

It's fine. Thank you so much.

Sarah Potter, BofA Merrill Lynch.

Hi there. It's Sarah Potter from Bank of America. I have three questions, please. Just actually aside from the tissue factor and the dara monotherapy data, can we expect anything else from Genmab at the ASCO conference?

Then secondly, on daratumumab, aside from the NHL study, can we expect any other updates in non-multiple myeloma indications in 2015?

And then finally, if you could provide an update on when we may get first visibility on your trials in immuno-oncology or checkpoint inhibitor targets, please? Thank you.

Thanks, Sarah, for the questions. In addition to tissue factor and dara monotherapy data potentially scheduled for ASCO, I can tell you that, yes, we potentially will see more data from Genmab, for example, on ofatumumab, as there are some other programs, preclinical programs. But, we have not detailed that. We will likely do that, Sarah, at -- what is it, May the 13th I think when the ASCO abstracts come out. We can likely send out a [curtain raise] of more information.

But, we believe that there is at least two other programs outside of tissue factor and dara, which will likely be the key I think datasets. This can also be presented at the ASCO meeting end of May, early June, of course, assuming that that will be -- that abstracts, etc., will be accepted for presentation.

Then the second question with regard to non-Hodgkin lymphoma data or other non-MM data, that will likely be preclinical data in a number of indications, where we continue to test out daratumumab either alone or in combination with other drugs in other settings. So, likely, outside of the clinical data, non-Hodgkin lymphoma, probably preclinical data, Sarah.

Then finally, the immuno-oncology programs are moving very robustly. The BioNovion deal, I've already described that in my introduction. We have then also bispecifics now. Genmab has set up over the last few years amazing setup with the DuoBody platform with robots, where we can actually create over 1,000 bispecific molecules per day, new bispecific molecules per day so that we are able to fish out the exact therapeutic candidates we want to work with.

And probably end of the year, you may expect some early hints of some of these programs, but definitely not before. What I can assure is that we are in multiple interactions with other companies, Sarah, looking at the immuno-oncology space in more detail. And Genmab is actually very focused in working more actively and proactively in that area. So, there will be further updates during this year on immuno-oncology programs being worked on by Genmab.

Thank you very much.

You're welcome.

[Mick Reedy], Goldman Sachs.

Hi. It's actually Keyur Parekh on for Mick. Just a couple of questions, please. One, kind of given historical experience for kind of the data expectations from the EMA in the multiple myeloma space, where my belief is they will ask for much more data than the FDA has, can you just give us a sense of why you're confident of being able to file this with the EMA in 2015?

And secondly, and then kind of moving onto the company landscape in the myeloma space, Jan, it would be great if you can share with us some of your thoughts on the potential use of CAR T or kind of the Bcl-2 inhibitors in the treatment for multiple myeloma. Thank you.

Thanks, Keyur. Good to have you on the line. I cannot say much further than what I already did to a previous question on the European situation. We believe we have very robust data. That data has been discussed with a number of absolute experts, world experts in this area, also from Europe, Keyur.

And they agree with us that we have strong data. And hopefully, we can present the data at ASCO, the monotherapy data. Yes, European authorities are far more conservative and careful with allowing findings on the base of single-arm studies. But, do remember that we also with Arzerra were successful in that respect in CLL.

We believe that daratumumab is a far more potent drug. It is the only antibody I know that can kill cancer cells at least five different -- via at least five different mechanisms of action. And we believe we have very good robust and durable data in a very difficult treatment setting. So, let's hope that the response will be favorable. We have a number of scheduled meetings in different countries now. And it depends on the outcome of those interactions, Keyur, how quickly we think we can move forward, also the European space. I cannot say anything further there.

Then multiple myeloma, yes, the landscape is absolutely changing, which we -- what you didn't ask is also immuno-oncology targets, like PD-1, PD-L1 seems to be of interest. CAR T cells for multiple myeloma may also be a way forward, albeit that the target is much more difficult.

We believe that CD38 may not be the optimal target for a CAR T cell approach. Genmab scientists have already looked at that potential target because CD38 is -- as we discussed before, is much more broadly expressed than just on the surface of multiple myeloma tumor targets, Keyur. It's also expressed in some of your erythrocytes, thrombocytes, some of the pulmonary epithelial cells. We believe a CAR T cell approach may well be too toxic for multiple myeloma relative to targets like CD19 that tend to be much more selectively expressed only on tumors.

Bcl-2 inhibitors, the Bcl-2 inhibitors, the early data, which we have seen preclinical data, were not too impressive in multiple myeloma. But, what I would say is perhaps if Bcl-2 inhibitors would work in multiple myeloma just as well as they do in non-Hodgkin lymphoma, they would be the perfect combination molecules for a CD38 monoclonal antibody because of the differences in mechanisms of action.

Even upon a DOC inhibitor, like the Novartis molecule, which has now come to the market, we believe is a fine combination partner for a CD38 antibody like daratumumab. And the same holds for new oral proteasome inhibitors or inhibitors like Kyprolis or carfilzomib. It's generated some very good data over the last week or so.

We believe that those molecules are ideal combination partners for a molecule like daratumumab because of the differences in mechanism of action. We have never seen data as robust as we have seen now in a very difficult treatment setting with daratumumab, Keyur.

So, I would say, though, potentially, I would score the Bcl-2 inhibitors higher as a potential for multiple myeloma than CAR T cell approaches. I do believe that also immuno-oncology drugs like and anti-PD-1 or PD-L1 maybe a good way forward. And then again, all of these three would be excellent combination partners actually with a molecule like daratumumab.

So, we believe the market will further develop, the landscape will further develop. But, we are well positioned there to create a real winner and a real success in the future.

Yes, sorry, if I can just follow up on your comments regarding Europe. If I heard you correctly and if my interpretation of what you said is correct is that you would be open to potentially kind of looking at a decentralized procedure as well as a centralized procedure across the various countries in Europe. Is that kind of a right understanding there?

Yes, correct. We are looking at different scenarios. And luckily, Keyur, we have a very, very experienced partner in development drugs in multiple myeloma with multiple drugs already approved in a setting. They know the landscape really well, the regulatory authorities really well, and also the patient organizations really well, as well as the reimbursement organizations. And they're talking to all of these parties as we speak.

So, we are going to use multiple approaches on the basis of very strong data that we would be delighted, Keyur, to show to the medical field hopefully over the coming months or so.

Thank you.

Thank you.

(Operator Instructions). Peter Welford, Jefferies.

Hi. I think I've just got a few very boring financial questions left, please, for David I guess, firstly just on the warrant expenses for the year. I guess, can you give us some sort of outlook in terms of how that would vary at the current share price relative to -- I think it was DKK27 million this year.

And equally, within the cash outlook for the year end, are we assuming within that DKK2.3 billion to DKK2.4 billion any income at all, cash proceeds rather from employee option warrant exercises during the year or not?

And then perhaps, finally, just on R&D, I guess this is really more theoretical than necessarily financial. But, if we think about the spend, obviously, the essential portion of the R&D during the 2013-2014 period was related to Arzerra and equally some of the CD38 then reimbursed spend.

I guess, in 2015, that's largely unwound. So, virtually all of the spend's now going to be for Genmab's core products. So, I guess, can you give us some sort of perhaps comment on the trajectory of those expenses, given obviously it's going to increase substantially 2013 through to 2015 and, perhaps, the proportion of spend you see in the future that's going to be allocated to your internal projects and how we should be thinking about that? Thank you.

Yes, thanks.

Yes, sure. First -- .

-- David, why don't you go ahead?

-- financial questions, they're never boring, Peter. So, thank you for the questions there. The warrant exercises, the cost of those coming through, you're right. We said we were increasing the cost associated with the warrants in 2014 compared to 2013, DKK28 million of expense in 2014 compared to DKK12 million in 2013. That'll be probably going up another DKK9 million or DKK10 million in 2015, a noncash charge, of course.

The warrant expense -- sorry, the warrant in terms of exercising the warrants, as we said in the detail of the guidance, we have not included any cash coming in from the warrant exercises in that cash estimate of DKK2.3 billion to DKK2.4 billion of cash at the end of 2015.

I don't include that within the guidance because it's something that we can't control, obviously. That's the employees and their decision when they would like to exercise their warrants. And very much, it will depend on, of course, where the share price is going as well. So, we haven't included historically any of the cash coming through. But, you did see last year we did get DKK66 million from the exercise of warrants in 2014.

In terms of the R&D expenses, you're absolutely right. Our total expense base at DKK585 million in 2014, that did include about DKK150 million related to ofatumumab. So, that does mean that all of the savings on ofatumumab, if it continued, we would've been spending probably about DKK130 million in 2015. But, it does mean that we are reinvesting moneys into the other programs.

The programs that are really taking up a larger share of that ofatumumab saving in 2015, the tissue factor, we'll probably be spending there about DKK50 million on tissue factor in 2015. And one that's really a new expenditure compared to the previous year will be AXL ADC. That is also about DKK50 million.

Now, you may be surprised that so much is being spent on AXL, being as it's not in the clinic at this stage. But, one of the early expenses that you go through before you get to that IND is the toxicology side of the program and also the CMC. So, some of that early-stage work can be quite expensive. We did see that a few years ago that tissue factor actually was more expensive in 2012 than it was in 2013, 2014.

In terms of the future expense, it really depends on the success of those programs coming through. But, if you look at Genmab, I think we're well positioned now. We've really -- if you look at it, we've got three large programs. We've got daratumumab with Janssen, could only be cash flow positive, zero expense contribution from Genmab.

And if you look at Arzerra, ofatumumab in cancer with Novartis, again, can only be cash flow positive, no cost investment going forward for Genmab. And then also, with ofatumumab in autoimmune subcue version with GSK, again, going to be cash flow positive and no cost investment from Genmab.

So, we're pleased to put our moneys into these new programs and grow and expanding that pipeline.

That's great. Thank you very much.

Sachin Soni, Kempen & Co.

Good afternoon, everyone. I have one question only. If you look at your own pipeline, it appears there is a lack of -- or there is no asset which is in proof of concept stage for next two years. Do you plan to in-license or do something about it, or would you rather progress your early-stage pipeline? Thanks a lot.

Thanks, Sachin. When you look at tissue factor ADC, that is in Phase I clinical proof of concept right now. So, that molecule will likely read out the first data this year hopefully at ASCO. So -- and then what I explained before, we could potentially use some of the new capital, like the deal coming through finally today between Novartis and GSK that gives me actually access to another -- essentially another $60 million of undiluted capital, which I would otherwise have spent on ofatumumab, which we can use to selectively accelerate other programs.

So, on tissue factor ADC, if the data would be encouraging, would be one of the candidates for most of expansion. We could do multiple Phase IIs rather than, for example, one with the current cash on the bank.

We're also progressing AXL that David has already described in answer to Peter Welford's question. That is moving actually to the clinic we believe in the coming year.

But, we are also open to potentially bring in other molecules from other companies in our pipeline if they are the right assets, Sachin. We are well capitalized. We have a robust engine with a good track record. But, we can identify [vendors] and then develop them further towards the market.

So, yes, I think we are open to look actively at the market at other assets at the Phase I or Phase I/early Phase II level. But, we have a very full pipeline. We have a stronger pipeline now than we ever had in our whole company's history. We actually have over 20 preclinical programs. Many of them are very exciting.

And we will probably with one or two or more per year begin to give you the candidates, which are all then slotted towards the clinic. Once we reveal the names, they are slotted firmly to move to the clinic.

So, it will be a combination of our own molecules and potentially molecules brought into our pipeline. So, you may see updates via the in-licensing level from us as well also during 2015.

No, that's clear. Thanks a lot.

Thank you.

Thank you. There are no further questions at this time. Please continue.

So, thank you, all, for calling in today to discuss Genmab's 2014 full-year financial results. We very much look forward to speaking with you again soon.

Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you, all, for participating. You may now disconnect.