Genmab A/S (GMAB) 2017 Q2 法說會逐字稿

Good day, and welcome to the Q2 report 2017 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 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 quarter ended June 30, 2017. Joining me on today's call is David Eatwell, our CFO; and our Chief Development Officer, Dr. Judith Klimovsky, will also be available for questions during the Q&A.

Let's move to Slide 2. As already said, 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. In the second quarter of 2017, we continued the positive forward momentum we saw in the first quarter. DARZALEX was approved with new indications in Europe and in the U.S. In Europe, DARZALEX is now approved in combination with lenalidomide and dexamethasone or bortezomib and dexamethasone for patients with multiple myeloma, who received at least one prior therapy. This approval converted the previous conditional approval for DARZALEX in Europe to a standard approval. Genmab earned $48 million in milestones from Janssen following the first commercial sales of DARZALEX in the new indications.

In June, DARZALEX was given an additional approval by the FDA for use in combination with pomalidomide and dexamethasone for patients with multiple myeloma, who have received at least 2 prior therapies, including lenalidomide and a proteasome inhibitor. Notably, this approval was based on data from the Phase I study of daratumumab in combination with pomalidomide and dexamethasone in relapsed or refractory multiple myeloma. Genmab earned $25 million in milestones related to the approval and first commercial sale of DARZALEX in this new indication.

The number of clinical studies for daratumumab also continues to grow rapidly. The Phase III APOLLO study, combining daratumumab with pomalidomide and dexamethasone for relapsed or refractory multiple myeloma that we discussed on the Q1 call, has since started. In May, Janssen also announced plans to start Phase III studies in smoldering multiple myeloma and with the subcutaneous formulation of daratumumab in amyloidosis and multiple myeloma. A Phase III study comparing the subcutaneous formulation of daratumumab with the intravenous formulation that could be used for registration purposes was also announced. In addition, a Phase III study of subcutaneous daratumumab in combination with cyclophosphamide, bortezomib and dexamethasone in newly diagnosed light-chain amyloidosis is also now on ClinicalTrials.gov. Janssen also plans a Phase II study of the subcutaneous formulation of daratumumab in combination with various standard-of-care treatments in multiple myeloma.

Other studies have also been announced recently via ClinicalTrials.gov, including 2 Phase III studies in the Asia Pacific region, including China, in the same treatment settings as the ALCYONE and CASTOR studies; and a Phase II study in relapsed/refractory multiple myeloma run by Merck, combining daratumumab with a checkpoint inhibitor, pembrolizumab, which is marketed as Keytruda.

DARZALEX has been launched in the U.S. and 23 European countries, and sales in marketed multiple myeloma indications continue to be strong, with net sales reaching $554 million in the first 6 months of 2017, resulting in DKK 454 million in royalties to Genmab.

Other key highlights this quarter include encouraging preliminary cervical cancer data from the Phase I/II study of tisotumab vedotin in solid tumors. In Part 2 of the study, 11 of 34 evaluable patients in the cervical cancer cohort achieved a response with a median time of treatment of 4.9 months, and 7 responders are still ongoing or in follow-up for progression. The safety profile seen with tisotumab vedotin was consistent with known monomethyl auristatin E or MMAE-based antibody drug conjugates. Conjunctivitis was identified as a toxicity specifically related to tisotumab vedotin, which led to the introduction of prophylactic management in the study. We are pleased with the results in the study so far and are discussing plans for further development in cervical cancer. This study continues, and we very much look forward to presenting additional data at the European Society for Medical Oncology 2017 Congress in Madrid in September.

In addition, a new DuoBody program developed by Janssen in our technology collaboration has entered the Phase I clinical study. This program targets BCMA and CD3 and is being investigated in relapsed or refractory multiple myeloma.

Finally, as David will discuss in more detail, we continue to perform well financially and improved our revenues by DKK 500 million in the first 6 months of 2017 compared to the same period in 2016.

I'm now pleased to turn the call over to David to describe our financial results for the first 6 months of this year. David?

Thank you very much, Jan. Let's move to Slide 4. Over the next few slides, I'd like to discuss the results for the first 6 months of 2017 and our financial guidance for the full year.

Revenue for the period came in at DKK 1,024 million. That's an increase of DKK 500 million or 95% compared to the first 6 months of 2016. The increase was primarily driven by higher royalty revenue and milestones related to our DARZALEX collaboration with Janssen. Total royalties more than doubled year-on-year. And this year's H1 royalty income of DKK 479 million exceeded the total expense base of DKK 442 million. Those expenses of DKK 442 million in 2017 compared to DKK 366 million in 2016. The increase of DKK 76 million or 21% was primarily related to additional pipeline investment in our key projects and the further strengthening of our management team as well as adding additional headcount.

Moving to the operating result. We had an operating income of DKK 582 million for 2017 compared to DKK 158 million in 2016. The increase of DKK 424 million was driven by the higher revenue, which was partially offset by the increased operating expenses in 2017.

Moving to the net financial items. There were a loss of DKK 171 million in 2017 compared to a loss of DKK 1 million in 2016. The net loss for the first 6 months of 2017 was driven by foreign exchange movements, and these negatively impacted our U.S. dollar-denominated portfolio and our U.S. dollar cash holdings. Operation tax for the first 6 months of 2017 was an expense of DKK 88 million at an effective tax rate of 21%. It was based on estimated average effective corporation tax rate for the full year. There was minimal corporation -- corporate tax expense in the first 6 months of 2016 as at that time, a tax loss was projected for the full year.

That brings us to the net result, which was a net income of DKK 323 million for the first 6 months of 2017 compared to a net income of DKK 157 million in the same period of 2016.

Finally, on this slide, our cash position increased by DKK 1.3 billion during the first 6 months of 2017. And that was mainly due to positive working capital adjustments of DKK 630 million related to the milestones achieved in the fourth quarter of 2016, which we then received in the first quarter of 2017. We also had the positive operating income of DKK 582 million as well as proceeds from warrant exercises of DKK 194 million. All of this resulted in a cash position at June 30, 2017, of DKK 5.2 billion.

Moving to Slide 5 on the revenue. A revenue breakdown by category is shown on the left-hand side of this slide. In the first 6 months of 2017, milestones were the largest portion of revenue at DKK 489 million compared to DKK 271 million in 2016. You'll see that royalty income came in at close second at DKK 479 million in the first 6 months of 2017 compared to DKK 202 million in H1 of 2016. The increase of DKK 277 million was driven by higher DARZALEX royalties, which were partially offset by lower Arzerra royalties. Deferred revenue from our collaboration agreements was fairly stable year-on-year at DKK 47 million in 2017 compared to a similar figure of DKK 45 million in the same period of 2016. The graph on the right bridges the revenue between 2 periods.

DARZALEX royalties grew from DKK 168 million in 2016 to DKK 454 million in 2017, an increase of DKK 286 million. As Jan mentioned earlier, DARZALEX sales were $554 million in the first 6 months of 2017 compared to $209 million in the same period of 2016. The increase in sales of $345 million was driven by the strong uptake following the regulatory approvals, both in the U.S. and in Europe. The increase in DARZALEX milestones was mainly related to the first commercial sales of DARZALEX in the second and third indications under the expanded label granted by the European Commission in April of this year.

Next, let's move to the expenses and the operating income on Slide 6. The graph on the left compares the change in expenses between the first 6 months of 2016 and 2017. As you can see, there was an increase in the operating expenses of DKK 76 million, which was driven by our decision to accelerate our product pipeline. Approximately 40% of the expense increase was due to additional investment in our product pipeline, including the advancement of DuoBody-CD3xCD20, HexaBody-DR5/DR5 and tisotumab vedotin.

As I mentioned earlier, FTE costs have also increased year-over-year as well as we are undergoing controlled expansion, hiring key personnel to support our product pipeline growth and strengthening our management team.

Looking at the chart on the right, you can see the increase in the operating income going from DKK 158 million to DKK 582 million. As previously discussed, the increase is mainly due to the higher revenue, partially offset by those increased expenses.

Now let's move on to the guidance for 2017. We are maintaining our 2017 guidance which was released on February 22 and reiterated on our Q1 call on May 10. We expect our 2017 revenue to remain in the range of DKK 1,950 million to DKK 2,150 million. Our projected revenue for 2017 consists of the DARZALEX royalties of around DKK 1 billion, and that's based on Genmab's estimate of DARZALEX net sales of DKK 1.1 billion to DKK 1.3 billion. We also project the DARZALEX milestones of DKK 800 million in 2017. The remainder revenue mainly consists of Arzerra royalties, DuoBody milestones as well as deferred revenue.

Overall, the quality of revenue continues to improve. And with the DARZALEX royalty income stream doubling year-over-year, it will nearly cover all of the total operating expenses in 2017, again getting us closer to our aim of being a sustainably profitable company where the royalty from products covers our total expense base.

In 2017, we expect our operating expenses to be in the range of DKK 1 billion to DKK 1.1 billion, which mainly consists the advancement and continued investment in our pipeline and products, including tisotumab vedotin, HuMax-AXL-ADC as well as our new INDs, DR5/DR5 and CD3xCD20, as well as advancing various products in our preclinical pipeline.

In total, we still expect to spend about DKK 440 million on our 8 key projects. That's approximately 42% of the total expense base. That means we still expect the operating income in 2017 to be in the range of DKK 900 million to DKK 1.1 billion, and we project a cash position of more than DKK 4.5 billion at the end of 2017.

Also, note that it's usual that 2017 guidance does not include any new potential deals or potential proceeds from future warrant exercises.

In summary, the increased royalties from DARZALEX in 2017 are enabling Genmab to increase the investment to selectively advance our pipeline and create even more value.

Now I'd like to hand back to Jan to discuss our goals for 2017. Jan?

Thanks, David. Let's move to Slide 8. We are making excellent progress towards achieving this year's goals. In addition to the label expansion for DARZALEX in the European Union in April, we had the third approval in the U.S. in June for DARZALEX in combination with pomalidomide and dexamethasone. We also hope to receive a regulatory approval in Japan, which could bring the products to more patients around the world.

Multiple new daratumumab trials and a variety of new blood cancer and solid tumor indications as well as into the subcutaneous formulation have been announced this year, and a number of these have started recruiting patients.

We also anticipate key data from the Phase III ALCYONE study, which evaluates daratumumab in combination with Velcade, melphalan and prednisone, or VMP, versus CMP alone in front-line multiple myeloma this year. Finally, for daratumumab, we expect to report data from studies and indications other than multiple myeloma in 2017.

Turning to the rest of the pipeline. We expect to see Phase III results for ofatumumab in follicular lymphoma. As mentioned earlier, we reported preliminary clinical data from the cervical cancer arm of the Phase I/II tisotumab vedotin trial in solid tumors in June and are excited to present additional information on the study at ESMO in an oral presentation scheduled in early September.

We are progressing the HuMax-AXL-ADC Phase I/II trial and plan to submit new INDs for HexaBody and DuoBody projects in 2017. We plan to continue to build a robust and innovative portfolio by entering new DuoBody and HexaBody collaborations and progressing our partnered programs.

Finally, we will continue to focus on disciplined financial management with controlled company growth and smart, selective investments in the most exciting and highest-potential programs.

Let's move to Slide 9. That ends our presentation of Genmab's Q2 2017 financial results. Operator, please open the call for questions.

(Operator Instructions) And we will take our first question from the line of Thomas Bowers from Danske Bank.

A couple of questions from me. Just firstly on tisotumab. What sort of time lines are we looking at in terms of possible pivotal trials following the cervical cancer data? And also, well, maybe -- are you maybe more focused on the I/O combination once you've got better understanding on the safety profile and maybe also the dosing range here? And then my second question. Just -- well, maybe brief. Just if you can give us some color on the abstracts submitted for the S conference. I believe the deadline was here last week. And then maybe a more scientific question here. Just on the I/O-I/O combination stories we've seen, the failure of this on PFS for the MYSTIC trials and maybe also generally some [drug] on progress for the next-generation at least for the OX40. So any thoughts on your biospecific I/O programs? Or are you already more focused on, you can say, 2 more expressed targets combined for the validated I/O? So maybe less on the I/O-I/O. So any thoughts on this would be much appreciated. Yes. I think I'll stop myself now.

Thanks, Thomas, for the questions. Let's start with the tisotumab vedotin question. We are, at this moment, interacting with regulators about plans for tisotumab vedotin going forward. So it's a little bit difficult before we have concluded those discussions, Thomas, to give you time lines, but it could be very quick. We think we have very strong preliminary data. We hope to present a fuller picture, actually, on September 8 in an oral presentation at ESMO. And in parallel, we are interacting with regulators. So I don't want to discuss too much about time lines, but it could be a fast track if the regulators support the data to be strong and convincing like we believe right now. So I should probably park it like that. And then the I/O combinations. We are very excited about immuno-oncology combinations and biospecifics, and we're doing actually both, Thomas. We are doing combinations of different checkpoint targets, and we also combine checkpoint blockers or even arginase with tumor-specific targets, and we have very strong proof of concept from both of these concepts, and we'll likely bring both of these towards the clinic. And the first possible INDs could be ready in next year, in 2018, for one or more of these I/O combinations. And we are going to definitely give you further information, Thomas, once we think that we have selected the candidates to move into the clinic. And that we are still a bit from that, but we are super-excited about some of these new combinations. And the preclinical data speak for itself. And then as it relates to the S conference, I don't know -- I don't have the exact overview, Thomas, of all the abstracts submitted, but we will definitely have a number of abstracts on daratumumab studies. There's also ofatumumab abstracts and also preclinical abstracts that are submitted. But I don’t have a complete overview at this moment. We hope to be able to tell you that soon. But it will be, I think, a very full S conference with Genmab products this year.

Our next question comes from the line of Michael Novod from Nordea Group.

It's Michael from Nordea. A few questions. First of all, with regards to subcu DARZA. It seems like a lot of stuff is going on. More and more are getting started. Should we assume that the final strategy will be to run the big Phase III and then get approvals much more broadly based on all the Phase II trials? As I recall, that was the strategy that JNJ used for subcu Velcade as well. And then secondly, also on tisotumab. So what about the time lines regarding Seattle Generics opt-in, opt-out? What have you -- will that be communicated in connection with the, say, regulatory and clinical trial strategy? Or when should we expect something there? And then lastly in regards to net financials and tax. Is -- the current tax rate, is that -- or reported tax rate, is that what we should expect for the full year as well? And could you try to guide us a bit on net financials at least just for '17?

Thanks, Michael. That's actually 4 questions, I think. The last 2, for David. But let me start with subcu dara. The plans are, indeed, to have a large Phase III non-SRA Roche study, Michael. It will be very, very soon. I think you will hear more news on that one. And then in parallel, a Phase II study where we actually combine daratumumab with various standards-of-care regimens in front-line, second-line and so on in order to get a potentially broader label than we got from the Phase III. And the -- I think the discussions with the regulators are finished now. The plan is rock-solid. It will be rolled out to the military force pretty soon. So we are moving aggressively forward together with Janssen there. And that's probably all I can say at this moment. And then for tisotumab vedotin, we keep Seattle Genetics very well informed about all the data and also the recent data. And I think it's very likely that a potential decision from Seattle Genetics on the potential opt-in could come in parallel with having more feedback from the regulators. As I said to -- an answer to Thomas's questions, we are really speaking with regulators as we speak on the programs, and Seattle is following that actively. And it's, of course, up to them, Michael, to see what they will do with their opt-in. But that could come quite quickly. And then having said that, I probably need to leave it at that, Michael. I will hand over the tax question to our tax specialist, David. And then, David, you can also give a little bit more color on, potentially, the financials for the whole year.

Well, I think I'll have to give a disclaimer on being a tax specialist, Jan. But yes, the tax for H1 was purely just using a weighted average rate, 21%. That gave us a tax charge of DKK 88 million. As you know, from looking at the year-end financials for 2016, we got quite a lot of NOLs and therefore had quite a large deferred tax asset that is not being recognized on the balance sheet because we have a deferred tax valuation allowance. Now you remember in 2016, we did release some of that allowance at the end of the year, and that gave us a credit to the P&L. Now we haven't released any further allowances so far in H1 2017, but we'll continue to monitor that. It will somewhat depend, looking at 2018 and then beyond, on profitability, particularly looking at that royalty income and how it covers the total expense. Of course, we do expect our expenses to rise in 2018, particularly if we're to go into pivotal trials for tisotumab vedotin. That will continue to be monitored. And it's quite possible you could probably say reasonably likelihood that we'll be able to recognize additional deferred tax asset in 2017. If we're able to do that, then we'll decrease that valuation allowance. In other words, that will create a credit, potentially, to the P&L tax line later in 2017. In terms of looking at the net financial items, as I said, that is just because the U.S. dollar-Danish krone exchange rate will bounce around. We had a very high rate at the end of 2016, DKK 7.05 between the dollar and the krone, and that gave us a fairly large credit in Q4 of 2016. At the end of June, it was a rate of DKK 6.51; hence, we get a loss. But remember, this is not a realized loss. Most of this is unrealized because we're holding those cash balances and marketable securities in U.S. dollars. So in terms of where it will go for the next of the year -- rest of the year, it's going to depend on where that exchange rate goes. As I said today, so around the DKK 6.30, DKK 6.33. And so we still got a further debit at this point in time. But I think the expectation is the dollar could strengthen again later in the year, somewhat depending on policies and interest rates. But we don't need to convert that cash into Danish krone at any point. We got plenty of cash balance. And then finally, I would sort of say is that we expect our U.S. dollar expenses to grow, obviously as we build out the clinical development team and further skill sets here in Princeton. But also, if we start going into the larger Phase IIs and Phase III trials, many of those trials will also be in U.S. centers. So we're likely to pick up in the future a higher amount of U.S. dollar cost. So at that point, we got some more natural hedging as well. We got U.S. dollars cash and multiple securities that can be used for future U.S. dollar expenses. I believe that answers your question.

Our next question comes from the line of Yan Li from Citi.

So I have 2, please. So first, now that Merck has launched a Keytruda-DARZALEX combination study in multiple myeloma patients, can we expect a formal collaboration agreement to be established in the future? I'm guessing they would need one if they wanted to run studies involving DARZALEX in solid tumors settings. Number two, thinking about potential competitors. Sanofi last week announced that they are also combining the CD38 isatuximab with an internal anti-PD-1. So the question is, do you think they will be too late? Or do you think maybe by owning the 2 assets in house, they could establish a competitive pricing strategy if successful?

Thanks, Yan. Merck, indeed, has started a multiple myeloma study combining Keytruda with dara. And I can tell you that Merck is, of course, in interaction with Janssen. And it's up to Janssen and Merck to decide on what level of collaboration intensity that will get. So I cannot comment of that further, Yan. I think it's -- you need to ask Janssen to see how they feel about a broader, more strategic agreement with Merck. And that's where I should probably leave the comments at. And then with -- in relationship to your second question with Sanofi, I mean, they have an internal PD-1 internally, as you say, and probably formed with Janssen and then, of course, isatuximab. And the same situation actually holds for Janssen because they also have their own PD-1, and they will test it out together with daratumumab. But as we know, we also are testing out dara in combination with 4 other checkpoint blockers from other companies. So I think in the end, potential combination strategies may be applied here by both Sanofi and by Janssen. So there's not necessarily an advantage for Sanofi there. And we are aggressively pushing the combination studies with checkpoint blockers. We fully believe that the data supports dara to be a -- recognizing the checkpoint molecule itself and to be potentially super-synergistic with different checkpoint blockers. So what we hope is that dara would become the universal combination partner, and let's hope that we are quicker than Sanofi. But it's clearly a good strategy.

Our next question comes from the line of James Quigley from JPMorgan.

DARZALEX sales in the second quarter, around DKK 300 million. Looking at simply the trends, $71 million in April, $81 million in May in the U.S., suggesting around about $60 million in the U.S. in June. Is there anything from your discussion with Janssen on the steering committee that could explain this drop? Or is it just a potential hole in the data? Secondly, in Europe. DARZALEX sales have been very strong. Is that still driven by Germany? And now that we've been on the market for about a year in Germany, what's your expectations for pricing going forward in Europe, especially Germany? And can the strong growth rates in -- well, in Europe be maintained? And then finally, on ALCYONE. Previously, you said late summer, early autumn for interim readouts. I think JNJ was saying late 2017 for a readout. Are you still confident that we -- or should we still expect a late summer readout?

Thanks, James, for the questions. And I will donate the first 2 to David to give you further perspective on the sales numbers, Symphony versus the Janssen numbers. But let me start with the third question first, the ALCYONE readout question. I can confirm again that we expect that in autumn and immediately after the summer. And that's fully on schedule, as I understood it from development team. And so in the coming months, we fully expect the ALCYONE interim readout to happen. And then having said that, probably, David, maybe you can answer James's first 2 questions and then comment a little bit further on the Symphony versus Janssen numbers and also on the European sales for Germany and put that in perspective. That would be great.

Sure. Yes. I think there were some confusion when the Q2 sales number came out from -- for Janssen for the U.S. I think it wasn't a decline in the Symphony data when you looked at the month of June. I think what it was is that because Janssen sales number came out before the June Symphony number, people were looking at the net sales number for Janssen of $212 million for Q2, comparing it to Symphony for April and May and deducing what June would be and possibly why June seem to be declining. A few days later, your Symphony number came out, and the June number was quite healthy. So then people were a little confused as to what the difference was between Symphony and Janssen's number. Now remember, the Symphony number, it is an estimate and as an estimate of it really what is being used in the marketplace. Janssen's sales number are Janssen's net sales number. And also, there can be timing differences between quarter-ends because it's what Janssen is selling into the market rather than Symphony is what is being used. However, I think we got used to it. Like in Q4, Symphony was $155 million and Janssen was $151 million. Very close together. Same in Q1 2017, Symphony $203 million, Janssen $201 million. So I think we were getting into the habit of thinking "Oh, Symphony is a good market or about the same," because I think there was some timing differences in there because when you look at Q2 of 2017, Symphony $233 million, Janssen $212 million net. So whilst it was only 1% or 2% variance in Q4 and Q1, there was a 9% difference in the Q2 number. Now I think some of that is probably, say, timing between sales and usage within the market, but also, there would be some small discounts. Now if you look at it for H1 and look at the half-year data, maybe that takes out some of the sort of the monthly and quarterly seasonality or movements on these numbers. Symphony was $436 million for the half year; Janssen was $413 million. That's $23 million or around 5% variance. So it's a pretty small difference between the 2. So I think Symphony is still a good market, but remember, it's a gross number, and that could still be inventory holding and stocking differences between those. Now 5% is a fairly small difference, and Janssen did say on their sales -- on their quarterly earnings call when they were asked about level of discounts and pressure on discounts. But they said it wasn't too relevant to a product like DARZALEX because it is a new product, a differentiated product, an unmet medical need. And therefore, they didn't see discounts in the U.S. market as being a significant issue for DARZALEX. So I think all the numbers tie up. I think it's some of the challenges when we're looking at finite data or looking at weekly or monthly data and try not to read too much into the world. If we look at the half year, very similar, very compatible, no concerns where we're going with the DARZALEX number. In terms of your second question really on the European number, of course, great growth, $54 million in Q1, while the rest of world sales jumping to $87 million. So a really nice sort of 60% increase in Q2 versus Q1, which is great news. Majority of sales is still coming, and it's really driven by 2 countries, Germany and France. And those 2 combined are supplying slightly more than half of the rest of world sales at this point. Good news is we go back last year, and Germany was sort of more like 80% of the total rest of world sales. So that does mean a lot more countries are coming on straight both within Europe and rest of world, and as Jan said on the call, now available in 23 different countries. Final part of your question was in terms of the German price because that's how we did highlight on launch. Great thing in Germany, you'd come through and you'd come through at a price, which is pretty much the price you want to launch at. We know, of course, that Janssen launched in Germany. Their price that was quite a bit higher than the U.S. price. But we also highlighted that after the first year anniversary of the product being on the market, you can expect a price negotiation, and indeed, that has happened. That is now being announced. The price is being reduced in Germany in June by about 25%, 26%. The good news for today's current exchange rate, that does mean that the current German price, if you convert it to today's dollar exchange rate, is just under $2,000. Now if you compare that to the current U.S. price, which is just under $1,900. So the German price today, after its first anniversary of price reduction, today still sits at about 4.5%, 5% higher than the U.S. price, which is not always typical for drug pricing comparison between Europe and the U.S. So we're pretty pleased with that German price that we currently got there.

Our next question comes from Peter Welford from Jefferies.

A quick financial one for David, which is the large increase in payables at the end of June. I apologize if I've missed the discussion about this. But I just wondered what that related to on the balance sheet that is. And then just going on to the sort of the pipeline. Just considering (inaudible) at ESMO. What sort of update should we anticipate? I don't appreciate if you're not going to give us data. But what sort of things or updates would you say beyond what you've already disclosed in June in the cervical cancer setting? What is it in particular that we should be focusing on? And then just with Keytruda. Can you confirm that the DARZALEX pembro study? Is that still set to -- or have they actually started enrolling yet? I guess the lumbar disc study has been on hold. I'm just curious as to whether the bio study is still definitely recruiting and on track to move forward in multiple myeloma.

Okay. Thanks, Peter. I think David can probably first address the first question. And then I will take the second one. I will ask Judith further color on Keytruda multiple myeloma study. David?

Yes. It's purely cut off at the end of the quarter. So if we sort of cut off 3 days, so then there would be -- that payables would have gone down. It actually related to warrant exercises. We didn't have a warrant exercise right at the end of the quarter. Employees can exercise warrants, and it's still what we call it cashless exercise. We simply receive the cash in from the bank that was doing the warrant exercises for us right at the very end of the month. And it was really the next day, very early, July, that, that cash went back out again. So purely a timing difference to do with cash receipt and cash going out to employees on warrant exercises.

And the second question on tisotumab vedotin.

(inaudible)

Okay. Why don't you do it, Judith?

Yes. Thank you. So for -- we -- what we -- at least in the press release, it's high level kind of qualitative on overall and safety. For ESMO, we'll present a full set of data, safety and efficacy, and patient demographic, which is key to put things in perspective. So these assume no variable, and it will be presented orally at ESMO.

And then maybe Keytruda trial, Judith, do you know whether it's actively recruiting at this moment?

So Keytruda, I mean, it's sponsored by Merck. So we don't have specifics on how recruitment or size are active. We can get details by asking them and get back to you.

All right. Peter, so we probably cannot tell you whether it's actively recruiting at this time. And for tisotumab, you'll get a full update of the data, the 34 patients, at ESMO in the oral presentation.

Our next question comes from Richard Parkes from Deutsche Bank.

Firstly on DARZALEX. So just wondered if you could give us an update on the patient shared data in the relapsed setting and how that's developed over the quarter and maybe in the U.S. in particular. And then on tisotumab, you're still looking at multiple tumor types, and we have seen the headline data from cervical cancer cohort. Is that simply the most mature cohort? Or is that the one where you're seeing the most evidence of activity? So that's the first question. And then in the data you outlined, there are a couple grade-free bleeding events. I'm just wondering whether there was any thinking over the etiology of that given that bleeding risks of this -- possible safety risk with this target. I'm just wondering if maybe cervical cancer patients have an underlying bleeding mech associated with the tumors. So explain that, or any other clarity would be helpful.

Thanks, Richard, for the questions. I will definitely ask David to comment on the usage in the 3 lines of treatment in the U.S. and the brand impact data in a sec. But for tisotumab vedotin, I can tell you that the cervical cancer cohort is the most mature cohort. We are looking at other cancers, 6 other types of solid tumors, and we will progress the drug also in other cancers. But this is simply the most mature cohort, Richard. And then I will ask Judith right now to maybe give you a little bit further color on the bleeding risk with this target tissue factor and the safety aspects of tisotumab vedotin as we see them right now. Judith?

Yes. So thank you, Jan. So with regard to the bleeding, there was a grade 4 bleeding event that was in a patient with a disease called head and neck cancer. And if you know what I mean, head and neck cancer tends to heal. And it was in-depth access by the VMP, and it was considered not related. So as we monitor efficacy and safety, every (inaudible) that's related to bleeding, and we didn't see any increased risk of bleeding. And the bleeding that we have seen is mostly related to epistaxis.

Thanks, Judith. And then maybe, David, maybe some on the brand impact data in the U.S.

Yes. This is the brand impact data, and this is the June 2017 latest numbers. So first off, in the second-line setting, we're in the high teens now in terms of market share for DARZALEX-containing regimes. Brand-related cost is still the market leader in that particular setting where you can see with the sort of trends over the last few months, DARZALEX is taking share and growing share. Nice thing for June. Remember, this is a relatively small survey data. But overall, DARZALEX has passed Velcade in the second-line setting that is now in terms of market share in the second spot. And we can also see from the data that DRd is used more than DVd. Moving to the third-line setting. Overall, in the third-line setting, DARZALEX-containing regimes are now about 1/3 of market share. And that's very close to -- very similar to the market share of REVLIMID. So each month, it's sort of down at the beginning to sort of swap over. REVLIMID gets the most 1 month. DARZALEX, the next. So they're pretty equal at about 1/3 each. Also seeing in the third-line, as you would expect, that the combinations -- DARZALEX combinations are used more than the DARZALEX monotherapy in that third-line setting. And then finally with the fourth-line setting, DARZALEX continues to hold its #1 spot. And overall, if you look at the mixture, about half of the DARZALEX is in the mono usage, and roughly half is in the combination setting. And you got combinations there, of course, with REVLIMID with Velcade, but also beginning, obviously, to see now the pickup of the Pomalyst also in combination with DARZALEX given the expanded label in the U.S. So quite nice data to look at, quite nice trends going up on a monthly basis as you look at 2017.

Our next question comes from Andrew Carlsen from ABG.

This is Andrew from ABG. Just an overview question with regard to DARZA and all the trials and different indications. Could you kind of, say, give an overview of what the indications that you think are most promising? And I was especially thinking outside of multiple myeloma. And when will we, say, have any indications of what DARZA can outside of multiple myeloma? You -- it's on your target that's for '17. But what and by how much information you'll disclose?

Thanks, Andrew. There's a lot of studies now ongoing. There's actually 55 studies announced ongoing involving roughly 8,000 to 8,500 patients in total, and there are several indications outside of multiple myeloma. I think amyloidosis is a really promising indication. We already started a Phase III trial there that is sponsored by Janssen. But also, there's more and more solid tumors now being tested with dara. There's great, I think, preclinical data in ALL and CLL, which was presented, Andrew, at AACR this year. So there we have fantastic preclinical data. So I would say I think it's difficult to point out an indication outside of multiple myeloma. This has the highest chance, but I believe that solid tumors have a pretty good chance to work because of very strong preclinical data from Janssen and also from MD Anderson, from a group in Zurich in Europe and from Sloan Kettering. So it's very difficult to predict what the most likely indications outside of multiple myeloma will be that dara can work, Andrew. But I think 2018 will be the year that you see probably the most robust datasets, but there could be data before that already.

Okay. So the data that you have that will be presented or, say, the target milestone of non-MM clinical data that we should only, say, expect preclinical data at the medical conference? Or what does that say?

It could be early clinical data. It could be early clinical data like on individual patients. It's very difficult to say right now, Andrew, but the more robust datasets like with larger cohorts of patients will definitely be next year. But it could be in a few patients -- select data in a few patients. And I have already been--some fantastic blood papers in amyloidosis published that is outside of multiple myeloma this year in blocks. A number of papers have been great data in NKT-cell lymphoma. Last year, in the New England Journal of Medicine in an individual patient in Milwaukee in the United States with great clinical responses. So NKT-cell lymphoma is clearly an indication, Andrew, where we think that work is very likely to work, and Janssen is also going to progress clinical work in that indication. But it will not be very large patient cohorts. It will be a few patients here and there with different indications. I actually could potentially see initial promising data. That is what you should expect for 2017, Andrew.

(Operator Instructions) And our next question comes from Anastasia Karpova from Kempen.

I have 2 quick ones. Appreciating that you have limited visibility, but if you could share any information on how the enrollment is ongoing on the Tecentriq-daratumumab trial in non-small-cell lung cancer and if you hear anything from Roche on that one. And secondly, during the course of summer, there was a number of meetings on CD38 patent discussion. If you can share some flavor or color on how this discussion is ongoing and what is Janssen's and Genmab's view on a potential outcome next year.

Anastasia, let me address both questions. So the Tecentriq enrollment in non-small-cell lung cancer, we have very limited visibility there. With positive feedback, I think Roche has already flagged that they don't see any safety worries in that trial and the trial is recruiting. That's what we also hear from Janssen that they have not a lot of visibility on how many patients are in that study. And Janssen said that 2018 would be the time to -- that's what [Peter Lee] would say that the most recent update would be the time to expect data there. And then the second question, as it relates to the litigation which is ongoing, we cannot give any further comments. There's definitely a lot of activity. We still believe we have a strong position, but I cannot comment on that any further, Anastasia.

Just one small addition to that, Jan, just to point that the Tecentriq non-small-cell lung cancer trial is actually run by Janssen, not by Roche. Roche is running a combination in multiple myeloma. And also interesting on the ClinicalTrials.gov, that trial from Janssen was changed from a Phase I/II to a Phase II.

All right.

Our final question comes from Carsten Madsen from SEB.

Carsten from SEB, and I only have one question left. The BCMA program with JNJ that is now in a Phase I DuoBody program. Just considering the progress we have seen with BCMA in (inaudible), could you reiterate how economics looks for you whenever there's progress under this program, both in terms of milestones, percent of royalties and also if you have any insight into clinical development for this compound going forward?

Thanks, Carsten, for the question. This is a program in our DuoBody collaboration with Janssen. We get royalties -- single-digit royalties, I think, for this one. And the milestones, I don't know about the total amount of milestones will be. I need to look at the deal. Maybe David can give you the total milestone...

Yes. It's still around the sort of $180 million to $200 million depending which -- whether it's in the first 10 or second 10 of the program. So it's under $200 million of milestones and single-digit royalties.

And do -- we do get regular updates, Carsten, like, I think, quarterly updates of the team on clinical progress about understanding that a trial is active and is progressing. But we don't get, like, detailed insight on an ongoing basis on a trial.

Okay. And maybe I could just have a follow-up question to David on the data you shared with DARZALEX, each of the lines in multiple myeloma. If you look at the overall market, can you see any signs of the market being expanded in terms of number of patient as duration of treatment is longer? Or is that too early to see in the data you're looking at?

Yes. Carsten, on the first one, the answer is we're starting to really look forward to in the future. I think it's fairly early days since we've been and particularly into the second-line area. But of course, if it follows through in real life with patients as it does in the trials, then we would expect patients to live longer for longer PFS and then longer overall survival, which means that patients will be taking more drug for a longer period, which should increase the total market for multiple myeloma and total dollar value over time. But I haven't seen any data that shows that's probably a bit too early at this stage.

As there are no further questions in the queue, that will conclude today's Q&A session. I would like to turn the call back over to Mr. van de Winkel for any additional or closing remarks.

Well, thank you for calling in today to discuss Genmab's financial results for the first 6 months of 2017, and we look forward to speaking with you all again soon.

That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.