Genmab A/S (GMAB) Q3 2020 Earnings Report, Transcript and Summary

So, hello and welcome to the general conference call to discuss the company’s financial results for the first 9 months of 2020. With me today to present these results is our CFO, Anthony Pagano. And for the Q&A, we will also welcome our Chief Development Officer, Judith Klimovsky; and our Chief Operating Officer, Anthony Mancini. 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. We have seen significant advances in our and our partners’ pipelines throughout 2020, and the third quarter was no exception. On a single day in August, the U.S. FDA granted approvals to Novartis for Kesimpta in relapsing MS and to Janssen for the 8th multiple myeloma indication for DARZALEX. The Kesimpta approval was highly anticipated, and we were very pleased that RMS patients in the U.S. had this convenient treatment option approved nearly a month earlier than expected. I am also very pleased to note the progress in our proprietary pipeline, where we have at least 50% ownership of potential therapies. In July, we dosed the first patient in an expansion cohort for epcoritamab. As you may have seen this morning, epcoritamab will be featured at an oral presentation at ASH. In August, we saw the start of the first-in-human trial of Duobody-CD3x5T4. And as you may recall, we are developing both epcoritamab and CD3x5T4 as part of our broad oncology collaboration with AbbVie. It is also my pleasure to announce that in October, we submitted the IND for HexaBody CD38, the second IND Genmab submitted this year. We’re also very much looking forward to the presentation of the first clinical data for Duobody-PD-L1x4-1BB, a major milestone in our collaboration with BioNTech at the SITC annual meeting next week. In September, we presented key data for tisotumab vedotin, which we are developing with Seagen from the Phase 2 innovaTV 204 trial during a late-breaking oral presentation at ASMO. Based on these results, we, together with Seagen, look forward to submitting a BLA to the FDA under the accelerated approval pathway. Recently, we entered into a joint commercialization agreement with Seagen. Genmab will copromote tisotumab vedotin in the U.S., and we will lead commercial operational activities and book sales in Japan, while Seagen will lead operational commercial activities in the U.S., Europe and China, with a 50-50 cost and profit split in those markets. In any other market, Seagen will be responsible for commercializing tisotumab vedotin, and Genmab will receive royalties based on a percentage of aggregate net sales ranging from the mid-teens to the mid-20s. The companies will continue the practice of joint decision-making on the worldwide development and commercialization strategy for tisotumab vedotin. I would also like to highlight recent developments in the very productive DuoBody research and license agreement with Janssen. A seventh DuoBody molecule is now out on the clinic, and there are two Phase 3 trials by Janssen for amivantamab in non-small cell lung cancer listed on ct.gov. In late October, clinicaltrials.gov was updated with an expanded access program to provide amivantamab to patients with metastatic non-small cell lung cancer who have epidermal growth factor receptor exon 20 and surge on mutations, and whose disease has progressed during and after current standard of care platinum-based chemotherapy. Excitingly, Janssen has announced that they are planning a U.S. filing for amivantamab. If this occurs, it will be the first investigational therapy using our proprietary DuoBody technology platform submitted for approval in the U.S., a major milestone for this technology and for Genmab. And we are very excited that ASH has selected two Janssen products that were created using our DuoBody bispecific platform for oral presentation at the annual meeting. Turning to DARZALEX, as I mentioned, the FDA broadened the label for the eighth time with an approval based on the Phase 3 CONDOR study. Janssen has now also submitted an SBLA seeking approval in AL amyloidosis. And if this is approved, it would become the first indication for DARZALEX outside of multiple myeloma. Recently, we announced data from the second part of the Phase 3 CASSIOPEIA study, which met the primary endpoint of progression-free survival at a preplanned interim analysis. Following the positive data from the first part of CASSIOPEIA, we are very pleased to see this benefit in the part 2 of this study. Finally, we reported $2,937 million in net sales by J&J during the first 9 months of the year, an increase of 35% over the first 9 months of 2019, resulting in about DKK2.9 billion in royalties. On September 22, Genmab commenced a binding arbitration of 2 matters under the license agreement with Janssen. We refer you to the details mentioned in the announcement, and we cannot provide additional information until the arbitration is concluded. Genmab intends to vigorously protect its rights under the agreement. However, the outcome of any arbitration proceeding is inherently uncertain. I am pleased to now turn over the call to Anthony Pagano to present our detailed financial results for the first 9 months of 2020. Anthony, go ahead.

Thanks, Jan. Let’s move to Slide 4. Before I get into the results and the guidance, I am going to spend a moment reiterating our overarching financial framework. First off, let’s look at our revenue profile. On the left, you can see the component parts of our current and future recurring revenue streams. It starts with DARZALEX. And here, we are looking forward to continued growth and expansion, and you can also see Kesimpta and TEPEZZA. We are excited about the launch of Kesimpta in RMS that occurred in August, and the TEPEZZA launch continues to be strong. Next on to R&D investment shown on the right and this is one of the areas where our collaboration with AbbVie makes a real difference. We’ll continue to be focused and disciplined in our approach. As we told you before, we’re going to continue to expand and accelerate our potential winners. But clearly, the cash from AbbVie and the fact that we’re sharing the investment in the existing clinical programs on a 50-50 basis means we’ll be able to do more and faster. Now stepping back, what continues to stand out for me from this overall framework is that Genmab remains a resilient business, with a very high-quality product pipeline and great growth prospects. Now, let’s move to DARZALEX on Slide 5. Here, we saw continued strong performance in the third quarter with the first single quarter with sales over $1 billion. You can see that in the chart on the left. Overall, DARZALEX worldwide sales grew by 35% year-over-year. That’s net sales of $2.9 billion, which translates to DKK2.9 billion in royalty income for Genmab. For Q3, we believe this shows a normalizing of the sales following the softness we saw in Q2 due to COVID-19. Additionally, we are pleased that sales include continued uptake of the subcu formulation, which was approved in the second quarter. As I have just highlighted, Q3 was strong. And so far, in Q4, we like what we’re seeing in the U.S. But we do need to bear in mind the context of the unfortunate reemergence of COVID-19. Even so, we continue to expect that DARZALEX sales will be in the range of $3.9 billion to $4.2 billion for 2020. So DARZALEX continues to be on a clear path to market leadership in multiple myeloma and remains a key driver of our revenue, as you can see on Slide 6. Looking at the graph on the left, you can see that there were 3 significant contributors to the increase in revenue. First, as we noted in Q2, we recognized 90% of the $750 million upfront payment from AbbVie. Now clearly, that’s a one-off contribution. And second, DARZALEX royalties grew 43% compared to the first 9 months of 2019. Finally, you see other. Most of that DKK399 million comes from 2 main items: first, TEPEZZA royalties. Here, we’ve seen a really strong start. It’s still early days, but we see this as a very promising launch. And second, the payment from Novartis as a result of Novartis’ plan to transition Arzerra to an oncology access program for CLL patients in the U.S. Now if we take DARZALEX to TEPEZZA together, we’re really pleased to have seen recurring revenues grow by 51% in the first 9 months of 2020. As well as increasing revenues, we’ve also increased investment in our pipeline, in our team and in our capabilities, as you can see on the next slide. On the graph on the left, you can see the major drivers of our increased investment in the first 9 months of the year. In total, operating expenses increased by DKK698 million, which was driven by the accelerated investment in our product portfolio, including the advancement of both epcoritamab and DuoBody-PD-L1x4-1BB. We have also spent more on expanding our very talented team. We have continued to hire key team members to support our growing product pipeline and we have continued to build our commercial capabilities. With the upfront from the AbbVie collaboration, our revenue growth significantly outpaced the higher investment levels, driving DKK5.4 billion of operating income. Now having looked at the individual parts, let’s look at our financials as a whole on Slide 8. Here, you will see a P&L summary. In the first 9 months of the year, revenue came in at DKK8.1 billion, an increase of only DKK5.7 billion compared to the first 9 months of 2019. The increase was primarily driven by the upfront payment from AbbVie and higher DARZALEX royalties. Total expenses were DKK2.6 billion, with 84% being R&D and 16% G&A. Operating income, as I noted, was DKK5.4 billion compared to DKK462 million in the first 9 months of 2019, driven by higher revenue. And that brings us to our net income of DKK4.2 billion, so an extremely strong 2020 so far despite COVID-19 pandemic, which brings me to our guidance on Slide 9. We are maintaining our 2020 guidance. In summary, we expect our revenue to be in the range of DKK9.25 billion to DKK9.85 billion. This is still driven by the upfront payment from AbbVie and the continued growth of DARZALEX, complemented by the strong launch of TEPEZZA. We continue to anticipate our 2020 OpEx to be in the range of DKK3.85 billion to DKK3.95 billion. Putting this together, we’re planning for substantial operating income in a range of DKK5.35 billion to DKK5.95 billion. Now, I will move to my final slide, Slide 10. In conclusion, I just want to take a moment to reflect on our business and financial position. We have a very strong foundation, even stronger following our collaboration with AbbVie. Especially important in today’s environment, we’ve got a robust balance sheet, $2.7 billion of cash at the end of the quarter and no debt. We have great recurring revenues, and they’re growing. And we’re using those revenues to invest in a really focused and disciplined way. We’re investing in our highly innovative and differentiated product pipeline as well as in the team and capabilities to deliver it, all driving towards our 2025 vision. Now, I will turn it back over to Jan.

Thanks, Anthony. Let’s move to Slide 11. 2020 has been an incredibly successful year for Genmab. Due to the drive and determination of our team, we have already hit over half of our key goals. And I’m confident that over the final quarter of this year, we will continue to make progress against our priorities. That said, the target we set for ourselves for this year were extremely ambitious. And as you will have noted here, we are no longer anticipating additional solid tumor data for tisotumab vedotin in 2020. One goal we will meet very soon is, as I mentioned, the presentation of the preliminary clinical data for DuoBody-PD-L1x4-1BB at SITC next week. We look forward to being able to walk you through that data among other topics during our Capital Markets Day next Friday, November 13. We are furthermore very excited to inform you that our abstract for DuoBody-PD-L1x4-1BB has been selected to be presented and discussed with selected media outlets at the SITC virtual press conference next Monday on November 9. We are also anticipating a very exciting ASH this year. We will hold a virtual 2020 ASH data review meeting following ASH on December 8. At this event, we will discuss the data from some of the well over 40 accepted presentations on Genmab-created antibody programs, including many that were accepted for oral presentation. And details about this event have been released about an hour ago and can be found on our website. So let’s move to Slide 12. That ends our presentation of Genmab’s first 9 months of 2020 financial results. Now operator, please open the call for questions.

Thank you. [Operator Instructions] We now have your first question. It’s coming from the line of Wimal Kapadia from Bernstein. Please go ahead. Your line is now open.

Great. Thank you very much for taking my questions. I am Wimal Kapadia from Bernstein. So yes, I have to ask about the epco ASH abstracts that just come up, clearly, very strong data, particularly at the high dose. So first, I just wanted to get your thoughts on the extent of the deepening responses with time for the product that you have seen. I’m just trying to get a sense of how the complete response could evolve with greater duration given the ORR is already 100% of the high dose? And then just tied to that, Jan, you previously talked about an earlier filing for the product in select indications, given the emerging data we are seeing, can you provide any additional color on these indications and time lines? And then my second question is just on Talquetamab and the GPRC5D target. Again, the early ASH data looks quite encouraging in a sick population, but I’m interested to hear your thoughts on the IV versus the subcu dosing for the product and just some of the safety – your thoughts on safety, given some of the CRS rates look quite high. Does that kind of limit the optionality of the products? Thank you.

Thanks, Wimal, for the questions. I will definitely turn the first question over to Judith. But let me first take one aspect of that earlier filing. We definitely see possibilities, Wimal. But I think we have to first present to you the detailed data and then give you further color at that moment. So we’re going to park that. And as it relates to your second question, Wimal, these are Janssen programs. We are not onto the details of the Talquetamab and Teclistamab so I’m not able to comment on the toxicity profile and on the IV versus the subcu profile of these molecules, but I think you need to ask Janssen for that. But I will ask Judith to maybe give a bit more color on the epco data. And I can tell you that we cannot wait, Wimal, to present the data at ASH. I think this will be a fantastic ASH this year for Genmab. And as I said before, the more data we see with epcoritamab, the more happy we get with the data. I think we have really a potential best-in-class molecule here. And having said that maybe Judith to you to see whether you can say anything further on duration of response?

Yes, thank you, yes. So just to answer the question, the first, the cut of the abstract is July. But for the actual post, you will see a little bit more data. And as disclosed in the abstract, by the time of the cut, the median follow-up was 8.3 months, and 25 patients were still ongoing. And I think that with this, I give you a signal, that 25 patients were still ongoing. And if you look at the data again at the tail, in above 48 milligrams for the DLBCL from 7 patients, the ORR was 100%; CR, 28%; 72% PRs, and those patients were ongoing. So – and the FPL, same thing, above 12. And the cut is arbitrary, but in order to have like a total number of patients, we did 12: 3 patients, 100% oral, 33%, APR and 66 – 53%, CR 63%, PR. So we expect as patients continue, as you said, the likelihood of deepening these responses. In terms of duration, the median duration of follow-up is 8 months, but you need to appreciate that most of the patients who were enrolled early in low dose cohorts.

Great. Thank you very much.

Thanks, Judith. Thanks, Wimal for the questions.

Thank you. Your next question comes from the line of Peter Verdult from Citi. Please go ahead. Your line is now open.

Thank you. Peter Verdult, Citi. Jan, you hit on the ASH abstract. It’s great to see the CRS for epco and the data from the myeloma bispecific programs. Just thinking ahead to SITC next week, is it too greedy or early to hope that we might see similar efficacy signals PD-L1x-41BB data to be presented next week? I realize you are not going to say anything in detail, but if you could just sketch in broad terms what we might expect to see over and above the SITC abstract, that would be helpful? And then secondly, Anthony, just to better understand why guidance is unchanged, especially when we can all see how strong the DARZALEX and TEPEZZA trends are. Is it just simply conservatism, given the macro backdrop? Is there – you have the J&J royalties back, OpEx phasing or something else that’s driving you to be – to maintain the guidance? And if I could, just a clarification on this arbitration process, I realize you are going to make no forward-looking statements. But factually, J&J have withheld something in Q2 and Q3. I know it relates to the Halozyme royalty I believe you need to contribute to, which is 5%. So factually speaking, did they deduct 1% or 2.5% of FASPRO sales from the royalty they paid you in Q2 and Q3? So it’s a backward-looking question.

Thanks Peter. I will definitely leave the last two questions to Anthony. For the first one, I think we can say very minimally because we’re embargoed basically, Peter. As you will understand by SITC, you will definitely see a very nice data set from the dose escalation with the PD-L1x4-1BB bispecific antibody. And yes, I think the fact that it has been selected for presentation and highlighting at the press conference probably already tells enough at this point. I want to leave it with that, Peter, and then hand over to Anthony for the financial questions on the guidance and on the potential offset for the Halozyme royalties by Janssen.

Yes, great. Thanks, Jan. Thanks, Peter. So I think looking at where we’re at, sort of starting with revenue on a year-to-date Q3 basis. Just sort of summarizing, we’re at DKK8.1 billion of revenue, which means we need just DKK1.2 billion to get to the lower end of our guidance and DKK1.8 billion to get towards the upper end. Putting this into context, our total revenue for Q3 was DKK1.7 billion, but this did include around DKK200 million of onetime items primarily related to the payment from Novartis that I mentioned in my opening remarks. And Peter, you put the nail in the head – you hit the nail on the head. It was expected, key contributors in Q4 will continue to be DARZALEX and TEPEZZA. Looking at dara, after a strong Q1, we did see some softness in Q2 due to COVID-19. As you’ve seen earlier in October when the numbers came out, this was followed by an exceptionally strong Q3, where, as I mentioned earlier, we sold the first single quarter with over $1 billion of sales. In fact, sales reached nearly $1.1 billion, which is a 22% quarter-over-quarter growth compared to Q2. And there are a couple of factors that I sort of think about then where we’re at. As I mentioned, there’s significant quarter-over-quarter growth. So we need to sort of think about any potential intra-quarter patient dynamics. Secondly, you refer to the macro environment. We need to put this in the context of the unfortunate reemergence of COVID-19. And as I mentioned in my opening remarks, I did talk about what we’re seeing in the U.S. being strong here in the early parts of Q4, but our visibility ex-U.S. is rather limited. Now, in terms of the arbitration, maybe a comment in this regard regarding DARZALEX and the related royalties, given the ongoing arbitration and Janssen starting to make deductions in Q2, we do need to follow the accounting rules, and we have started to accrue for this as a reduction to our royalty revenue. I can’t get into the specifics of exactly how we’re doing that or exactly as to what Janssen is sort of withholding from us. If I put all this together, we’re really pleased with the progress of dara and remain confident in our full year guidance range of $3.9 billion to $4.2 billion as well as our total revenue range of 9.3 to 9.9. We think that’s the right place to be as we sort of exit Q3 and get into Q4. And I’ll be brief in terms of OpEx. Here, we see a number of sort of significant increased items in Q4 primarily related to DuoBody-PD-L1x4-1BB and epco in terms of existing and potentially new trials as well as some significant CMC activities.

Thank you.

Thanks Peter. Thanks, Anthony.

Thank you. Your next question comes from the line of Kennen Mackay from RBC Capital Markets. Please go ahead. Your line is now open.

Thanks for the question and congrats on the quarter and stellar 2020 so far. Another question on the PD-L1x4-1BB, I think this combination is maybe one of the most exciting within the sort of immunotherapy landscape beyond PD-1, just beyond the initial checkpoint. I was just wondering, given evaluating single-arm trials has been a challenge in the past, sort of – how you’re thinking about the discriminating the efficacy of contribution of 4-1BB versus PD-L1 here? And really, what we should be looking for as we look at the data coming up at SITC? Thank you and congrats again.

Thanks, Kennen, for the kind words, and congratulations. PD-L1x4-1BB, I’m going to hand that over to Judith and then ask Judith to give you some color and maybe add to that. Judith?

Yes. Thank you, Jan. So for SITC, as Jan alluded, we will have ample time to discuss this at the Capital Market Day and the actual post and the actual data. To give you a hint on how think about the contribution of each one of the components, as you have seen, we are running several expansion cohorts, parallel arms. And each of the expansion cohorts have – will teach us where we stand because we chose indications where the benchmark for PD-1s, PD-L1s is very clear and consistent, such as triple-negative breast cancer or head and neck cancer or urothelial, so for – as examples. So these opportunities will give us an indirect comparison on where or what 1046 can do vis-à-vis what is very consistently reported for PD-1s, PD-L1s. Is it clear?

Judith, maybe just to elaborate on that a little bit. That sort of – those indications span both sort of immunologically cold as well as hot tumors, obviously, post PD-1 treatment in earlier lines of therapy. Just wondering where yourself and the team are sort of most excited about the potential for the bispecific? Is it turning cold tumors hot, so to speak, or much more so in reactivating tumors that previously were immune responsive? Thanks again.

Okay. I would say all of the above option A and B. So – and as you see in the expansions, we are enrolling patients that are naive to checkpoint inhibitors in those tumors where the activity for PD-1s or PD-L1s is more sort of low. And in addition, we are enrolling like type tumor types that failed PD-1s, PD-L1s. So obviously, after PD-1s, PD-L1s is kind of low-hanging fruit, and we will collect this data and the totality of the date will guide us on future steps. With regard to hot or cold, I don’t know what definition are you using? But for the conditional activation of 4-1BB, there is some level of PD-L1 that we need. And we are collecting a very comprehensive biomarkers to understand better how this could or could not play a role for this agent.

Thanks, Judith. Thanks, Kennan. And next week, there will be a lot more, Kennan. So it will be PD-L1x4-1BB week next week. Alright, operator, we can move to another question.

Thank you. Your next question comes from the line of Trung Huynh. Please go ahead. Your line is now open.

Hi, guys, thanks for taking my questions. It’s Trung from Credit Suisse. So firstly, just on tisotumab vedotin. We saw the pivotal data at ESMO. The efficacy looks really, really good in this population. However, we did see over 50% of people having ocular adverse events? So they were mild to moderate, but are you putting in your plans an expectation for a REMS program or any type of eye care education program to avoid these ocular events turning severe? And then if you could just confirm when you expect to file? And then secondly, your – on the customer transitioning from this R&D company to a commercial company, and that starts with tisotumab. So perhaps can you talk about the level of investments that you’re going to see need to next year? And when does those expenses start to ramp? So any help there would be welcome. Thanks very much.

Thanks, Trung, and I’m going to definitely hand over to Judith for the first one. For the filing, I can tell you that you should stay tuned. I mean, we’re very busy preparing that. And then I will ask Anthony to actually give you some color on the investments needed to really make the move to a fully fledged commercial company. But Judith, maybe you can start with the ocular events and then on the potential REMS program.

Thank you. So first, we are encouraged by the data, we’re very enthusiastic and actively working on the BLA. At this point, we don’t disclose time lines, but they are sure that our commitment to patients with cervical cancer is filed as soon as the BLA is ready. With regard to the ocular toxicity, as highlighted by [indiscernible] in the ESMO discussion, with the management plan that we included in the protocol that includes cortical drops and cool masks and dose modifications, it’s absolutely manageable and very different what is known from MMAS. As to whether we will go with educational ramp, these are regulatory details that we are not disclosing publicly. So I gave the answer.

Thanks, Judith. And then maybe Anthony Pagano, a bit of color for Trung on the steps in the coming time, I don’t know how much we are willing to disclose, but maybe you can provide some perspective here for Trung.

Yes, Happy to do so, Trung. I mean, for me, it really does start with our financial framework of being focused and disciplined. But in this context, we’ve been thoughtful about how we’ve made investments in building out our early commercial capabilities over the last several years, and that could accelerate it here more recently. And also more recently, we present a further build-out for leadership position in the U.S. and of course, really excited now also to have Anthony Mancini on board as well. In terms of this focus, the U.S. and Japan, these are the two markets where we plan to focus our collective [indiscernible] now following the positive data we are starting to further build out our capabilities and [indiscernible] all of this was in high court – potential T-cell launch, but also thinking about the broader opportunities set in front of us. And maybe just quickly thinking about our investments generally, we will continue to be focused and disciplined as we invest in our business and the growth opportunities that are in front of us. And really, like I’ve talked about this the past, as we think about being focused in discipline, there are really two sides to this point. On the one hand, we talk about discipline this is about de-risking investments, to understand, and making tough decisions along the way. Now the other side of that point, thinking about focus, parts of our focus strategy that we’ve been executing against for some time, and it’s also a – help allocate capital. And for 2020, I was very deliberate about where we’re putting investment dollars and our growth towards key programs and how we’re thinking about really moving our business forward. And what we can commit to, certainly as we move forward, we’ll likewise be focused and disciplined and provide relevant sort of thought process to why we’re making structured investments. That’s probably where are we now.

Thank, Anthony. Thanks, Trung.

Thanks, guys.

Thank you. Your next question comes from the line of Michael Schmidt from Guggenheim. Please go ahead. Your line is now open.

Thanks for taking my questions and congrats on the progress. Maybe another follow-up on epcoritamab, I guess now that you have more clinical data in hand – and congrats on the ASH presentation. I guess what is your latest thinking around the development opportunity longer term, maybe relative to your competitors, primarily Roche and Regeneron? And where do you think the drug may have the strongest value proposition? And another question on GEN1046, again, I know you commented around the update coming up here at SITC. I’m just wondering if we should think about this as a potential monotherapy opportunity in patients progressing or resistant to checkpoint inhibitor therapy or whether there is – what type of efficacy bar one should think of in those settings potentially? And whether there’s an opportunity longer term also in earlier stage, maybe patients maybe in combination with other drugs? Thanks so much.

Thanks, Michael, for the questions. And I’m going to hand over both to Judith to give some color on epco and the value proposition and the development plan. This is expansive and very rapidly developing. You will see very soon, Michael more and more trials appear on ct.gov, I can assure you. And then for the PD-L1x4-1BB, maybe also a bit more color, Judith, on how to develop this as monotherapy and in combination with other drugs for different cancers. Judith, over to you.

Yes. Thank you, Jan. Thank you, Michael. So with regard to the question for epco, as the data unleash, it will guide us farther. But the way we see this asset, we service the others, sees with very, very high efficacy, very acceptable safety and convenience of the subcutaneous formulation. And because of these characteristics, we plan to unleash the full potential of epco in the whole spectrum of PCL malignancies. Of course, we will go to the traditional development paradigm, which is start with the low-hanging fruit and expand as we learn more in different combinations. And as Jan alluded, you will see more in coming weeks. So this is with regard to epco. And related to other assets, cross-trial comparisons are difficult. But we are very pleased with how the data is consolidating in each cut and as we increased the end and the characteristics and attributes of epco, it becoming more consistent. And I would like to flag that all Teclistamab started in 2014. And the recommended Phase 2 dose, I think, was declared last year or we started 2 years ago and we started the expansions already and more to come in coming weeks, months. So this is with regard to epco, so fully committed to unleash the full potential and more to come. With regard to 1046, I don’t think that single agent or combinations are mutually exclusive. The way that we are exploring is we start with single agent. We define the safety profile and the efficacy bar, and we assess the potential for combination in terms of A, which combination partner. And this will be guided by the data that we see as single agent. So we are thinking of those strategies, and the data from the expansion cohorts will tell us, I mean, where to combine, and we will explore and there are several agents that we started a discussion that could have additivity or synergy with 1046, so more to come as we learn about the expansions and where we stand. In terms of efficacy, what is the bar? As with other IO – oral is important, but duration like TFS and impact on overall survival is so important. And it is characteristics of IO where you have a response, but you have long-lasting stable disease, which really benefit patients. So it will be a time landmark analysis plus the traditional PCR and oral.

Okay, great. Thank you so much.

Thanks, Judith. Thanks, Michael.

Thank you. Your next question comes from the line of Sachin Jain from the Bank of America. Please go ahead. You line is now open.

Thanks for taking my questions. A couple please. Just firstly, kicking off with DARZALEX, do you have an update as to where subcu penetration is in the U.S. and how you’re thinking about that into ‘21? And then going back to the arbitration – and apologies if you’re unable to answer this, but do we expect this to be resolved by the time of full year ‘21 guide or should we start thinking about ‘21 on a reduced royalty rate basis where the impact could be more material if subcus a bigger percentage of DARZALEX sales? That’s topic one. Topic two, just to go back to 4-1BB, there’s been a lot of commentary already. But just to clarify, are you ready to announce next steps in terms of trial expansion, tumors, etcetera, at the Investor Day at the end of next week? I just wanted to clarify that. Thank you.

Thanks, Sachin, for the questions. I’m going to hand over the first one to Anthony Mancini, give a bit more color on subcu, then the second question to Anthony Pagano. And then 4-1BB, I think we should park that question basically till next week session. We have a Capital Markets Day, we have SITC, and we are not willing to give you further color on that at this point. But we will definitely be more than pleased to work you over the data and I think we need to wait until next week. So maybe I can hand over to Anthony Mancini to give a bit more color on subcu and how it is actually progressing in the U.S., Anthony?

Thanks, Jan, and thanks, Sachin, for the question. Yes, overall, we’re very pleased with the strong growth in share gains across lines of therapy for DARZALEX, and specifically as it relates to FASPRO in the U.S. It was clearly a driver of some of the share gains that we’re seeing in earlier lines. And now to give you some color, if you look at IQVIA and Symphony data, it accounts for in the latest weekly gross sales data, about 40% of U.S. weekly gross sales. And as it relates to market share, we’re also seeing encouraging performance. I think in the latest data point – and this is a – brand impact data from IQVIA. We saw the highest point in a total frontline patient share at 12% and also the highest ever point as it relates to new frontline patient share at 16%. So we continue to believe that earlier and earlier use of DARZALEX will be driven by FASPRO. And certainly, we’re continuing to hear that the convenience, the efficacy and the safety benefits are very favorable from a customer perspective. So we continue to believe that, that will be – that will continue to came, share riding into ‘21. Maybe I’ll pass it to Anthony Pagano to talk about the second part of your first question.

Thanks, Anthony. Anthony Pagano, any color on the offsets for royalties in ‘21?

Yes. Thanks, Jan. Thanks, Sachin. And yes, Sachin, I could really appreciate that – I wish I could help you out. But I do have to just refer you back to the details that you mentioned in the announcement around the arbitration. And then really, I can’t provide any additional information until the arbitration is concluded. So unfortunately, I just have to leave it there.

Okay, no issue. Thank you very much.

Thanks, Sachin. Thanks, Anthony.

Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead. Your line is now open.

Hi, thanks for taking my questions. Just a couple of quick ones. If you could remind us of the FX basis for the current guidance. And then also just in the answer to the last question, you gave the update for frontline penetration for DARZALEX. So just if you would not mind giving the full update across the different lines of therapy? Thank you.

Thanks, Emily, for the question. The first one is for Anthony Pagano and the next one is for Anthony Mancini to give you full color because we just got the brand impact data for September. Emily, we would be happy to read them out to you. Anthony Pagano?

Yes, hi, Emily, yes. In terms of FX, we had an original assumption to begin the year of a U.S. kroner rate of 6.5%. And we have left that in place all year. It is kind of our full year assumption. As we are all aware – well aware, we started the year off ahead of that. We now find ourselves, at least this morning, with something around 6.35%, 6.37%. And so we are just leaving that assumption of 6.5% unchanged. And maybe now over to Anthony Mancini to sort of talk about the market shares?

Yes. Thanks, Anthony, and thanks, Emily, for the question. Just to give you the update on market shares for total patient share. I gave you the frontline total patient share at 12%. Second line is up to 41%, third line is now 49%, and fourth line is 43%.

Thanks Anthony

Thank you

Let’s move on to the next because we have still a number of people asking questions, I believe. Next one.

Your next question comes from the line of Jonathan Chang from SVB. Please go ahead. Your line is now open.

Hey guys, this is David Ruch on for Jonathan. Congratulations on the progress, and we appreciate you taking our questions. First question on tisotumab vedotin, could you talk a little bit about the potential to expand in traditional indications beyond cervical cancer and the timing of data disclosure for these additional tumor types?

Thanks, Dave, for your questions. I will hand it over to Judith. We are now testing tisotumab vedotin out in 5 other solid tumors. And Judith can give you some further color on which tumors there are and potential timing. Judith?

Yes thank you. So as – in a little bit, we are testing in ovarian kind of – for tumors in the basket based on the presence – that was selected based on the presence of the expression of tissue factor, head and neck, some non-small cell lung cancer, pancreas and colorectal cancer. These two studies are operationalized by our partner, Seagen. We are actively enrolling patients, and at this point, we cannot commit on a particular timelines. We will see and we expect, like, by next year, we will have more clarity on when these cohorts will have an update to be presented. Now in terms of tisotumab vedotin, the way I think about it – and if they did on cervical cancer, it’s super favorable, but it can be think about as a proof of mechanism of action where other tumor types with – that express tissue factor might respond as well. And this is why we are looking forward as well to have more data on each one of these tumors to understand the potential.

Thanks, Judith. Thanks, Dave.

Awesome. Thank you I just want to follow-up. For enapotamab vedotin, could you talk a little bit more about the data disclosure we might get over the remainder of this year and how you are thinking about the next steps of that program? And that’s it for me. Thank you.

So I can be brief, Dave. We haven’t updated you on that yet. This year, we will have the data to allow for decisions on next steps. And that is where I want to leave it at, so busy times ahead in the coming two months.

Got it. Thank you.

Alright.

Thank you. Your next question comes from the line of Greg Suvannavejh from Goldman Sachs. Please go ahead your line is now open.

Yes, it’s Greg Suvannavejh, for Goldman. Thank you for taking my questions and congrats on the progress in the quarter. I have got two, please. Just as a follow-up to an earlier question on the litigation. Just wanted to – and I might have missed it. Any expectations on the timing of that resolution and how we should be thinking about that or whether it’s year-end or first half of next year or sometime next year? And then my follow-up just on the uptake of FASPRO, I am just curious, if you are seeing, from a reimbursement or market access perspective, whether there are any hurdles or challenges that might still be in place that is perhaps currently still holding back the potential uptake of that product? Thank you.

Thanks, Greg, for the questions. I will definitely pass the second one over to Anthony Mancini, but let me start with the arbitration. As you and I know, and I said in my introductory remarks, we cannot make any further comments. And the timing of any arbitration proceedings, Greg, is inherently uncertain. So we cannot give any further color. We will do that after the arbitration is over, basically, then we can give you all the details, but not now. And then maybe Anthony Mancini on the potential hurdles for FASPRO?

Yes. Thanks, Jan, and thanks, Greg, for the question. At this point in the U.S., the Janssen team has done a really, really nice job as far as removing any hurdles. The uptake from a – or the uptake from a P&C and pathway perspectives on a GPO perspective, has been spot on. So there are no remaining hurdles in the U.S and certainly, in Europe. It takes time to get public reimbursement for a subcu formulation, and we know in at least a couple of the major markets is the case that there is a public reimbursement achieved for the subcu formulation in some of the EU major markets already. So it’s going very, very well.

Thanks Anthony. Thanks Greg.

Thank you. Your next question comes from the line of Asthika Goonewardene from Truist Securities. Please go ahead your line is now open.

Hi, guys. Asthika Goonewardene for Truist Securities. Thanks for taking my questions Jan, I believe a couple of quarters ago, you mentioned that this FASPRO, J&J was training hospital staff for at-home administration has a workaround to the shutdowns that are happening with COVID wave one. I am wondering now with COVID wave 2 underway, has department broadened this out to more across in the U.S. and also maybe into Europe to do just kind of at-home administration to help sustain volumes there of FASPRO. And then on PD-L1x4-1BB, if I may, I am excited for PD-L1x4-1BB week next week, but I was wondering if you guys could help me prep with some immunology homework here. what about your own asset, but we have also seen some of the data for Roche’s FASPRO 4-1BB plus Atezo at ESMO, where we didn’t see activity in PD-1 failed patients and didn’t see much activity on TNBC. Reading between the lines in your abstract, you seem to have maybe a better profile here. So maybe on a high level, in terms of targeting, dosing, other engineering aspects, could you maybe walk us through why yours is better than Roche’s Fas-4-1BB approach? Thanks.

Thanks, Asthika, for the questions. And I will start with the first one. I can tell you that what we said before is that actually bigger cancer centers in the U.S. were training nurses to visit patients at home for FASPRO treatments. And I don’t know whether this actually has been broadened in the second wave of coronavirus. So I’m going to ask Anthony Mancini and a sec to give his perspective on that because I’m simply unaware of that, Asthika. But as it relates to PD-L1x4-1BB, I will let Judith give you a bit more color there. But I think the big difference is, I think, is our DuoBody platform, because we actually can create thousands of candidates of bispecifics and then empirically select the best one. And that is why we are so unusually effective now in actually creating these very well-working bispecifics against different targets. You have seen it with epco, more data at ASH. You have seen it with Teclistamab, with Talquetamab from Janssen also with more data at ASH. And you will hopefully see it next week with the PD-L1x4-1BB at SITC from us, Asthika. So I think the sequence is really that we can actually create thousands of candidates with the robots and then actually empirically, select the one based on very strict criteria which is working the best. And I have given already the example of Novo Nordisk, who created more than 30,000 bispecifics with the DuoBody technology to fish out one, which is 15-fold better than Hemlibra for hemophilia. So I think this is now a recurrent theme. And I will leave it up to Judith to give you some further color on the specific PD-L1x4-1BB combination versus the Roche 4-1BB combination. But let’s first start with Anthony Mancini, and see whether Anthony knows of any further activities in training nurses or other hospital personnel in actually treating business with DarzaLex FASPRO at home. Anthony?

Thanks, Jan, and thanks, Asthika, for the question. As FASPRO’s approved for HCP administration and although some teaching centers did at the onset of COVID initially start to do some at home administration. There aren’t any plans for Janssen to do that in the near future. What is really good, though, is that based on the inherent advantages of FASPRO in that it provides a 3 to 5 minute injection, the same efficacy as IV and safety benefits that are actually two-third fewer infusion reactions than IV. And the Janssen team has trained extensively, nursing staff in oncology offices around the U.S. The sense is that they will be much better positioned here in the second wave to do the in-office administrations quickly without exposure as was potentially a concern the first time around. So hopefully, that answers your question.

Thanks, Anthony. Let’s move over to Judith to see whether you want to give a bit more color to Asthika on the Roche compound versus the PD-L1x4-1BB. Or do you want to park that on next week, Judith?

No, I can give like a general answer because the concept are totally different. So for the Fas-4-1BB, the Fas has to globalize, the 4-1BB. PD-L1, 4-1BB is a different concept. It’s not only the localization based on the presence of PD-L1, but you have, it was signaling the inhibition of the PD-1, PD-L1 axis plus the 4-1BB in the context of the cell-cell synapsis, that acts like as a zipper. So I think that this biologically is different than the concept of the Fas-4-1BB.

Thanks very much, Judith.

In terms of signing the – yes, yes, Asthika.

In view of the time, we need to probably park this here, Asthika, but more to come next week, for sure.

Thanks guys.

Thank you.

Thank you. Our next question comes from the line of Peter Welford from Jefferies. Please go ahead your line is now open.

Hi, thanks for squeezing me in few. Firstly, I think I missed this at the start. But I wonder if you could just outline the commercial deals for the Seagen that you have agreed to? I got cut off, and I am afraid I missed the explanation of the Seagen collaboration. Secondly then just on the arbitration, I appreciate details, the scam, but can you confirm whether or not the first arbitration claim is related in any way to the second arbitration claim, i.e., the reduction in royalties, and the extension of the patent? Or are these two completely separate arbitration issues? And then just thirdly, curious to the amount of time – the spend, I guess, in the slide, I have not sort of seen before on the strong financial position. I mean, it’s obviously very clear that there is. Does this reflect increased appetite within Genmab to pursue business development and perhaps bringing in assets, obviously, as you shift towards a commercial entity? Or is there really no change internally in your appetite and desire to perhaps pursue those sorts of deals, and the money very much is going to be used for the, obviously, burgeoning pipeline? Thank you.

Thanks, Peter, for the questions. So the first question, I am going to pass over to Anthony Mancini, who can also give you a bit of color because he is heading the BD activities now on the strategy going forward. Let me handle the second question, Peter, on the arbitration. These are two related items, basically, both focused on the subcu formulation of daratumumab. So they are clearly related, but clearly two different questions we have, a bit of both going to be parked now at the arbitration judges to take a decision on. I think I should leave it with that and then ask Anthony Mancini to explain the Seagen commercial agreement, which we have recently put into place. Which I did mention, Peter, at the beginning of the remarks, but Anthony is happy to repeat them for you for sure. Anthony?

Thanks, Jan and thanks, Peter, for the question. Just to recap some of the detail that Jan covered earlier. We are really pleased, by the way, just with the amendments to the joint commercialization agreement with Seagen. We think it’s a win-win for both Seagen and Genmab. But from a development and commercialization strategy perspective, we will continue to work together with Seagen. From an operations or economics perspective, in the major markets, which are the U.S., the EU, China and Japan, there will be 50-50 cost and profit split. And as Jan mentioned, in other markets, outside of those, there will be royalty territories, whereby Genmab will receive royalties on net sales in the mid-teens to mid-20s. From an operational perspective, Genmab will be the exclusive commercialization party and book sales in Japan and Seagen will book sales and lead commercial operational activity in other territories. As it relates to the U.S., Genmab and Seagen will co-promote TV in the U.S. with each party contributing 50% of medical representatives as well as MSLs. And from a clinical operational perspective, Seagen will be the operational development lead for future TV studies. So overall, we really leverage Seagen’s experience in drug development and knowledge of ADCs. We continue to share decision-making and gain for Genmab, a presence in one of our key markets with 50% of field resources in the U.S. and continue to lead exclusively in Japan. So we are really pleased with that. Just to answer the other part of your question, Peter, with respect to business development, corporate development, clearly, we’re going to continue to look at some opportunities for partnerships in a disciplined and focused way. And we will keep you posted as that evolves, but we are definitely going to continue first, to work towards becoming a fully integrated biotech company, to attract the best talent in order to do that, and also in parallel, move the opportunity partnership or – and complement their technology.

Thanks, Anthony. And then Peter, more to come next week at the Capital Markets Day on Friday 13.

That’s great. Thank you.

Thanks.

Thank you our last question comes from the line of Matthew Harrison from Morgan Stanley.

This is Connor on for Matthew. So cognizant that a bunch of questions have been asked on 4-1BB, but can you just give us the highlights on your expectations for the program after the data at SITC? And then maybe you mentioned that you are going to discuss the plans at the Capital Markets Day as well. But do you – across both monotherapy and the other expansion cards, do you see a need for more dose escalation before you maybe move it into the next phases? And then just quickly, this may be similar to the AXL program, but on DR5, do you think you have an active therapeutic window? And what do you see as your expectations for that asset before the end of the year? Thank you.

Thank you very much for the question. So I can – I think be very brief on PD-L1x4-1BB embargo. So we cannot give you any further color on the data. We have to wait until at least Monday, the press meeting from SITC. So – and then the second question related to that, I think I can handle as well. We know the recommended Phase II dose. So we are not going to do further dose escalation. We know exactly which dose we want to use for the expansion cohort and for the further development. And then for DR5/DR5, more updates this year. I cannot give it at this time, but we are definitely still exploring different doses and dose frequencies with a very active program. And even in the coronavirus era, the patients are coming into the trial, so also no further news at this time. And in view of the time, I’m – I think I’m going to give it back to the operator here.

We have no further questions.

Alright. So thank you all for calling in today to discuss Genmab’s financial results for the first 9 months of 2020. If you were not able to get to your question, please reach out to our Investor Relations team. They are ready to answer the questions and address the issues that you haven’t gotten to. So I hope that you will all stay safe, remain healthy and very much look forward to speaking with you again soon, hopefully, next week, if not before. Thank you.