Genmab A/S (GMAB) Q4 2020 Earnings Report, Transcript and Summary

Hello, and welcome to the Genmab Q4 2020 Conference Call. [Operator Instructions]. 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 an obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless this is required by law. Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities in order to update you on Genmab going forward. Please refer to our website for more information on Genmab and our privacy policy. Today, I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

Hello, and welcome to the Genmab conference call to discuss the company's financial results for the period ended December 31, 2020. With me today to present these results is our CFO, Anthony Pagano; and then for the Q&A, we will be joined by our Chief Development Officer, Judith Klimovsky; our Chief Operating Officer, Anthony Mancini; and Tahi Ahmadi, who as of March 1, will be our Chief Medical Officer. Many of you may already be familiar with Tahi from his participation in events like our 2020 Capital Markets Day and the 2021 JPMorgan conference. I would like to take a moment to say how thrilled we are to welcome him as a member of Genmab's executive management team. With his leadership and proven track record of success and innovative thinking, he makes our strong team even stronger. I look forward to working with him and the rest of the team as we continue to grow our organization and evolve into a fully integrated biotech innovation powerhouse. 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. Genmab is focused on the development of innovative antibody products with the potential to transform cancer treatments and improve the lives of cancer patients. For over 20 years, we have not wavered in this commitment. In 2010, we link this core purpose to an extremely effective strategy by focusing on our core competencies of being able to identify the very best disease targets, develop differentiated next-generation antibody technologies and create unique best-in-class or first-in-class antibodies. We have been able to turn Genmab's world-class science into a robust proprietary pipeline and approved medicines, effectively allowing us to build a sustainably profitable and successful biotech. I'm very pleased with our track record of success. But we are only just getting started. With the first regulatory submission, along with our partner Seagen for tisotumab vedotin, we are closer than ever to achieving of our ambitious 2025 vision. And all this leads me to Slide #4. I'm extremely proud of the recent BLA submission for tisotumab vedotin, the first for our product where Genmab has 50% ownership of the program. If approved, tisotumab vedotin would be the first-in-class therapy, and we believe it has the potential to become an important treatment option for women with recurrent or metastatic cervical cancer, who have disease progression on or after chemotherapy. We look forward to providing you with an update on this submission in due course. While this BLA submission was a milestone for our company, it is one of many that we reached over the past 12 months. So now let's move to Slide 5 and look and take a look at some of our more recent accomplished achievements. 2020 was a transformational year for Genmab. We have a strong foundation of innovative science and an unparalleled history of repeated R&D success. Over the course of the past few years, we strategically built on this foundation with the goal of evolving into a fully integrated end-to-end biotech. Because of our exceptionally talented world-class team, we reached an inflection point in this journey in 2020 with a series of key events. First among these is our collaboration with AbbVie, which marks a landmark achievement for the company. This collaboration allows us to both expand and accelerate the development and commercialization of 3 of our bispecific antibody products, including epcoritamab, and it further strengthens our already very strong financial position. 2020 is our eighth year of profitability with an impressive 139% increase in operating profit versus 2019. Our strong balance sheet allows us to continue to strategically invest in our capabilities and differentiated product pipeline, as will be discussed by Anthony in more detail. These investments are already showing themselves in the way our pipeline is expanding and maturing. Thanks to our productive R&D engine, we ended 2020 with 7 programs in the clinic, where we have at least 50% ownership. And 2 of these, epcoritamab and tisotumab vedotin, are now in Phase III. And it's not only in our own pipeline where we see Genmab's innovation in action. Janssen's DuoBody product, amivantamab, became the first DuoBody to both receive breakthrough therapy designation from the FDA and be submitted for regulatory approval in both the U.S. and in Europe in 2020. Should amivantamab be approved, it would continue our solid track record of success in creating approved medicines that are developed and commercialized by other companies. So now let's move to Slide 6, and look at these successes. DARZALEX, Kesimpta and TEPEZZA, Genmab created therapies marketed by our partners, all had first in 2020. DARZALEX is now a mega-blockbuster that has redefined the treatment of multiple myeloma. In 2020, a SubQ formulation was approved in both the U.S. and in Europe, making it the first and only SubQ CD38 monoclonal antibody approved for the treatment of multiple myeloma. Subsequently, this formulation was approved in the U.S. and AL, amyloidosis, making it the very first FDA-approved treatment for this devastating disease. A second SubQ medicine approved in the U.S. in 2020 was subcutaneous ofatumumab or Kesimpta for relapsing MS. This is the first piece of therapy that can be self-administered by patients at home. With the recent positive opinion from the CHMP, we are hopeful that Kesimpta will soon become available for relapsing MS patients in Europe as well. Then finally, TEPEZZA, which became the first and only FDA-approved medicine for the treatment of thyroid eye disease. We are enthusiastic about the future of these medicines as they exemplify our commitment to applying world-class antibody expertise to create differentiated antibody therapeutics with the potential to fundamentally improve patients' lives. And of course, the collaboration for these 3 medicines have provided us with the financial foundation of our current success with recurring revenue from royalties on DARZALEX, Kesimpta and TEPEZZA, which we can use to invest further in the business to deliver our inspirational vision. And at this point, I will now turn the call over to Anthony. Anthony, please go ahead.

Great. Thanks, Jan. Let's move to Slide 7. We've never been in a better position to achieve our vision of transforming the lives of cancer patients. And in 2020, we've continued to execute against our priorities despite the challenges of COVID. My objective today is twofold: first, to explain why 2020 has been yet another remarkable year for Genmab; and second, to provide our guidance for 2021, which is set to be another very strong year. I want to start by reminding you of the robust foundation we've continued to strengthen. We grew recurring revenue by 50% in 2020. That's due to royalties from DARZALEX, TEPEZZA and Kesimpta, and that's ensured an eighth consecutive year of profitability. Our strong balance sheet and growing recurring revenues allowed us to continue to invest in our business and our pipeline in a very focused and disciplined way. And an important part of this has been to continue to build the team and capabilities to enable us to succeed. So let's look at those revenues in a bit more detail on the next slide. We saw continued strong performance for DARZALEX in 2020. You can see that in the chart on the left. Overall, DARZALEX sales grew by 40%, that's net sales of nearly $4.2 billion, which translates to DKK4.4 billion in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines. The softness you can see in Q2 was a direct effect of COVID. Sales quickly recovered with significant growth in H2, fueled in part by the continued uptake of the SubQ formulation. So DARZALEX remains a key driver of our revenue, as you can see on Slide 9. Looking at the graph on the left, you can see that there were 2 main drivers for the higher revenue in 2020: first, as previously noted, we recognized 90% of the upfront payment from AbbVie. now clearly, that's a one-off contribution; second, recurring revenue grew by 50%, that's primarily due to DARZALEX's royalties, which were up 41%. And we also saw additional recurring revenue growth from TEPEZZA and Kesimpta royalties, partially offsetting these 2 items was lower milestones in 2020. As well as increasing revenues, we also increased investment, as you can see on the next slide. Total operating expenses came in just a touch below DKK3.8 billion in 2020. And here, you can see where we invested. We accelerated our investment into our product portfolio, especially the advancement of both epco and DuoBody-PD-L1x4-1BB. We've also spent more on expanding our team, hiring key team members to support our growing product pipeline, and we've continued to build our commercial capabilities and invest in systems to support our expansion. Finally, we are leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further accelerate and broaden our partnership programs. Now let's look at our financials as a whole on Slide 11. Here, you can see our summary P&L. In 2020, revenue came in at DKK10.1 billion, an increase of over DKK4.7 billion compared to 2019. The increase was primarily driven by the upfront payment from AbbVie and higher DARZALEX royalties. Total expenses were approximately DKK3.8 billion, with 83% being R&D and 17% G&A. Operating income was DKK6.3 billion compared to DKK2.6 billion in 2019. Our net financial items amounts to a loss of DKK409 million, which was primarily driven by two partially offsetting items: first, unrealized foreign exchange rate losses related to our U.S. dollar-denominated cash and investments due to the move lower in the dollar; and second, an unrealized gain on our investment in CureVac. Then we have tax of DKK1.1 billion, which equates to an effective tax rate of 19.4%. It's important to note that this rate is positively impacted by some onetime items in 2020. By contrast, our rate was around 24% in 2019, and this is probably more reflective of what we would expect moving forward. And that brings us to our net income of DKK4.8 billion. So by any measure, 2020 was an extremely strong year. I'll now turn the call back over to Jan to discuss our pipeline and our investment plans for the coming year.

Thanks, Anthony. Let's move to Slide 12. Our maturing pipeline is the result of a world-class R&D engine. Our novel approaches to disease target discovery and unique next-generation antibody technology platforms allow us to create truly differentiated antibodies that will further fuel our own pipeline with potential first-in-class and best-in-class therapies. We are highly confident that our technologies will continue to grow our pipeline because we have already been doing this. On the right, you see the impressive progression resulting from our productive R&D engine and expanding clinical development programs in our pipeline over the last 5 years. In 2016, we only had 2 product candidates in the clinic. We anticipate more than 8 programs underway by the end of this year in more than 20 clinical trials. And our pipeline is not just growing, it is also rapidly maturing. We started the year with two products, epcoritamab, and tisotumab vedotin in Phase III, and we are planning for additional Phase III trials to start in 2021. So now let's move to Slide 13 and take a closer look at the 2 key areas of investment in our pipeline for 2021. To continue to deliver on Genmab's promise of creating and developing truly differentiated antibody therapeutics, we intend to continue to significantly invest in the development of both epcoritamab and DuoBody-PD-L1x4-1BB. We are continuing to focus on these particular products, given our belief and their potential to become important new treatments, should they eventually be approved. Starting with epcoritamab, we believe this could be a best-in-class product. This confidence comes from both the clinical data we have seen and from its subcutaneous route of administration, a feature that differentiates it from other CD3/CD20 bispecifics. Along with AbbVie, we are planning a highly comprehensive and aggressive development plan for this product across a variety of hematological malignancies end lines of treatment. DuoBody-PD-L1x4-1BB, one of the products that we are developing along with BioNTech, has the potential to be first-in-class and to provide Genmab with a truly differentiated first-in-class bispecific next-generation checkpoint immunotherapy. There is a high unmet medical need to improve on checkpoint immunotherapies, and we are encouraged by the first clinical data presented at SITC last year. Given the potential for these products to be either first or best-in-class, there are significant potential across multiple oncology indications and unmet medical need for patients. We remain focused on further accelerating these programs. This reflects our clear priority of developing differentiated therapeutics for patients as fast and as broadly as possible. I will now turn the call back to Anthony to discuss our 2021 guidance. Anthony?

Thanks, Jan. Let's move to Slide 14. Before I provide you with our guidance, I'd again like to spend a moment explaining the underlying framework and the related key drivers. First off, let's think about our revenue profile. On the left, you can see the component parts of our current and future recurring revenue streams. Starting with the approved products where we receive royalties, we're looking forward to the continued growth and expansion of DARZALEX in 2021 and beyond. You can also see Kesimpta and TEPEZZA. As we've heard from our partners, these are both potential blockbuster products. So we're really excited about the potential of these two recurring revenue streams for the years to come. We've also got two potential additional revenue streams in the future. We submitted the BLA for tisotumab vedotin earlier this month. At the end of last year, Janssen submitted a BLA and an MAA for amivantamab. If these products are approved, they'll bring our total number of approved products to 5. Now on to our focused approach to investment shown on the right. We'll continue to invest for sustained success with focus and disciplined investment in our pipeline. And as highlighted by Jan, we'll accelerate and expand our potential winners. We'll also ensure we are ready to launch should tisotumab vedotin and in the future, epcoritamab be approved. As well as investing, we will, of course, remain focused on the bottom line, and we fully intend to deliver a ninth consecutive year of profitability. Let's take a closer look at an important component of our recurring revenue growth, DARZALEX sales on Slide 15. Here, we are on a clear path to market leadership in multiple myeloma. For 2021, we anticipate that DARZALEX sales will continue to ramp up, and we expect sales to be in the range of $5.2 billion to $5.6 billion. There are three drivers underpinning this growth: first, there is significant opportunity for further market share gains in frontline; second, the rapid conversion to the SubQ version is expected to continue; and third, with 8 approved indications in the U.S., we anticipate continued strong market shares across all lines of therapy. So DARZALEX is really continuing to deliver for us. Now let's take a look at the components of our revenue on Slide 16. For 2021, we anticipate another year of strong revenue growth, excluding, of course, the AbbVie upfront from 2020. We're projecting DARZALEX royalties to be in the range of DKK4.9 billion to DKK5.3 billion. Recurring revenues in total, including royalties for TEPEZZA and Kesimpta, are anticipated to increase approximately 20%. It's useful to unpack this recurring revenue growth a bit more. Now starting with sales from our products marketed by partners. As you've heard, we're expecting dara to grow by around 30% in 2021, and both TEPEZZA and Kesimpta are also well positioned for strong growth this year. As we translate these very strong product sales into royalties, we do have some significant headwinds in 2021. But in our mind, these aren't reflective of the very strong underlying fundamentals. More precisely, total recurring revenue growth takes into account a negative impact of around 20 percentage points to the growth of DARZALEX due to 2 items. First, lower FX. The 2020 average rate for the dollar/krona was around DKK6.5, and for 2021, we're assuming a flat DKK6. Second, reduction in royalties because of the ongoing arbitration with Janssen. Here, we've reduced our guidance to reflect Janssen's continued reduction of its royalty payments. This does not, in any way, reflect our position on the ongoing arbitration. And of course, we intend to continue to vigorously defend our contractual rights. The impact of these two items is between DKK800 million to DKK1 billion, and the split between the two items is roughly 50-50. Turning to nonrecurring revenue. We also see some nice growth here, which will be driven by reimbursement revenue from our collaborations with BioNTech and Seagen and other milestones. Looking at our total revenue, we're expecting revenue of DKK6.8 to DKK7.5 billion, with DKK7.2 billion at the midpoint. Now let's move to Slide 17 to take a look at our investment profile for 2021. Before highlighting our investments, I'd like to take a step back and put these investments in the context of our overall strategy and the very significant growth opportunities in front of us. Our 2025 vision has acted as a guiding light for us. It focused on our core purpose to meaningfully impact the lives of cancer patients. And today, we've reached an inflection point where we find ourselves with an exciting pipeline that is maturing with two potential product launches in the next couple of years and with more to come. And that's a great place to be. But it also means we've now reached a point where there's a strong rationale to invest. We've got all the ingredients to become a fully integrated biotech powerhouse. Clearly, we're building the team and capabilities to enable us to succeed in this. As well as driving better patient outcomes, this will capture more value for our shareholders. So with that background, let's look at our investment priorities for 2021. Our total OpEx is expected to be between DKK5.5 billion and DKK5.8 billion, and this fully reflects the investment priorities I shared with you at our Capital Markets Day. priority number one is filing and launching tisotumab vedotin; two is accelerating the development and launch of epco; three is expanding DuoBody-PD-L1x4-1BB; and priority number four is standing up our commercialization capabilities in the U.S. and Japan. This is essential to realizing our full potential. To support this growth, we're building infrastructure, teams and systems to evolve the organization for continued success. So these are our immediate priorities, but we're not just focused on today. In line with our vision, we're also very focused on long-term value creation. So here, we're investing to progress our early-stage pipeline and to generate the next wave of IND candidates. We're also investing to ensure that we maximize the value of our current technologies and that we stay right at the forefront of antibody science. Finally, let me provide some context around the AbbVie collaboration. They are equally excited about accelerating and broadening epco as well as our other partner programs, and you can see there are expected step-up in contributions in 2021. Now having looked at the framework and the constituent parts, let's look at how this all comes together on Slide 18. Here, you can see our 2021 guidance. We expect our revenue to be in the range of DKK6.8 billion to DKK7.5 billion. As you can see, most of this is made up of recurring revenue. For operating expenses, we expect to be in a range of DKK5.5 billion to DKK5.8 billion. This step-up in investment is fully in line with our strategy and our focus on creating long-term value. Putting all this together, we're still planning for substantial operating income in 2021 in a range of DKK1 billion to DKK2 billion. Now from my final slide, let me provide a few closing remarks. In summary, we've created strong and growing recurring revenue streams. And that gives us a strong backbone of significant underlying profitability, and we're investing those revenues in a highly focused way to realize our vision and capitalize on the very significant growth opportunities in front of us. And on that note, I'll hand you back to Jan to discuss our key priorities for 2021.

Thanks, Anthony. Let's move to Slide 20. Essential to our success in 2021 are key priorities for the year. With the recent submission of the tisotumab vedotin BLA, we are on track towards reaching these goals. In addition to the possibility of our first product on the market with our partner of Seagen, we are also planning, along with our partner, AbbVie, to accelerate development of our potential best-in-class epcoritamab with the advancement of expansion cohorts and additional Phase III trials. You may recall that the first patient was treated in the first Phase III epcoritamab trial in January this year. We will also focus our resources on continuing to further expand and develop our world-class antibody product pipeline in general. In addition to advancing our already late-stage product candidates, excitingly, we anticipate to move at least 1 more proprietary product into late-stage clinical development during 2021. We very much look forward to updating you on a number of our clinical programs over the course of this year, and we will continue the strategic development of our internal capabilities with the goal of building a smart commercialization model as we aim to not just create medicines that transform cancer treatment but to provide these medicines to doctors and patients in the most effective way possible. Finally, as Anthony discussed, we expect to further strengthen our already extremely solid financial foundation. Let's move to Slide 21. As evidenced in the previous slides, we are very close to reaching our inspirational 2025 vision. Our vision has acted as a guiding light for us. It has focused us on our core purpose to fundamentally improve the lives of cancer patients, and this core purpose is linked to a laser-sharp strategy that will allow us to build a profitable and very successful biotech. Today, we have reached an inflection point in our exciting journey where we find ourselves with 2 potential product launches in the next couple of years and with more to come as we evolve into a leading, fully integrated biotech innovation powerhouse. And let's move to our final slide. Slide 22. That ends our presentation of Genmab's 2020 financial results. Operator, please open the call for questions.

[Operator Instructions]. And our first question comes from the line of Peter Verdult of Citi.

Pete Verdult, Citi. Yes, I would love to be talking about the pipeline exclusively, but maybe we could have two questions. One on the royalty rate for Anthony and then one on the pipeline. Anthony, I just want to understand the royalty rate guidance a little bit better because we all knew that J&J were withholding the Halozyme, the share they thought you owed on the Halozyme patent from Q2. But you've got an exit royalty rate in the high teens for 2020 in Q4 and an implied royalty rate that is below 16% for 2021. Now I know FX is a component, but i.e., is the delta and the change versus expectations in the market, is that a function of J&J withholding half of the Halozyme royalty? Or is there something more broadly going on with the royalty rate structure that J&J have decided to withhold? So just I just want to drill down a bit more on that given the importance of the near-term valuation. And then secondly, for Jan, for Judith or Tahi, just on those assets where you have or enjoy over 50% economics, can you just be a little bit more specific about what incremental data we will see in timing, be it for epco, GEN1046 or the 4-1BB CD40 program? Just what we might see incrementally and when this year?

Thanks, Peter. Why don't we hand over the first question to Anthony Pagano, and then I will take the second question, Peter. Anthony?

Yes. Great. Thanks, Peter. So first, let's take a look at the fundamentals dara sales grew by 40% in 2020, and we're estimating growth of around 30% in 2021. In absolute dollar terms, the quantum of sales has been growing over the last number of years, adding around DKK800 million in 2018, DKK1 billion in 2019 and DKK1.2 billion in 2020. Now looking at our dara royalty for 2021, we're estimating royalties at the midpoint of around DKK5.15 billion. This represents growth of around 17% compared to the growth in the underlying sales of around 30%. Now there are really 3 building blocks to get to the royalty, right? At the midpoint, you have dara sales of DKK5.4 billion; secondly, you have the estimated effective royalty rate of 17.2% in 2021; and then third, you have the dollar/krona foreign exchange rate. Now if you multiply these through and you use the average 2020 FX rate of just over DKK6.5, then you would get estimated royalties for 2021 of around DKK6.1 billion. As I just noted, we're assuming royalties of 2021 -- for 2021 of DKK5.15 billion. So this difference of around DKK900 million is due to 2 items: first, the lower dollar/krona rate. And here, again, Peter, we've assumed a flat DKK6; and second, for purposes of our guidance, we've reflected Janssen's withholding or reduction of royalty payments due to the ongoing arbitrations. So Peter, in summary, it really is down to these 2 items, FX and Janssen's continued with reduction of the royalty payments to Genmab. But as I mentioned, the underlying fundamentals remain very, very strong.

So Anthony, can I transfer my arm here? Are you -- it seems to me that J&J are effectively asking you to pay half of that Halozyme royalty. Is that a fair assessment?

So Peter, at this point, I think I tried to give as much color as I can. We talked about the total impact this year due to these two items of FX and as well as Janssen's continued withholding reduction of the royalty payment amounting to DKK900 million or so. And that roughly speaking, this DKK900 million could be equally split against these two items.

Thanks, Anthony. So let me handle the second question and then see whether we can ask Judith or Tahi to step in there. You will have multiple data set this year, Peter. For epcoritamab, we expect more data from the dose escalation, more follow-on data, depth of responses, duration of responses, potential data of the expansion cohorts, which are growing very well. During this year, we haven't yet decided anything on timing. For the PD-L1x4-1BB program, we expect to get data from the expansion cohorts, Peter. We have multiple ongoing orders starting up. For the CD40 4-1BB, we expect data this year from the dose escalation. We have not decided yet with BioNtech on timing. And we also expect data from some of the earlier programs like the DuoHexaBody CD37 program, some of the other programs like the DR5/DR5-HexaBody program. And potentially, Peter, even from the HexaBody CD38 program. But that all depends on how we are impacted by the pandemic, whether we can actually rapidly progress in those studies. But we are -- and of course, what I forgot to mention is, of course, we expect data from daratumumab, potentially from Phase III trials this year via Janssen. So this will be a very data-rich year. We will give you in time, Peter, when we have decided which conferences to talk and at which timing to take for the different clinical trials. We will give you further color as we always do on the timing. But this will be a very data-rich year with Genmab proprietary programs. I think one of the most data-rich years up to now, Peter.

Our next question comes from the line of Emily Field of Barclays.

Just a question on epcoritamab. Coming out of ASH, with most in mosun and GlowFit, Roche seems to be targeting kind of a more niche commercial strategy, positioning mosun as a gentler asset for maybe more elderly or frail patients and GlowFit as a stronger asset. I was just wondering, as you're building your commercial organization, is it enough to say that just to say that we have the superior and safer agent across all NHL patients, assuming that, that is your belief. And then on that potential asset that could be moving into late-stage development this year, is that one of the assets potentially that's part of the AbbVie collaboration?

Thanks, Emily, for the questions. I will hand over the first one to Tahi Ahmadi first to give you a feeling for how we think about epcoritamab. But let me first take the second question from you, Emily. We actually have a number of candidates. And we believe that we can actually bring one of these candidates at least to late-stage clinical development during this year. There are a number of candidates, and that also includes potentially other candidates from the AbbVie collaboration, but we cannot be more specific at this time, Emily. But we promise you to actually come with data, as I already said in my answer to Peter, and potentially also paralleled by late-stage clinical development initiated in 2021. So maybe, Tahi, you can give some further color on epcoritamab, how we are thinking of positioning epco in the B-cell cancer landscape.

Yes, sure. Thank you, Jan, and thank you for the question. I think I wouldn't want to comment too much on the Roche Genentech strategy. I think your characterization of the positioning of these 2 assets certainly aligns with how we see their strategy playing out. And we've been very clear from the very beginning, what we think is the advantages of epcoritamab and what our strategy is in terms of developing it. And so our ambition has not changed. Our belief has not changed. We believe that we have an asset that because of the wealth of administration is convenient. It may avoid some of the grade 3 cytokine release issues and continues -- or share some data to answer the other question as well towards the end of the year probably, continues to show efficacy that we are excited about, both in terms of response rate and depth of response, CRs and our intent. And we will execute on some trends in the next couple of months that it will be publicly announced is very clearly to develop epcoritamab across the entire spectrum of B-cell malignancies and across all lines and then really position it as a backbone in a modality that will transform and change treatment paradigms as they are known today.

Just one follow-up, if I could. How many Phase III trials do you anticipate being in by the end of the year?

We haven't -- I will take that one, Emily. So we haven't yet given you that number. But in time, you will see more and more Phase IIIs for epco coming on CT.gov, and potentially for other molecules. But we haven't given you any number up to now.

Our next question comes from the line of Trung Huynh of Crédit Suisse.

I've got three, if I can. So on your DARZALEX royalty guidance, can you tell us what that assumes for FASPRO share of DARZALEX sales in 2021? I think it currently stands at over 45% today. And then secondly, and thirdly, I guess, can you remind us of the penetration of DARZALEX in different lines of therapy for dara? And are you seeing FASPRO uptake more in the different lines of therapy? Or is the penetration similar across those lines?

Thanks, Trung, for the questions. I will hand the first one over to Anthony Pagano. And the second and third question to Anthony Mancini to speak a bit more about penetration of dara versus dara FASPRO. Anthony, can you give an answer to the royalty question?

Sure. Thanks, Trung. I think to sort of step back and sort of think about this, right? We've seen rapid uptake with DARZALEX FASPRO in the U.S. and SubQ in some countries as other parts of rest of the world. As you all know, we have the best visibility on the U.S. market where currently DARZALEX FASPRO accounts for more than 50% of DARZALEX's sales according to IMS. We expect the conversion and the adoption of FASPRO and SubQ will continue in the U.S. and rest of world throughout 2021. However, key uncertainty is rest of world where we do have more limited visibility. As with DARZALEX sales tracking in general, as I mentioned, the lower visibility in the rest of the world, and it's important to note that it does account for 45% of total DARZALEX sales. However, if we put this all together, we believe it's fair to anticipate and assume that more than 50% of global DARZALEX sales will be FASPRO or SubQ in 2021. So Trung, not giving you a precise number, but hopefully, that gives you some direction about how we look at this, not just in the U.S. but from a global basis.

Thanks, Anthony. Maybe Anthony Mancini. Anthony?

Yes. Thanks, Jan, and thanks, Trung, for the question. I think Anthony provided a lot of the guidance that I would give just to add detail on line-by-line penetration of FASPRO. What I can say is that we're seeing FASPRO and SubQ in general, be a driver of performance. And it's increasing pretty steadily and similarly across lines. I would say that we're continuing to see earlier and earlier use. And I think the inherent advantages of FASPRO are the reasons why that is. Just to give you a flavor of overall share, though, we're seeing about the highest overall first-line share at 13%, and the new share continues to outpace it. And when we actually query how much of that is FASPRO, it's pretty similar across lines. And as Anthony mentioned, we're seeing over 50% penetration, or the comparison of IV versus SubQ is about a 50-50 split in the latest data points, and that's pretty evenly across lines.

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

Two questions. Maybe you could just comment on how you see sort of DARZALEX sales, H1 versus H2? And whether you have into your expectations that there is a potential COVID impact in H1. And then it eases up and accelerates into H2 in regards to sales performance. And then secondly, I don't know whether you can provide some additional guidance to more specific absolute commentary to Kesimpta and to TEPEZZA royalties besides the 40% growth in royalties you have provided already.

Thanks, Michael, for the questions. And I will hand it over both to Anthony Pagano. Anthony?

Great. So yes, so Michael, thanks for the question. I think in terms of dara, we really like how we exited Q4. I mean, looking at the overall sales levels for Q4, we were at DKK1.25 billion. And as we've entered 2021, we like what we're seeing thus far, don't have any particular kind of guidance or specifics around expectations on a quarterly basis or H1 versus H2, but sort of more of the broader comments that we've continued to highlight looking at DARZA's overall profile with the 8 approved indications in the U.S., looking at the main growth drivers for 2021, continued market share gains in frontline, continued uptake of SubQ and, just sort of more broadly, strong market shares expected across all lines. And in addition, as a reminder, we do have amyloidosis coming online. So that's for dara. If we think about then TEPEZZA and Kesimpta sales, and I think it's also kind of useful to put this in a broader context. We're really excited now to have 3 products that are generating recurring revenue for us and look forward to have more in the future. Both Kesimpta and TEPEZZA have very compelling propositions for patients, and we think they have very strong growth profiles moving forward. For 2021, we expect each of these programs to grow significantly. We're not guiding, Michael, specifically for these 2 products, but we can provide a bit of more color if we dig into our revenue guidance. We're estimating total recurring revenue to be around DKK5.3 billion to DKK5.9 billion. And of that amount, DKK400 million to DKK600 million relates to TEPEZZA and Kesmpta. And as you just highlighted, this represents 40% growth compared to 2021. Now for TEPEZZA, 2020 was just a remarkable launch year. I mean the progress that was made there was just really unbelievable. But same as you, we've heard about what appear to be some short-term supply disruptions. We have to be mindful of that for TEPEZZA. But overall, remarkable launch year for 2020. For Kesimpta, the U.S. approval came in late August in 2020, and to initiate access, Novartis has provided a significant amount of Kesimpta free of charge for U.S. patients. As we've heard, Novartis anticipates that a majority of the sales in the first couple of quarters here of launch will continue to be free goods, but expect the share to decrease over time as reimbursement progresses. And finally, just sort of thinking about Kesimpta and where some additional growth could come from, we certainly could be looking at the recent positive CHMP approval in January. And in conjunction with that, Novartis is awaiting marketing authorization in EU. So Michael, hopefully, that gives you some additional color, both for dara, but also for Kesmpta and TEPEZZA.

Our next question comes from the line of Michael Schmidt of Guggenheim Securities.

I had one regarding the arbitration with Janssen. Just curious around the timing. What is a reasonable time frame when investors might potentially expect resolution? Is that something that could happen in 2021? Or is it a longer-term process beyond that? And then on the pipeline, I was wondering on the DuoBody-PD-L1x4-1BB product with BioNTech. I guess, what do you need to see in expansion cohorts to potentially advance into Phase III trials in different settings there?

Thanks, Michael, for the questions. I will definitely hand over the second question to Tahi on PD-L1x4-1BB. He can speak a bit more about the expansion cohorts. Let me focus on the arbitration case. There's very little we can say. And as I already said publicly, Michael, the timing is inherently uncertain, but you summed it up quite well. Yes, it could be concluded in '21. But it could also potentially move into 2022. And it's very, very difficult to predict actually what the timing is in these arbitration cases. It's very first, I can assure you, and I hope it will be our last arbitration case. But I think we cannot give you any further color at this time because this is inherently uncertain. Let me ask Tahi to give you a bit more color, more precisely on the expansion cohorts and the next steps there. Tahi?

Sure. So yes. So first, I would say the expansion courts of the first-in-human trial for PD-L1x4-1BB were built to do two things: to help us understand the biology of 4-1BB in very distinct defined patient populations post IO or IO naive, but diseases that are not necessarily amenable to checkpoint inhibition; and then obviously, in the second part, to -- if we were to see a signal there to provide us with a path forward from a development point of view in these different indications. And so the answer to your question is the answer is always the same. What we need to see is data that makes us believe that as a single agent, we have a high level of confidence that we provide a valuable opportunity to these patients. And so there might be situations where there is a single-agent path. And similarly, we will, in the near future, also show and publicly announce some plans where we will then generate data in combination. There were also defined development plans. So I think it is essentially the answer to your question, I hope that clarifies it, do we see enough single-agent activity in a given indication or do we see an opportunity to combine in a given indication.

Our next question comes from the line of Matthew Harrison of Morgan Stanley.

I guess two for me. One, maybe you could just comment. You obviously have a lot of assets that are in development by others. Any this year where you would expect some meaningful data that we could see in terms of those potential royalty assets? And then secondarily, maybe just another question on 4-1BB. We've seen a couple of people advancing 4-1BB monotherapy assets recently. Just wondering how you're looking at the sort of competitive landscape of 4-1BB assets right now?

Thanks, Matthew. I will take the first question. And definitely, the next one -- the second one will go to Tahi, who can give you a bit more color on our 2 for 4-1BB targeted bispecifics and how they actually position themselves in the competitive landscape. But let me now walk over some of the assets with other companies, which are created with Genmab technology base. Amivantamab for lung cancer, can actually end up on the market this year. And there's continuous data in lung cancer from Janssen on amivantamab. It got breakthrough therapy designation. It is filed in the U.S. and in Europe, end of last year. And we expect more data from amivantamab, this can potentially already lead to royalties at the end of this year to Genmab. Then there is two other assets -- two other bispecifics, both made with the DuoBody technology, Matthew, teclistamab and tocilizumab They're both in Phase II and they both will come with data, we believe, this year from the Phase I/II or even Phase II setting also from Janssen, and they could also, in the future, lead to product filings and royalty income via recurring revenue to Genmab. And there is, of course, Novo Nordisk with Mim8, the anti-Factor IX, Factor X hemophilia bispecific antibody, which is also in Phase II as we speak. And we believe that at some point, Novo will also start speaking about the Phase I/II data with Mim8. And there's a number of other compounds in the clinic, like with BMS and anti-IL-8 antibody. There is also an anti-IL-15 antibody from Genmab technology in the clinic. And I think for those molecules, Matthew, the timing is less certain because we don't hear that proactively from these partners. We see updates from many times annual reports to us. But I think there is a good chance that this year we will get meaningful data from Janssen from Novo Nordisk and potentially from BMS on some of these clinical studies. And now turn over the -- for the second question to Tahi to really put some perspective on how we position our 2 bispecifics, Tahi, versus the landscape of for 4-1BB monotherapy approaches.

Well, I mean, I would say, it's probably fair to say, as you're alluding to that there is an increasing activity in the PD-L1x4-1BB and increasing recognition that maybe through the utilization of very intelligently designed bispecifics, you might be able to harness the biology of 4-1BB. It's probably also fair to say that the first asset that has actually shown that in the clinic is indeed 1046. So we have two assets that Jan was alluding to. 1046, the PD-L1x4-1BB and CD40x4-1BB. And all I can say to this is that we are very focused on bringing them as expeditiously and as intelligently forward as we believe is possible. And we've so far been quiet expeditious in the development of these assets and the generation of data, and we continue to do so. this is, actually, all there's to say.

Our next question comes from the line of Carsten Madsen of SEB.

Just one question. I think on your 2020 achievements, you had listed some HexaBody DR5/DR5 Phase I/II enhance dose escalation. But you didn't really get to that milestone in 2020. And in the annual reports that you should anticipate in 2021, but it's not listed as a 2021 trigger. So I was just wondering if you could give us an update on where you are with DR5/DR5? And what do you expect to show us from that program during this year?

Thanks, Carsten, for the question. And I certainly updated markets during the recent JPMorgan conference on where we are with the DR5/DR5 program. But we'll ask Judith Klimovsky to give you some further color, Carsten, on where we are and what we are going to do next with that program. Judith?

Yes. Thank you, Jan. Thank you, Carsten. So as Jan already mentioned, we resumed enrollment last year. We came to a dose that is pretty well tolerated and where we found biological activity, and we are continuing enrolling to understand and characterize better the risk/benefit, and see whether we can optimize the therapeutic index. So we are following the data very closely. The aim is to see whether we can go as a single agent and potentially combinations as a next step. So more to come as when the data becomes appropriate to be shown.

Our next question comes from the line of Jonathan Chang, SVB Leerink.

First question, can you discuss the development strategy and time lines for tisotumab vedotin in tumor types beyond cervical cancer? And second question, can you discuss the reasons for confidence that epcoritamab could succeed in CLL?

Thanks, Jonathan, for the question. The first one on tisotumab vedotin, I will hand over to Judith. And the second one on the CLL and epcoritamab, very good question, I will hand over to Tahi. Judith, can you start on tisotumab vedotin in other cancers than cervical?

Yes, sure. Thank you, Jonathan. So as you know, Seagen is operationalize -- operationalizing two studies: 1 in ovarian cancer and the other 1 called BASKET study, including for solid tumor types based on the premise that tissue factor is over expressed in a variety of solid tumors. Those studies are ongoing and actively recruiting, as you can see from ClinicalTrials.gov. They're exploring these different tumor types and different dose scales. We cannot firmly commit to when this data become available, but we expect to have some of those data later this year. And based on the data, we will further define what could be the role in these different indications.

Thanks, Judith. Over to Tahi for the CLL-epco question, Tai?

Sure. So I mean, biological, CLL, cells express CD20, B-cells as well, there is evidence that the mechanism of T cell redirection can be effective from CLL. I think I mentioned at the Capital Markets Day, if you look at the initial pen-paper by CAR to tune of -- this introduction of the CAR technology was actually in 3 CLL patients. I think there are some concerns in the field around safety based on some observations that have been on other programs, which is, of course, a concern. And so our belief has been that because of our -- so far, its quite favorable, not favorable. But safety profile that avoids these grade 3 cytokine releases that we will be able to dose patients with CLL, we have started a Phase I study, and we have not seen anything that would conclude this. And so we fundamentally believe that in any other B cell malignancies, the expression of the target is there, that the power of the T-cell redirection in the DuoBody, we'll be able to redirect T-cells and see efficacies. And CLL is one of the diseases that we're looking at.

Our next question comes from the line of Wimal Kapadia of Bernstein.

Can I just ask first one on epco. So one of your CD3/CD20 competitors will be reporting data for a key trial in first-line DLBCL, which could -- this year, which could change the standard of care from R-CHOP to P -- CHMP. So should that trial be positive? How should we think about Genmab and AbbVie in terms of how they pivot their trial programs, given this is probably one of the most lucrative indications for epco? And then secondly, Jan, you mentioned the CD37 asset. When I've looked at this asset in the past, at least from a preclinical perspective, the product seems to be quite efficient at binding to B cells for low binding to T-cells, NK cells and neutrophils. So to me, that kind of suggests its key strength could be safety. And assuming it's high potency, which is something Genmab arguably are very strong at, this could be one of the lower risk, early-stage assets. So just getting your thoughts here would be great. And then tied to that, how should we think about combinations for this product with other mechanism of action? Because, again, early data suggests, this could be quite synergistic. And one of the reasons why AbbVie partnered the product. So just appreciate your thoughts on that comment as well.

Thanks, Wimal, for the questions. I think I'm going to hand them over first to Tahi and then potentially add to that as it relates to combinations, depending on what Tahi describes. Tahi, can you start with those questions?

Well, I'll start with the first one, which was the question on POLIVY. Well, my general first comment is there is always a study going on somewhere that may change the standard of care. So it's -- one has to be careful. But as obviously, we've made to be aware of this. POLIVY is a vedotin. We have some experience with vedotin because it's the same payout actually as tisotumab. They are affective, but they come with their own cell toxicities. Notably, in their trial design. As I'm sure you're aware, the vincristine is actually being replaced with POLIVY. So we'll have to see what the data is and how meaningful the data will be when it reads out. And so that's probably all there is to say on that. The other question was around the potential combination in the pipeline.

For CD37, DuoHexaBody.

I think it's early to say at this point. But Jan, I think, in the call, indicated that we anticipate possibly to also share some initial express even dose-escalation data on CD37. And obviously, assuming that CD37 is safe, assuming that CD37 has efficacy as single agent in the combination of 2 different targets with 2 distinct mechanisms has always been part of our thought process and is certainly part of our strategy.

And what I could add there, Wimal, is one of the obvious candidates, of course, is potentially epco to basically combine it with the CD37 type of antibody. Because CD37 and CD20 are co-expressed for many targets, but there are many, many more combinations possible. And I think more to come in the coming time.

And we have no further time for questions, so I'll hand back to our speakers for closing comments.

So thank you for calling in today to discuss Genmab's financial results for 2020. If you were not able to get you to your question or you come up with a question later, please reach out to our Investor Relations team. We hope that you will all stay safe and remain healthy and very much look forward to speaking with you all again soon. And this concludes the call for today. Thank you.

This now concludes our conference call. Thank you all for attending. Participants, you may disconnect your lines.