Genmab A/S (GMAB) Q4 2021 Earnings Report, Transcript and Summary

Hello, and welcome to the Genmab conference call to discuss the company's financial results for the period ended December 31st, 2021. With me today to present these results is our CFO, Anthony Pagano. 6. For the Q&A we will be joined by our Chief Operating Officer, Anthony Mancini, and our Chief Medical Officer, Die Giamatti. Let's move to 6Slide 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 has a science-focused and innovation-based culture. and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference some of the products being developed under the strategic collaborations. And this slide acknowledges those relationships. Let's move to Slide 4. Due to our extraordinarily solid foundation, Genmab is extremely well-positioned to achieve our ambitious vision of making a difference for patients by transforming the treatment of cancer. I would like to start today with a reminder of some of the many successes that will fuel our future growth. Beginning with Slide 5. The 39 INDs created by Genmab over to our technologies have led robust and expanding clinical pipeline with five approved medicines including TIVDAK. The first Genmab owned product on the market, which we are co-developing and co-promoting in the U.S. with Seaton. Loyalties from partner owned medicines plus key partnerships with companies like FC, have expanded our revenue significantly. Our strong recurring revenue allows us to continue to invest in next-generation technologies and truly differentiated new antibody therapies and in our company, where we added commercialization capabilities and are further strengthening our unstoppable world-class team with key talents. Our growing internal competencies are enabling us to evolve into an integrated end-to-end international biotech led by an experienced, and diverse leadership team. We built on these solid track records with the events of 2021. So now let's move to Slide 6, and take a look at some of our recent achievements. 2021 is our 9th year of profitability with an impressive 48% increase in revenue versus 2020, excluding the one-time after the upfront payments. Our strong balance sheet allows us to strategically invest in our capabilities as differentiated product pipeline, including our first product launch. While we are evolving into a fully integrated end-to-end biotech, we know that we can accelerate innovation by strategically investing in collaborations with partners across the pharma and biotech ecosystem, which can provide us with building blocks that support our future pipeline expansion, novel targets, novel payloads, and technology that complements our own. In 2021, we entered into more than 10 collaborations that will add to the breadth of our suite of technologies and support the rapid growth of our innovative next generation pipeline of antibody therapeutics. For example, we partnered with Bolt on a stimulatory antibody drug conjugates or ADCs and with Synaffix on its topoisomerase I inhibitor ADCs. We're seeing the results of our investments in collaboration and capabilities in our expanding and progressively maturing pipeline. Examples of recent investigational medicines entering the clinic are HexaBody-CD38 and Duo HexaBody -- and DuoBody-CD3xB7H4 both the products of our highly productive R&D . In addition to growth, our product pipeline also matured over the past 12 months. The highlight of the year was undoubtedly the FDA’s accelerated approval of TIVDAK, our first regulatory approval and a much needed new potential treatment for patients with metastatic cervical cancer. With the part of a TIVDAK Seagen, we have a robust development plan for TIVDAK, including the first Phase 3 study initiated in 2021, which is intended to confirm TIVDAK’s benefit in recurrent or metastatic cervical cancer and to support global regulatory applications. Epcoritamab also enters Phase 3 development in 2021, the first of multiple Phase 3 studies that we, and our partner AbbVie are planning for Epcoritamab. Both of our investigational medicines under developmented BioNTech also advanced last year with the first Phase 2 study for DuoBody-PD-L1×4-1BB, and multiple expansion cohorts initiated in the Phase 1/2 study of DuoBody-CD44-1BB. New, and updated data from all of these programs, and other were presented at a variety of prestigious conferences throughout the year, and we are anticipating additional data presentations this year, including data from the tisotumab vedotin innovaTV 207 study, which is scheduled to be presented in a plenary session at an upcoming also had a neck cancer symposium in Arizona on February 25th. In addition to our own pipeline, Genmab’s innovations are applied in the pipelines of multiple global pharmaceutical and biotechnology companies. In particular, our DuoBody technology platform has powered a variety of by-specific antibody therapies in developments. The most advanced of these Amivantamab and Teclistamab are the result of our DuoBody collaboration with Janssen. In 2021, Janssen’s Amivantamab was approved as Rybrevant, in the U.S., Europe, and other markets for the treatment of certain patients with non-small cell lung cancer with eGFR exon 20 insertion mutations. These are the first regulatory approvals for a therapy that was created using the DuoBody bispecifics technology platform. Subsequently, at the end of 2021, Johnson submitted a BLA to the FDA for teclistamab for the treatment of relapsed or refractory multiple myeloma. Last month, Johnson furthermore submitted a Marketing Authorization Application or MAA for teclistamab to the European Medicines Agency. These events provided further validation for our DuoBody technology platform which also powers the majority of our own product pipeline. Johnson’s darzalex, which has redefined the treatment of multiple myeloma, continue to evolve in 2021 with new approvals including the approval of the subcutaneous formulation of Daratumumab as the first and only approved therapy for AL amyloidosis. Sales of darzalex for the year were very strong with J&J reporting $6,033 million in net sales, an increase of 44% over 2020 resulting in $6,235 million co-owner in royalties to Genmab. 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. My objective today is twofold. First, to explain why 2021 in yet another remarkable year for Genmab. And second, to provide our guidance for 2022, which is set to be another very strong year. Overall, we continue to strengthen our foundation, and drive towards our 2025 vision. We executed our first commercial launch, bringing TIVDAK to cervical cancer patients. We grew recurring revenue by 48% in 2021. This was driven by strong royalties from Darzalex and other approved medicines. And as John said, that's insured our ninth 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. 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 2021. You can see that in the chart on the left. Overall, darzalex sales grew by 44%. That's net sales of over $6 billion, which translates to kr6.1 billion in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and the continued uptake of the SubQ formulation. So darzalex remains a key driver of our revenue. As you can see on Slide 9. Our recurring revenues grew by 48% in 2021. We've already spoken about Darzalex and the very strong performance there. We're also encouraged by the growth of Kesimpta and TEPEZZA, which generated kr 828 million of royalties for 2021. And that's an increase of more than $500 million compared to last year. This growth really illustrates the power of our recurring revenues. So our revenue profile continues to get stronger with increases both in recurring and non-recurring revenue after excluding of course, the AbbVie one off. We're taking our strong recurring revenues, and investing in a highly focused way as you can see on the next slide. Total operating expenses grew by 44% in 2021, and here you can see where we invested. We accelerated our investment into our product portfolio, especially the advancement of both EPCOR, and DuoBody CD40, 4-1BB. We've also spent more on expanding our team to support our growth in commercialization, enhanced technology and systems, and other areas related to our expanding pipeline. That includes supporting the launch of TIVDAK, and preparing for the filing, and potential launch for EPCOR. Finally, we're leveraging the AbbVie collaboration by utilizing their expertise and significant financial contributions to further expand and accelerate our partnership programs. Now, let's take a look at our financials as a whole on Slide 11. Here, you can see our summary P&L. In 2021, revenue came in at approximately kr8.5 billion. That's up 48% on last year excluding the AbbVie one-off. Total expenses were about kr5.5 billion with 77% being R&D, and 23% SG&A. And we reported a very strong operating profit at around kr3 billion. Our net financial items amount to income of $965 million, which was primarily driven by the strengthening of the U.S. dollar against the Danish kroner, our U.S. dollar denominated cash and investments. Then we have tax expense of $975 million, which equates to an effective tax rate of 24.5%. And that brings us to our net profit of around $3 billion. So as you can see, extremely strong financial performance for 2021. Let's move now to reminder of our robust financial framework on the next slide. First off, let's think about our revenue profile, which you can see on the left. At the beginning of 2020, Darzalex was the only product on the market. And today, we have five, and that provides us with expected recurring revenue growth of 39% in 2022. And there's a clear path to potentially expand the number of approved products with Janssen's recent BLA for Teclistamab, and our planned submission for EPCOR in 2022. Taken together, we expect significant cash inflows for us in the years to come. Moving to the right, we continue to be focused in our investments as we evolve our organization for continued success. At the top of the list is accelerating and expanding the development of EPCOR. I'll come back to this and some other exciting opportunities which provide a compelling rationale for increasing investment shortly. So with that background, let's take a closer look at darzalex sales on Slide 13. Here, we're on a clear path to market leadership in multiple myeloma. For 2022, we anticipate that darzalex sales will continue to ramp up and we expect sales to be in the range of $7.3 to $8 billion. There are three drivers underpinning this growth, 1. There is a significant opportunity for further market share gains in front line, 2. We expect to continue conversion to the SubQ version, and third, with 10 approved indications in the U.S., we anticipate continued strong market shares across all lines of therapy. So Darzalex is really continuing to deliver. Now let's take a look at the components of our strong recurring revenue on Slide 14. For 2022, we anticipate another year of strong revenue growth. Looking at our total revenue, we're expecting to be in the range of kr10.8 billion to kr12 billion, and the majority of this will come from recurring revenues which are anticipated to increase 39%. We're projecting Darzalex royalties to be between kr7.7 billion and kr8.5 billion, an increase of 32%. As a reminder, consistent with how we handled this last year, our guidance reflects around a kr700 million reduction in royalties due to the ongoing arbitration. Recurring revenues also include a 71% increase in royalties from TEPEZZA and Kesimpta. Turning to non-recurring revenue, the growth here will be driven by reimbursement revenue from our collaborations and other milestones. In particular, our 2022 guidance does include a significant milestone associated with the filing and acceptance of the regulatory submission for EPCOR. Now, I said I'll come back to our ever stronger rationale for investment, and this next slide shows you why. We can see here on the left is a powerful combination of both our technologies, and our pipeline. These are what underpin our imperative to invest. On the right, you can see the real progress we're making. 2021 was a great year with more than 20 active clinical trials, as well as bringing our first product to market with TIVDAK. Building on that foundation, 2022 is going to see another real step-up in terms of our opportunity set. With more than 30 active clinical trials anticipated and preparation for a potential Epco regulatory submission and commercialization in the U.S. And to be clear, based upon the work we've done so far, and the data we've seen, we're convinced that Epco is a drug that has the potential to make a real difference for patients. And as we've told you before, if we want to see this meaningful opportunity we've got to invest and that's exactly what we're going to do. And that, of course, also includes investing in our team, technology, and infrastructure to deliver. So let's look at -- let's take a look at that and a bit more detail on Slide 16. Our total apex is expected to be between kr7.2 billion and kr7.8 billion. This fully reflects the evolution of our pipeline and indeed our entire business that I've just described. There are four near-term investment priorities for us. First is initiating new phase 3 EPCOR trials to maximize its potential. Second is the filing and standing up our commercial organization for EPCOR. Third is generating the next wave of data for DuoBody-PD-L1×4-1BB and DuoBody-CD-404-1BB. And priority number 4 is continuing to build our infrastructure, teams, and systems. This is essential to our continued success and realizing our full potential. 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. Now, having looked at the framework and the constituent parts, let's look at how this all comes together on slide 17. Here, you can see our 2022 guidance. We expect our revenue to be in the range of kr10.8 billion to kr12 billion. And most of this is made up of recurring revenue. For operating expenses, we expect to be in a range of kr7.2 billion to kr7.8 billion. As I previously highlighted, 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 planning for substantial operating profit in a range of kr3 billion to kr4.8 billion. Now, to my final slide, let me provide a few closing remarks. In summary, we have a clear path to reach our 2025 vision. We've created growing recurring revenue streams, and activity, 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 2022.

Thanks Anthony. Let's move to Slide 19, beyond strong revenue, 2021 was an excellent year for Genmab. As we continue to focus on our core purpose, we're preparing for an equally momentous 2022. Let's start with our most advanced products. For epcoritamab as I mentioned, we're very much looking forward to expanding its development. We are excited about the data, and we anticipate filing in the U.S. and or Europe this year. Further, the Genmab, and AbbVie teams are hard at work, and gearing up to initiate new Phase 3 studies to maximize EPCOR's potential. As part of these preparations, we're going to collect more data on Epco dosing due to the recent FDA guidelines recommending that sponsors perform more formal dose elevation studies. This means that for some of the Phase 3s, the first patients, those could be pushed beyond 2022. As Anthony noted the investment will start this year. We will work with Seagen to continue to broaden the clinical development program for Tivdak and establish it as a clear choice for patients with metastatic cervical cancer with disease progression on or after chemotherapy. And we very much look forward to data from the clinical expansion cohorts and progress to next steps for both of our first-in-class bi-specific next-generation immunotherapy candidates in development hat BioNTech. Beyond these maturing programs, we anticipate expanding and advancing our other early stage programs including the potential for additional IND s or CTA s. Finally, we intend to continue to scale our organization based on our planned portfolio development and as Anthony just discussed, we will use our solid financial base to support our growth. We have a lot to look forward to in the next 12 months and we very much look forward to sharing our progress with you. Let's move to our final slides. That ends our presentation of Genmab’s 2021 financial results. Operator, please open the call for questions.

Thank you. And if you do wish to ask a question, . If you wish to withdraw your question, . And please limit yourselves to one question per person and then rejoin the queue. Our first question comes from the line of Kennen MacKay from RBC. Please go ahead.

Hi. Thanks for the update, and thanks for taking the question. Maybe just a housekeeping question for John or Anthony. Wondering if you could help us with updated expectations towards when we might expect resolution of the ongoing arbitration and litigation with J&J around Subcu Darzalex? Thank you.

Thanks, Kevin, for the question. Unfortunately, I cannot give you further color there because the outcome and the duration of these proceedings are inherently uncertain. We hope, however, that we will see a resolution soon. Thanks, Kennen. I think we can go to the next analyst.

Yeah. The next question comes from the line of Peter Virgil from Citi. Please go ahead.

Yeah. Thank you. I'm Peter Virgil. Just one clarification, and one question. Just want to make sure given your comments about the change in the FDA guidelines, just a clarification that an EPCOR filing in DLBCL is still scheduled for 2022, and could there be any other potential upside filings this year? And then my question, sorry, Jan, to test your patience, I'm just going to follow on from Kennan's. I mean, it's pretty clear from attending ASH and seeing QB trends that darzalex is going to be a much bigger drug than everyone thinks, and the pipeline is progressing. The problem is when you speak to incoming investors or new investors on Genmab, the fly in the ointment is this arbitration overhanging and that puts people off. I realize you can't go into the details, but can you at least frame as to whether you think are hopeful, which you say that every quarter? But I mean, is it really -- how long is the piece of string? Could this ramble on into next year or do you think there's a strong chance we might see resolution sooner rather than later? If I can push you on that. And sorry for testing your patience. That'll be helpful. Thank you.

Thanks, Peter. Let me start with the easy one with the Epco question. Yes. A filing in the U.S. and / or Europe is absolutely on the schedule for the B-cell lymphoma. And perhaps even in other allegations but depends on when data become available. Peter, so we continue to be very, very excited about filing this year. So that's fully on schedule. Then the more complex question is the arbitration. We also hear that this is an overhang and we of course understand that. What I already said before publicly is that all the materials and the positions have been exchanged and now it's up to the three judges to come in resolution. And I'm actually fairly confident that it will definitely come this year and hopefully so, Peter. I cannot give you any further indications on timing, because it's not under our influence at all.

Thank you.

Thanks, Peter.

And the next question comes from the line of Wimal Kapadia from Bernstein. Please go ahead.

Oh, great. Thank you very much for taking my question. Can I just push a little bit on timelines for data please? Particularly the earlier pipeline, so CD38 to CD37, and element 24-1BB molecules, when exactly in 2022 could we get update? And are there any conferences you could start to point to where the data is most likely? And then specifically on the CD38, will we get an update this year to really begin to have a view that this product could be superior to Daratumumab or we will really need to wait longer term. So maybe a 2023 debate. Thank you.

Thanks, Wimal. I think the timeline several only get clear once we noted this conferences, we have submitted the data, but we won't -- let's ask A - Tahi Ahmadi was on the line, our Chief Medical Officer. To see whether Tahi is willing to give a bit more color on HexaBody-CD38 of the DuoHexaBody-CD37. Tahi, maybe you can give a bit more color there.

Thank you Jan, so I will try. Let's take CD38 first. There were, I think there were three parts in your question. The first part is when will we see any data, I think Jan pointed that out. That will be a function of appropriate conference. And I think we have before publicly stated that this is probably a second half '22 event where we will be able to share the dose escalation data. And it’s worth noting that we only started dosing patients last year. We -- I think already publicly said that we will achieve -- make phase II those, very confident getting the phase II those in a very timely manner. And then we'll engage in the second stage of the data generation will be comparatively to the Subcu, whether or not that data will be available this year. I think this is too premature to comment on because this is really a function. And generating the data and then having it in the hands. On CD37, I think there's a very similar timeline CD38, I would say. We are close to determining the recommended Phase 2 dose. I would say, with some of the changing environment. also touched on the Project Optimus. These things were also probably impact the time and the data that this needed to define the recommended Phase 2 dose and some of the earlier trials. But I think we're pretty confident we're going to get this within the first half of this year. And then share the data in the base of CD38 .

Thanks, Tahi. I think that's all we can say at this time. Maybe more when the timing of the data submissions to conferences are clear, we will, of course, update you right away.

Great. Thank you.

Thanks, Wimal.

The next question comes from the line of James Gordon from JP Morgan. Please go ahead.

Hello. James Gordon, JP Morgan. Nice taking the question. One on the 4-1BB bispecifics. I saw the line about generating data to determine the potential mutilate stage. So the question is, how long can do not see that one or both of the bispecifics does actually move to late stage? Which of the two, so PD - L1 or CD40 do you think is more likely to be taken forward? And is it fair to you that you are a bit more cautious on these assets than 18 months ago?

Thanks, James, for the questions. I will hand over the question first to tie in and see whether I can add on his characterization time. Maybe you can shed a bit about the PD-L1 form will be, and the CD44 programs, and then give some color on the likely use of moving them separately or both of them to late stage clinical development this year.

Let's take one at a time. So PD-L1 form, we begin when we had shipped data in 2020 and then also in 2021 at SITC, helping us further narrow down understanding of the biology but also the observation of single agent activity with limited durability in the post-IO space, we had already announced. And this is now in the public space that the next step was would be the integration of the combination of the engagement of form would be together with full blockade of the PD-L1 access. This is happening for PD-L1 for maybe in two distinct experiments. One is a separate study that is actively enrolling, which is interrogating various schedules of either sequential form would be concomitant, form would be a PD-L1 activation inhibition, respectively. In the post-IO setting, it's the for study, as I said, actively enrolling. And separately, as in maintenance, all of the original Phase 1 study, we have cohorts that are interrogating the combination of PD-L1. In this case, with PD-L1 for the non-small cell lung cancer treatment the incorporation. This product is also actively ongoing. And these are the datasets independent of each other, but then also in conjunction with each other, they will inform the next steps for 1046. For 1042, very similar. We had shared data for the 1st time at SITC that show the dose escalation was also big in biology. We had flagged up very early that by mechanism of action of engaging APCs and then engaging formally reported the C cells, we didn't really anticipate a lot of senior agent activity in a meaningful way in the post-IO space, but are very confident based on some of the preclinical models that we had also shared had succeed at the combination with checkpoint inhibition will be very powerful and these experiments are ongoing in the clinical trials in both non-small cell lung cancer and neck. The safety part is already included and we are now on the active expansion, where -- and this is again -- this goes public in I think times ago, that until we're getting the combination of 10.2 plus pembro and PD-L1 high and PD-L1 low non-small cell lung cancer in head and neck cancer. And then also and thank us combination in Bankers ended hasn't made the in chemotherapy and all of these are actively enrolling as we speak. As it relates to the decision, that is of course like always, a function of a getting the patients in and then be getting the data in hand to make those decisions. We will look at those very carefully. tried to make the decision as. Efficiently as possible. When we have the data. I hope that helps you a little bit understand where the on the timelines.

Thanks Tahi. Thanks James for the questions.

The next question comes from the line of Sachin Wadhwa VP from Bank of America. Please go ahead.

Hi. Thanks for taking my questions. I just got a bunch of clarifications, if I may. So if I could just follow-up on the last 1042, 1046 question. On 1042, I think Judith had said on the third quarter call or the ASH call that the combination cohort data maybe due the coming months. That was obviously a couple of months back. So is 1042 data possible in the combination cohort in 1H or we now thinking that data for all of the assets you've referenced, 385710461042, a little more 2H so that's Clarification 1. Clarification 2 is on EPCOR. You mentioned in filing addition indications possible among data. I wonder if you could just clarify that comment as to what other indications may be possible? My final clarification is on the CD38. Again, you've referenced the data, but just wanted to be sure. Is there enough data in '22 to drive a potential partner position from J&J or some of that data into '23? Thank you.

Thanks, Sachin, for the questions. I'm going to hand over the 1042 questions to tie but you can think about answering that one tie. Let me first start with Epco. I said, well, definitely, our T-cell lymphoma session is the most advanced cohort with treatment. But we also move very rapidly with follicular lymphoma and multiple cell lymphoma and potentially follicular could also be ready for potential filing but it depends on how quickly we can get to access to the data. And that is the cohort I was mentioning when I was answering that question. Then for CD38 data, you two question session. I mean, it depends to Johnson. What I said before publicly, I mean, how much data do you need to take a decision? I believe for certain that they want to see, for sure, some data on the head-to-head versus Subcu data because I think that is of course whether this about whether this HexaBody-CD38 is actually clinically superior to Subcu data, which this is setting the benchmark here. I don't know whether they want to see all the data from the study, and clearly that will not be available in '22 session that is not possible. We're trying to see a number of patients where already it's very, very clear that potentially the HexaBody-CD38 is clinically superior. They could actually exercise the option, and then actually develop the program further. What I said to you before, it's at basically when we were in licensing discussions on Daratumumab, the IV formulation of Daratumumab in 2012, we have data less than 26 patients in total worth of clinical data. And what I heard is that Johnson actually took their opt-in decision basically on two patients with triple refractory multiple myeloma, which both went into a strange and complete response. So they didn't need more data basically to base their decision to patner in 2012. So depends on Johnson and you need to ask them. But I think some data could become available this year, already a session. But the majority of the data from the head-to-head against subcu will likely move into '23 and then that's probably where I want to leave for that and then ask Tahi to give a bit more color on 1042, the different cohorts and the expansion cohorts that data could potentially come or some data could come in first half or whether we should guide for the second half for the data.

Yeah. Again, I think this is a little bit of discussion on when data is available and when we are making data publicly in what form we got to make it publicly. As I mentioned before when we just think about like the time Judith gave that commentary. The safety quarter just started and I -- just to -- in response to earlier question already flagged expansion costs. So we will have data in our hands before the end of the first half of this year. Whether that data is going to be sufficient enough for us to then trigger next decisions. That's going to be a function of that data to some degree. There's -- but I don't think there's any anticipation that we will be able to share that data in a public forum in the first half of this year.

Thanks, Tahi. That's clear. Thanks, Sachin, for the questions.

And the next question comes from the line of Michael Schmidt from Guggenheim. Please go ahead.

Hey, guys. This is Paul on for Michael. Thanks for taking our question. I just want to focus on Tivdak and the upcoming innovative certain data study that has been running for a couple of years now. So hoping you could set expectations for the scope of the readout. Maybe whether the data will be restricted to head and neck and if so if we could potentially see data from other solid tumors at some point down the line. And lastly, maybe how you're thinking about how the data will inform next steps for the program beyond cervical.

Thanks, Paul, for the questions, and I will hand over these to you, Tahi. I think we'll make it a busy call for you.

Thank you. And I think of it as a yes like either studies operational or risk by cgen be -- we have said before that there -- we will look forward to some sharing of data on the head make space, which we will do in one of the upcoming conferences. And we're quite excited about the data that we've seen there will potentially allow us to expand the development of -- also into that space. I should probably look at that.

Thanks, Tahi. And then further updates will come from cgen because they're operationalizing those studies. But we are very confident as we move to earlier lines of treatment with TIVDAK in cervical as well as in several solid cancers. So let's abate the date on February the 25th and then await further updates from cgen on then to actually present further data on solid cancels.

Great. Thank you.

Thank you.

And the next question comes from the line of Elizabeth Walton from Credit Suisse. Please go ahead.

Hi. Thank you. Elizabeth Walton from Credit Suisse. Just a couple of questions left at this point. Firstly, can you update us on the penetration of subcutaneous Darzalex that you're seeing? I think the data point we have was a comment that was made at 2Q that you were seeing about a 64% penetration in the U.S. Can you update us as to where that got to at the end of the year? And do you have any data of what penetration looks like further subcutaneous version outside of the U.S.? And potentially what you think the ceiling could be for the penetration that's up to subcutaneous version? And then just one quick one on TIVDAK. We saw $6 million of sales reported this year by Seagen. Consensus expectations are around $30 million for this year. Just wondering how comfortable you are with these consensus expectations and anything you can share on how the launch is tracking versus your internal expectations? Thank you.

Thanks, Elizabeth, the questions and these are like perfect questions for Anthony Mancini who we have on the line. So Anthony, maybe you can basically address both questions. First, the penetration of the SubQ data, and then also the Tivdak question. Let's see what's you're willing to update on the launch and on the how well we're -- how comfortable we're with the consensus expectations for Tivdak. Anthony.

Sounds good, Jan. Thanks and thanks for the question, Elizabeth. Just on the penetration of Darzalex. First, as you discussed, the Q3 number was 72%. We ended the year at 77% in the U.S. in terms of the exit subcu penetration. Penetration, that's based on IQ via data based on weekly gross sales. We are continuing to see strong share gains, and so we're confident that growth will continue, and because of favorable reimbursement of subcu, what I can tell you around -- outside of the U.S. is that we've now got confirmation that all 5 top European countries are reimbursing subcu, with Italy just being achieved in December. So we continue to see favorable subcu penetration across European markets. So that is continuing. I won't give you a specific number around where we think subcu is going to land. But what I can tell you is that the trends are very favorable, and really the only places that are going slower than expected or when there's practice economics or system dynamics that make sub conversion difficult. That's really the question on SubQ Darzalex, as it relates to TIVDAK We're really pleased with the TIVDAK launch today and the launch is really going as we planned. It's important to note that although the population in this initial indication is pretty modest, that we're hearing from providers in this early stage of launch that TIVDAK really is an important treatment option for this patient population. It really is also the only non-IO therapy that's achieved the category 2A NCCN guideline recommendation in this population. So the feedback we're getting on the launch from the gynos and medox in the community has been really positive. And with our partner Seagen we're navigating the I-Care requirements. We've implemented a patient support program that that helps connect patients to I-Care providers in their geographies and in their healthcare plans. And we continue to strengthen our educational efforts and support in this area. So launch is going really, really well.

Thanks very much.

Thanks, Anthony. Thanks, Elizabeth, for the questions. Let's move on.

The next question comes from the line of Asthika Goonewardene from Truist Securities. Please go ahead.

Hey, guys. Thanks for taking my questions. I've got a couple of quick fire ones, if I may. Anthony, what proportion of your that 2022 non-recurring revenue is related to the EPCOR filing milestone, can you give it a little color and that will be great. Tahi, just want to confirm the two studies that you describing post-IO and non-small cell lung ending the treatment even on the non-small cell lung. Are you waiting for dose to complete before you start doing other studies in other tumor types? And then Jan, very quickly. Our arbitration KOLs checks pointed to across that as allows for an appeal, and I just want to check. Do you think that will they'll go into appeal, and does your expectations for this to be resolved in 2020 to take this into account? Thanks, guys.

Thanks, Asthika, for the questions, and I'll let my colleagues think about the questions, Anthony Pagano and Tahi. But as it relates to the appeal, the verdict is binding from the three judges, Asthika, but the parties can appeal one more time with one judge and that has a finite timeline and we think that even if that would happen, we -- of course we cannot predict whether that would happen, but it would still be concluded in 2022. That's probably where I need to leave that for now and then maybe ask Anthony Pagano to answer the question on the Epco milestone.

Great. Yes. Thanks. Thanks, John as everyone knows, regarding milestones, the timing and outcome are really inherently a little more uncertain. As reminder for 2022, our guidance assumes that non-recurring revenue is expected to be around 1.7 billion. Again, that that has two components, the reimbursement revenue and the milestones. And I highlighted during the call, our guidance does include a significant milestone associated with the filing and acceptance of a regulatory submission for Epco. Now as zoom in on that just a bit. In total for Epco in 2022, we have around 500 million kroner of Epco related milestones and the majority of that 500 million does relate to the filing and acceptance of their regulatory submission. So hopefully that gives a little bit more clarity in terms of the magnitude of this milestone.

Thanks, Anthony. Sorry, Tahi.

taking a step in trying to answer the question on what I believe was a question about 1046. And I think the short answer is, we view these datasets are being generated as biological experiments that answer distinct biological questions. So for 1046 the biological question is, can you enhance the ability and increase efficacy by complete blockade of the checkpoint access, either by doing this in a sequential manner, first activating for we'd be then or in the concomitant activated for will be handled check-in, and we do this experiment in two settings one is opposed which we believe is a very different setting, patients will have pre -op immuno –therapy have a completely different biological makeup than the . Depending on what the answer is that we will get, we will -- and of course, it also depends on the strength of the answer. We will then take that answer and apply it biologically to other indication. So it may not necessarily mean that we have to why for the entirety assets to mature, but that's also a question or a function of the quality of the data that's being

Thanks a lot guys.

Thanks Asthika. Operator.

The next question comes from the line of Peter Welford from Jefferies. Please go ahead.

Hi. Yes. Thanks for taking my questions. Just going back to epcoritamab, I do want to put a clarification on the recent FDA guideline changes regarding those finding we're discussing. Just to be clear, do those relate to Phase 3 initiations in combination studies presumably? And is it the extent of those finding that you need to do before you could initiate those combination trials? And just to understand that, can you give us a bit more color in terms of what we -- the Phase III development plan? Obviously, it feels like B-cell lymphoma is initiated. Presumably, we should think about the other follicular has other potential indications. But should we also be thinking about potential indications that you've yet to start study potentially getting underway during the course of this year or next, or perhaps you can just talk a little bit about how broad in terms of the current indications the could potentially be during the course of this year by the end? Thank you.

Thanks, Peter, for the questions. I think these are perfect for Tahi. Tahi, maybe you can give some further color on my remarks on the dose finding studies needed and the context was for Phase III. And then also in a bit broader context, the expanding epcoritamab development program for Peter.

Right. And let's take this -- set this up. So the first part is we continue to be extremely excited about the data that we're generating, both as a senior agent and in combination in diffuse large B-cell lymphoma and . The comments from the was around a regulatory shift, that asked for a limited generation of data in combination to interrogate whether they are potentially opportunities to lower the dose in combination. And it's a relatively a dataset that I'm going to say answer for the totality of the program. And that obviously has some impact on the ability to start Phase 3 in combination. We will obviously be operationalizing this as possible. And I think have very clear plans and have very active, engaged process with the agencies in order to manage and then the ability to initiate the Phase 3s that we are having plans that our colleagues and partners at AbbVie.

Thanks, .

The next question comes from the line of Laura from UBS. Please go ahead.

Hello. Thanks. I'd just like to go back to the HexaBody-CD38, please. Given it seems like they're in there quite optimistic about the . On the dollar combo, those entail. And sorry me to put them to be interested in the HexaBody-CD38 wouldn't only have to lift faster than Dora. It would likely have to play nicely with those two molecules. I realize you can't comment on from a theoretical standpoint, is there anything wrong with a potential HexaBody-CD38 plus Teclistamab or talquetamab combination. Thanks.

Thanks for the question that is a perfect question. Yes, there's now, but I will let Tahi give you a bit more color on the potential combination, theoretically, also HexaBody-CD38 and Teclistamab and talquetamab targeting BCMA or GPRC5D. Tahi.

Actually, it's a good question. I think as Jan was saying at this point, because the HexaBody-CD38 program, until the moment that Janssen opts in is a Genmab program that is still in the dose escalation of the simulation. There are no plans for these combinations, but it's also, I think, fair to say that this one, we have have not seen anything as it relates to the safety that would in any shape or way indicate that it would be a lesser program. And that's

Thanks.

Thanks, Tahi. Thanks, Laura, for the questions. Let's move on to the next one.

Next question comes from the line of Ian from Berenberg. Please go ahead.

Hi. It's Ian from Berenberg. Thank you for taking my question. So I have a question on the epcoritamab Phase 3 trial design in front line DLBCL. Really just wondering if there's any color you could give up on the potential trial design for front line DLBCL, anything you could share in terms of combination partners or control arm? And actually, logistically just wondering, can you actually run a frontline trial involving or do you have to wait until FDA approved for use of poly being frontline DLBCL? Is that by any chance item for you? Thank you.

Thanks, Ian for the questions. And a question I will handle over to Tahi to see what you're willing to say about our plans for full line diffuse large T-cell lymphoma. Tahi with Epco.

I'm going to make comments. Number one, if you look into the data that we have generated a next-gen heavily publicly shared. It is it sure. Is what the experimental arm will be. It will be And we have been consistent with commented on this post ash as well, that in the near future and really this is the only relevant future for the start of the Phase three that we're talking about. We believe to be this in the .

Thanks, Tahi. I think that answers the questions here.

Yeah. Actually, just wondering, is it possible to actually wrong the trial, including pulling way before it's actually approved in front-line? Is it logistically possible?

Okay. Tahi, do you know whether it's theoretically possible?

Yes, theoretically.

Theoretically, if you wanted to run a study with a non-approved drug, you need a drug supply agreement.

Understood. Thank you very much.

Thanks Thanks, Tahi. Let's move to the next question.

The next question comes from the line of Matthew Harrison from Morgan Stanley. Please go ahead.

Thanks. This is Charlie on for Matthew. I just really get -- need a little more clarification on the 4-1BB and CD40 the flexibility of that in terms of the pilling of potential without studies. And maybe about to what is what's your expectation in terms of what population, whether there will be held by market pivots subset or were will be the goal is to help target a big product population? Thank you.

Thanks, thanks caught your name correctly better, but I'll hand over the question to Tahi a bit more on 4-1BB CD40, Tahi and planning of studies.

The current data that's being generated is in essentially five buckets. In non-small cell lung cancer frontline, PD-L1 high, in combination with pembro. In non-small cell lung cancer, PD-L1 low, meaning between 1 and 49 in combination with pembro . In head and neck in combination with pembro. In head and neck, PD-L1 positive in combination with pembro and chemotherapy and in combination with chemotherapy or in combination with RPN 1 chemotherapy and just . These other datasets are being generated by, as we speak right now, in the expansion cohorts. And they are chosen based on what we thought we would be able to see. Obviously, the signal of synergies between checkpoint inhibition 1042, 1046 and / or where we have reasons to believe that the biology of CD40 engagement will play a particular role. And they will obviously be the driver depending on what the data is for follow-up activities, including activities if the data session supports it. They will not be necessarily restricted, but this will obviously be the first wave.

Thanks Tahi. Let's move on to the next question.

And we have one final question from Emily Field from Barclays. Please go ahead.

Hi, thanks for fitting me in. Just a few quick ones. One on Darzalex. I know you don't break this out in the consented depend us but versus our own estimate, Europe has doing been doing conceptually better than our expectations. And I was just wondering, is that also the key relative to your own internal expectations. And I know you've given us sort of the in the past the brand impact share across the lines of therapy in the U.S. But I was just wondering if you could compare to kind of how that track in Europe across maybe first-line and second-line multiple myeloma. And then also just a quick 1 on the SG&A productive increase for 2022. It's almost the same order of magnitude as R&D. Is that primarily the build-out of the commercial sales force for epcoritamab. And is the bulk of that heavy lifting going to be done in 2022 or -- and I know you're not going to talk about 2023, but how should we think about sort of SG&A trending in beyond '22? Thanks.

Thanks, Emily. These are perfect questions for Anthony Mancini and Anthony Pagano. Anthony Mancini, maybe you can start with Darzalex at the European sales versus U.S. sales and how to track them and how it fits with our own expectations? Maybe you can give a bit more color there.

Yeah. Thanks, John. Thanks, Emily, for the question. I would say that we're -- our thinking is in line with your thinking on this. But just remember that really most of the changes in fluctuations in share related to reimbursement decisions. And so one of the ones I highlighted earlier with the major EU5 reimbursement and coverage decisions for some indications and some formulations like Subcu really drive sales. And what I can tell you is that the trends look very strong from a share perspective, but there is some variability that system -- that's healthcare systems specific there. But I think that's where I'll probably leave it as it relates to European or rest-of-world sales relative to U.S. sales on DARZALEX. And maybe I'll pass the next question over to Anthony Pagano.

Great. Thanks Anthony, and thanks Emily for the question. First of all, talking about -- give you some additional color and context around in 2022. I think there's 3 things you should be thinking about. 1. We'll have a full year, let's call it the TIVDAK commercial expenses, so that would be one thing. 2. As you highlighted, really starting to make sure that were potential -- prepared for potential filing an approval of EPCOR. So that be number two. And then third is I mentioned in my remarks. Is this sort of making sure from looking at the broader evolution of our business that we have the right technology, systems and team in place to really make sure we're well positioned to support this growth and managed risks along the way. So that's how you should be thinking about 2022, and I think it's probably premature to talk about 2023. But what I would sort of say is just thinking about what I already said. As I could have talked about our overall opportunity set, I've continue to be very, very pleased with the overall progress we're seeing in terms of building out our pipeline. I talked about in 2021 having more than 20 active clinical trials and seeing that expand to potentially more than 30 moving forward and taking more of our medicines towards the market. So I think we'll provide you guidance for 2023, Emily, but I think what's the -- the message you should take away from today is that our opportunity set is very strong, but this team will continue to be focused and disciplined as we evaluate where we want to kind of pull the trigger on certain ones.

Thank you.

Thanks, Emily. Thanks, Anthony and Anthony. Let's see whether there are any further questions, Operator.

There are no further questions at this point. A - Jan van de Winkel : Thank you for calling in today to discuss Genmab's financial results for 2021. If you have any additional questions, please reach out to our Investor Relations team. We hope that you-all stay safe and remain healthy and optimistic and very much look forward to speaking with you-all again soon.

This concludes the conference call. Thank you all for attending. You may now disconnect your line.