PG&E Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 3, 2023

There are 17 speakers on the call.

Operator

Call.

Speaker 1

Anticipates, plans or expects actual results may differ materially, for example, as a result of delays is for development projects. Genmab is not under any obligation to update statements regarding the future Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities I would now like to hand the conference over to your first speaker today, Jan van den Winkle. Please go ahead.

Operator

Hello, and welcome to Genmab's conference call to discuss our financial results for the period ending June 30, 2023. With me today to present these results is our CFO, Anthony Pagano. For the Q and A, we will be joined by our Chief Development Officer, Judith Klimowski and our Chief Operating Officer, Anthony Monsigni. As already said, we will be making forward looking statements, so please keep that in mind During today's presentation, we will reference products being developed under some of our strategic collaborations, And this slide acknowledges those relationships. In May, Abkinje became the 1st T cell engaging specific antibody approved for use in the U.

Operator

S. For 3rd line plus diffuse large B cell lymphoma. With this approval, we achieved an important milestone both for Genmab and most importantly for patients with 3rd line plus Our teams along with our partner AbbVie were in place and fully prepared prior to launch. Now they are actively engaging key stakeholders and we are encouraged by the overall positive response we have received As we deliver Abkinley to appropriate patients. And we look forward to the potential for Additional opportunities for Abkinley as we work with AbbVie to progress development into a variety of patient populations and treatment settings.

Operator

The 3rd line plus diffuse large B cell lymphoma indication is the first step to potentially establishing Abkinli as the core therapy is across diffuse large B cell lymphoma, follicular lymphoma and beyond. Abkinje's approval is also a testament to our team's dedication to turn novel translates into medicine and to develop differentiated antibody therapeutics with the goal of improving the lives of patients. It is the 3rd approved therapy to be developed using our proprietary dual body technology. And overall, it's the 7th medicine based on our innovation. I would like to thank the patients and investigators who took part in the EPCOR NHL1 trial is responsible for the discovery, development and now commercialization of Abkinley.

Operator

Let's now turn to our other recent highlights. In June, we announced that eplaritumab As these guidelines are an important resource for providing U. S. Healthcare providers with the information they need to make optimal treatment decisions, We were pleased that they were updated to include eperitimab so soon after approval. Looking beyond the U.

Operator

S. Approval, we were pleased to announce in July that AbbVie received a positive opinion from the CHMP recommending the conditional authorization of epcaritamab for the treatment of adult patients with relapsed or refractory diffuse large B cell lymphoma After 2 or more lines of systemic therapy and if approved, abcuritumab would become the 1st and only subcutaneous bispecific antibody conditionally approved in Europe as a monotherapy in this indication. As I mentioned, together with AbbVie, we are advancing a robust clinical development program for epcaritumab across B cell malignancies, Including diffuse large B cell lymphoma and follicular lymphoma. And to this end, also in June, we announced has positive top line results from the follicular lymphoma cohort of the Phase IIIbco NHL1 trial. The results showed an overall response rate of 82%, which exceeded the protocol's pre specified threshold for efficacy.

Operator

The observed median duration of response was not reached and no new safety signals were observed. These results are encouraging for patients with relapsed or refractory follicular lymphoma that are in need of new treatment options. And based on the data, Together with AbbVie, we will engage with global regulatory authorities to determine next steps. The full results will be submitted call presentation at the Future Medical Conference. As you noted last quarter, we had data presentations at a number of recent medical conferences is covering a variety of our investigational antibody therapeutics, including abcuritumab.

Operator

We also continue to grow our pipeline last quarter with an IND submission for Jan 2017 or DuoBody CD3, CD30, this has the potential in hematological malignancies. Turning to other programs that incorporate our innovation. Last month, Janssen announced that they have received positive CHMP opinions for both Talve or talquetamab and TEGVILI, Both of which were created via our dual body platform. The CHMP recommended conditional marketing authorization for TOLFE As monotherapy for patients with relapsed or refractory multiple myeloma, who have received at least 3 prior therapies, including an immunomodulatory agent, A proteasome inhibitor and an anti CD38 antibody and have demonstrated disease progression on the last therapy. The CSMP also recommended the approval of a Type 2 variation for teclistamab, providing a reduced Biweekly dosing schedule of 1.5 milligram per kilogram every other week in patients who have achieved a complete response or better Darfalex also continues to redefine the treatment of multiple myeloma.

Operator

As you have seen, J and J's net sales for Dara were up 22% over the first half of twenty twenty two, And that is generating DKK4.9 billion in royalties for us, contributing materially to our robust financials. I will now hand over the call to Anthony Pagano, who will take you through our first half twenty twenty three financial results. Anthony, the floor is yours.

Speaker 2

Great. Thanks Jan. We continue to strengthen our foundation is over the first half of the year. Of course, top of mind for everyone is the FDA approval of Epkinley. And as we'll see, our financials continue to be strong.

Speaker 2

Recurring revenues grew by 27% in H1. This was principally driven by strong royalties from DARZALEX and other approved medicines. Our solid balance sheet, growing recurring revenues and significant underlying profitability allow 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 So let's take a look at those revenues in a bit more detail. As you can see in the chart, overall net sales grew by 22%.

Speaker 2

That's net sales of nearly is $4,700,000,000 which translates to over DKK4,900,000,000 in royalty revenue. This growth was driven by continued share gains and strong performance in the frontline setting. So, DARZALEX remains a key driver of our revenue. In H1, we grew total revenue to over DKK7 1,000,000,000. And as I've already highlighted, That included a 27% increase in our recurring revenue.

Speaker 2

And to be clear, that's on a reported basis. Excluding some minor FX headwinds, recurring revenues grew by 30% on an operational basis. And as a reminder, last year's H1 results make for a somewhat tough comparator, given that in 2022, As well as royalties from other products. Taken together, this really illustrates the power of our recurring revenue. In Q2, we also recognized net product sales for Epkinley And we're pleased with how the initial launch is progressing so far.

Speaker 2

It's of course super early days at this stage, So we shouldn't draw too many conclusions from a single month of sales. Nevertheless, we remain excited is by Epcor's potential to transform the lives of patients. And as we said, we're taking our strong recurring revenue is in line with our significant growth opportunities. Total OpEx grew 45% in H1. Call is being recorded in R and D, we've accelerated our investment into our product portfolio, especially the advancement and expansion of EPCOR and other pipeline projects.

Speaker 2

We've also further strengthened our team to enhance our commercial capabilities And support our expanding pipeline, and of course, that includes the launch of App Kinley. Now let's take a look at our financials as a whole. Here you can see our summary P and L. That's negatively impacted by a small FX headwind. Total expenses were $5,100,000,000 With 70% being R and D and 30% SG and A.

Speaker 2

And even with this increased investment, We're still delivering over $1,900,000,000 of operating profit. Moving to our net financial items. Here, we have a gain of $75,000,000 so far in 2023, and this is driven by 2 partially offsetting items. First, we've got the weakening of the U. S.

Speaker 2

Dollar against the Danish kroner and that's negatively impacting the value of our cash and investments. Is being recorded on the other side of the ledger, we have an increase in interest income due to higher effective interest rates. Then we have tax expense of $426,000,000 which equates to an effective tax rate of 21.2%. And that brings us to our net profit of nearly DKK1.6 billion. So as you can see, With that, let's take a minute to revisit our robust financial framework.

Speaker 2

Is now open. First off, our revenue profile on the left. With the approval of Abkinley in May, we now have has 7 products on the market that are generating significant recurring revenues, and we see a clear path will be posted on the call to potentially expand the number of approved products with the potential approval of Janssen's tauquetamab. Taken together, we expect significant cash inflows for the years to come. Moving to the right, at the top of the list is accelerating and expanding EPCOR.

Speaker 2

But that's just one of the exciting opportunities call will provide us with a compelling rationale for increasing investment. As we've told you before, if we want to seize these meaningful opportunities, We've got to invest and that's exactly what we're doing. So with that background, let's take a look at our guidance. As you will have seen, we updated our 2023 guidance last week. And that's an increase to both the bottom and top end of our range.

Speaker 2

This increase is driven by continued strong recurring revenue growth, call includes higher total royalty revenues from DARZALEX and other marketed products. Is being recorded for DARZALEX, following strong H1 performance, we've increased the low end of our guidance for net sales now estimate a range of $9,800,000,000 to $10,000,000,000 Turning to our investments, As always, we remain focused on executing against our strategy and key priorities and at the same time is creating long term value. So we're investing to capture the significant opportunities in front of us. And here, we're increasing our OpEx guidance to a range of DKK10.4 billion to DKK10.9 billion. This is primarily related to increased and accelerated investment in epkaritamab and the progression of other pipeline products.

Speaker 2

More specifically, for EPCOR, our higher investment reflects increased and accelerated dose optimization work We are also accelerating our investment for our frontline trial in FL. As you know, this is a significant value driver for the EPCOR franchise and we're doing everything we can to accelerate this opportunity. Putting all this together, we're on track to deliver another year of substantial operating profit is in a range of DKK4.5 billion to DKK6 1,000,000,000. And finally, as a reminder, Note that these projections are based on an assumed U. S.

Speaker 2

Dollar Danish kroner exchange rate of 6.8. Now let me provide a few closing remarks. In summary, we've had a very solid H1. And that gives us a strong backbone of significant underlying profitability. And we're investing those revenues is in a highly focused way to realize our vision and to capitalize on the very significant growth opportunities in front of us.

Speaker 2

And on that note, I'm going to hand you back over to Jan.

Operator

Thank you, Anthony. In the first half of twenty twenty three, we continue to work towards our 2,030 vision, where our Kaixo antibody medicines are is fundamentally transforming the lives of people with cancer and other serious diseases. We are very excited about the launch of Abkinley in the U. S. And we look forward to working with AbbVie to continue to expand EPCO developments with new studies.

Operator

We are collaborating with our partner, Cgen, program in cervical cancer and beyond. We also continue to look forward to data from the clinical expansion cohorts and progress to the next steps for both dual body molecules targeting 4 1BB that are in development with BioNTech. And we anticipate expanding and advancing other early stage programs, including the potential for additional INDs or CTAs this year. Is based on our planned portfolio development and business needs. Finally, we will continue to leverage our is a solid financial base to support our growth.

Operator

We have a lot to look forward to in the second half of the year. That ends our presentation of Genmab's financial results for the first half of twenty twenty three. Operator, please open the call for questions.

Speaker 1

We will take our first question. Your first question comes from the line of Vikram Parrajit from Morgan Stanley. Please go ahead. Your line is open.

Speaker 3

Hi. Thank you for taking our questions. We had 2 on the Epkinley launch. First, We were just wondering if you could provide some color on the types of patients you've been able to treat so far in the first phase of the launch and any kind of patient characteristics you're observing in the patients you have been able to treat and also in the centers that these patients are coming from? And then secondly, on a related note, How are you benchmarking the early phase of the launch internally versus other second line plus DLBCL launches?

Speaker 3

And how are you framing What you're seeing in terms of the launch trajectory here versus other recent launches in the space? Thanks. Bye.

Operator

Thanks, Vikram, for the questions. Let's moves them over to Anthony Molcini. I think he can give you color on both of the questions. Anthony, floor is yours.

Speaker 4

Thanks, Jan, and thanks, Vikram for the question. First, we're really, really pleased with the Epkinley launch uptake to date. I think your question around characterizing a little bit the types of patients that we're seeing here in these early first early phases is very Difficult at this point, but because really claims data is pretty limited, but I can give you some sort of sense qualitatively of what we're hearing, But it's really in line with our expectations with about a 27 day head start versus competition. Most of the early patient starts here or some of the early patient starts are later line refractory patients And most of them are coming from centers we've identified as key accounts, mostly academic centers for the most part. But as the first FDA approved T cell engaging bispecific antibody for the treatment of third line plus DLBCL, really what customers are telling us They're enthusiastic about the power of Evgenli overall responses, the manageable safety profile and the seamless and efficient step up is a very important question for the company.

Speaker 4

And subcutaneous administration that goes along with it. And this what's encouraging is this is really consistent with what we've been hearing is a pre launch from opinion leaders and clinical trial sites and in our view reinforces a really differentiated profile for Epkinley. In terms of framing the launch uptake relative to other launches in the space, I think it's important to ground ourselves in The size of this first indication, so this 3rd line plus relapsed refractory DLBCL population is a modest one with about 3,600 patients in the U. S. And it's really is an important starting point from which we will build to help make Epkinley a core therapy across B cell malignancies In collaboration with AbbVie, I think that covers it.

Operator

Thanks, Anthony, and thanks, Fikal, for the question. Let's move on to the

Speaker 1

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

Speaker 5

Yes, thanks. Pete Bedalt Citi. Two questions, if I can, or just the first one, if that's the rule. But Jan, firstly, just on Gen 30, 14, Hexabody 238. We understand J and J is telling investors that an opt in decision could potentially come In 2023, now I realize you're not going to comment on that per se, but could you just remind us how the open label head to head trial is progressing In terms of recruitment event rate and your level of confidence that HexaBody can indeed raise the bar in myeloma versus DARZALEX in a clinically meaningful way.

Speaker 5

And then just quickly on 4246, can you provide an update on what data you expect to have in house

Operator

Thanks, Peter, for the questions. For the Hexabody CD38 program, I can tell you happily that we're actually very actively recruiting the head to head So the trial with the optimal dose of HexaBody CD38 versus subcu Dara, but we will still need this year for recruitment of the patients, so we will we actually anticipate that next year in 2024, We'll have the readout of that head to head study. But of course, we can on an ongoing basis under confidentiality share data With J and J, but we still believe that it's very likely that they want to see all the data, at least a meaningful part of the data Of the hat to hat, but it's progressing well. And now in multiple countries, we have initiated new sites in new countries. And I think we're doing fine there.

Operator

And once we have all these patients in, Peter, we will be happy to give you a good update to the market. Then for 1042, 1046, what we actually want to do is come to a decision point this year to progress 1 or both of these programs to the next stage of clinical development. And that is the key target for this year, Peter. So we will actually internally hopefully get the data to allow us to take a rational decision to move to the next stage. And then it is possible To share that data at a medical conference this year, when we are in time for an abstract, etcetera, maybe a late breaker for conference, we will also try to presented data publicly.

Operator

What we could of course do is take the decision internally and then potentially flag it up like an event like the post ASH update event from Genmab after ASH, which we usually do to actually educate the market on key steps happening with the company. But it's very likely that the full complement of data for either of these programs of both would be presented in 2024 Because we may simply not make the abstract deadline this year, but we hope that we at least get the data to allow for a rational decision to move to potential next steps together with BioNTech. That's where I probably want to leave it at, Peter, at this point.

Speaker 6

Very clear. Thank you.

Operator

Thank you.

Speaker 1

We will take our next question. Your next question comes from the line of Sachin Jain from Bank of America. Please go ahead. Your line is open.

Speaker 7

Hi, thanks for taking my questions. Actually, two follow ups on the same topics that Peter have. So the first one is, do you have any best sense Yes, how many patients you may have on HEXBODY CD38 by year end should J and J want to make it? Just to get a sense of How quickly that patient recruitment is going, if you just give us a sense of where you think you might be by the end of this year? And then just secondly to clarify, I think it was clear in the answer, but Are you basically ruling out a conference presentation for 1042, 1046 this year and your working assumptions to update us to your post ASH R and D event?

Speaker 7

Thank you.

Operator

Thanks, Sachin, for the questions. For the head to head, I mean, I cannot give you a prediction because recruitment is not linear. Usually, once you build momentum, Sachin, this goes quicker and quicker. So hopefully, by year end, we will have Many of the patients in the head to head arms of the trial with hexaBody CD38, but probably not all. I think there's still some remaining patients whether that will be enough And follow-up to your and Peter's question for J and J.

Operator

I don't know. I mean, it's their decision, but I would still stick with 2020 call is more likely, I think, point where we have enough data in order for J and J to take a good decision on potential next steps. 1042, 1046, no, it's very likely that the bulk of the data will be described in 24 other medical conference, but I think for at least one of those, we hope to present also some data this year at a medical conference, because there are key medical conferences in the second In the last part of the Q4 of this year, which we could potentially use for data dissemination. But at this moment, we don't have that data. But I think it's a very good likelihood that we will actually will be able to share at least some data at a medical conference session and then potentially further color on the data at our post ASH Events, but it's speculation at this point.

Operator

We are very rapidly now collecting data. That is going well. We are preparing for next steps for sure for a number of programs, but we need the data in order to allow for rationalization. That's probably our belief

Speaker 2

in the

Speaker 7

Can I just take one follow on? Can you remind me of your target recruitment number of patients for the HEX-1E CD38 head to head?

Operator

Yes. Yes.

Speaker 7

Sorry, I was just asking what the number of patients you're targeting to recruit in that study is?

Operator

Yes, we don't we haven't made that public, Sachin, but we are well on track basically for targeting The number we want to actually recruit there, but we haven't put it in the public domain, Sascha.

Speaker 7

Okay. Thank you.

Operator

All right. Thank you.

Speaker 1

Thank you. We will take our next question. And the question comes from the line of Michael Schmidt from Guggenheim Partners. Please go ahead. Your line is open.

Speaker 8

Hey, good afternoon. Thanks for taking my questions. I just had a follow-up on Ep Kienle, obviously, understanding that the initial indication is sort of a small opportunity in third line Plus DLBCL, but could you talk about the cadence of possible label expansions? I know the second line Phase 3 trial, I believe, is fully enrolled now. And you also started the first line DLBCL trial recently.

Speaker 8

Just curious sort of how we should think about the pace of Possible label expansions into larger markets. And then follow-up, your competitor Roche is marketing sort of this fixed duration consideration for leukemia as well or if you're sticking with the continuous treatment in the earlier patient populations. Thanks so much.

Operator

Thanks, Michael. I will hand over both questions to Judith, who is online here. Judith, you can start with giving your color and then I can potentially add to that if needed. Judith, please go ahead.

Speaker 9

Thank you. Yes, thank you, Jan. So for the label expansion, As you are aware, we announced the positive opinion from CHMP is for the 3rd line in LBCL or the LBCL, and we also announced that we filed in Japan is on follicular lymphoma, the headline plus and we are engaging with health authorities, as Tian well alluded, which will will provide potentially additional expansion to other B cell malignancies, in this case, Additionally, we have 3 Phase 3 studies at percussingalcverao.gov as part today In first line DLBCL, in combination with our job based on the stellar data that we made public at call is on EHA. And we have in the 3rd line or above EPCO versus So all these Phase 3 studies will allow us more opportunities to convert to full approval So this is with regard to question 1. With regard to question 2, I would like to make a clarification first that the treatment until progression is disease and setting dependent.

Speaker 9

Because of the nature of the disease and our belief that sustained Having said that, we also did MRD in the study that showed that Good proportion of patients, around 50% get MRD negativity. So we allowed or benefits, but if it's a decision from the site or related to earlier lines where they are we treat for 1 year or for 2 years depending on the disease of the setting. So hope this helps.

Operator

Thanks, Judith. Maybe Anthony Monsigni can add some further color on the fixed duration question. Anthony Monsigni, please go ahead.

Speaker 4

Yes. No, thanks, Jan, and thanks, Michael, for the question. I think in 3rd line plus DLBCL, as Judith sort of described, the setting matters and is difficult to treat patients that have already undergone several unsuccessful fixed duration therapies. So maintaining treatment until progression effectively provides in our view patients the greatest chance for a positive outcome. And with that Kinley, obviously this is done with Even with a treat to progression approach with less chair time per patient through the 1st 6 months Compared to the competition and as Judith outlined earlier, in other disease settings and earlier lines With less heavily pretreated patients, we're exploring fixed duration regimens for Abkinley.

Operator

Thanks. Very clear, Anthony. Thanks a lot. Thanks, Michael, for the questions. Let's move to the next question.

Speaker 1

Thank you. We will take our next question. The next question comes from the line of Asika Googwadhan from Truist. Please go ahead. Your line is open.

Speaker 10

Hi, guys. Thanks for taking my questions. And again, congrats on delivering on another solid quarter. Just a quick financial one, does the increased OpEx guidance for 2023 include An increase in expenditure for Gen1042 or Gen1046. And then in your 1st month of sales of McKinley, I know I don't want to tease too much out of the data here, but have you had any patients from the community centers that are being referred to the academic center?

Speaker 10

Just wondering if You were seeing that in the early data already. And lastly, on the potential data that you hope to present for 1042 or 1046 later this year, if you do that, Would that be in just one tumor type? Or could there be possibility of more than one tumor type there? Thanks.

Operator

Thanks, The first one, I will definitely hand over to Anthony Percano. The second one to Anthony Mancini. Let me take the third one. I think right now we are collecting data in multiple cohorts, Ostraca. So we haven't decided yet With Cohort, we have an update to make a decision to move to the next step.

Operator

But very likely in the public presentation, it will probably be in very I have one or maximum 2 settings, I think, for 1042 and 1046, but that's not decided yet. But that at least gives you some direction. So maybe we can move over to Anthony Pagano for the question on the OpEx guidance.

Speaker 2

Sure. Yes. To be clear, the Vast majority of the higher investment is reflective of what I said in my comments where I did a double click for you in terms of the increased An accelerated investment in for epritimab. The comments in the text of our company announcement and some report around other Pipeline Products, there's nothing there for any of the products that's individually significant or material. I really would Like you ought to leave with is really that the increase in acceleration, the vast majority of it is absolutely down to epkiridumab And the key drivers supporting that that I outlined in my opening remarks.

Operator

Thanks, Anthony. Maybe move over to Anthony Moccini for the Abkinley question on community center patients versus academic, a bit more color there potentially.

Speaker 4

Yes, really, Asthika, at this point in the launch, the vast majority of the starts are coming from the academic centers And hospitals at this point. So I'll leave it at that. And as more data matures, we'll be able to share a

Speaker 2

little bit more around the setting Thanks,

Operator

Antti. Let's move to the next question, operator.

Speaker 1

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

Speaker 11

Hi. Thanks for taking my questions. And I was just checking here because I wasn't sure. So for McKinley, Roche I said last week that they've had feedback from the regulators that the PULRX regimen needs to be, given that it's moving toward standard of care should be a comparator on for any first line DLBCL trials. Is that your take and is that included in your first line programs Just any thoughts on the first line development there?

Speaker 11

And then also a question, I know that the label language for Akimli should be hospitalized and that did allow for some flexibility for healthcare professionals to determine the appropriate level of monitoring. So just any color that you could give on how that's being enacted in the real world setting and just what the regulatory process is to Thank you.

Operator

Thank you, Emily, for very good questions. So I will hand over both to Judith first and then maybe Anthony and Moxini can give can add to the second one if needed. Judith, why don't you give it a go?

Speaker 9

Yes. Thank you, Jan, and thank you, Emily. I will start with the second one with regard to the hospitalization. As you well alluded, the With regard to the removal of the hospitalization as we flagged it up in several calls, There was an evolving knowledge with ekarytoma or ekaryinli in terms of the requirement for patient monitoring is being recorded in parallel in new studies, we made it optional, Leaving it to the patient and investigator to discuss whether they can be accessible is in the hospital, but not in the hospital. So we made the hospitalization is optional and gave the option to treat it in the outpatient setting as well.

Speaker 9

Additionally, we have a study ongoing testing only this outpatient setting. This is with regard to question 2. The question 1 was regarding to Poly D, what was the question?

Speaker 11

Yes. And just whether that needs to be the comparator

Speaker 9

arm? Yes. So again, thank you for the question. So we PolybV is an option in first line that or PolybV is TFS without OS benefit. So some sites might choose our drug for paying patients, We are exploring very actively the potential combination of ebcoritamab with polyvirutuximab

Operator

Thanks, Judith. So Emily, I think it's clear. I mean, this is an option. This is not mandatory. So it's different from what I think you've heard from other competitors.

Speaker 11

Great. Thank you.

Operator

Thank you. Let's move on to the next question.

Speaker 1

We will take our next question. And the question comes from the line of Jaron Werber from Cowen. Please go ahead. Your line is open.

Speaker 12

Great. I have a couple of questions. Maybe the first one, just thinking about, is there any way to get an accelerated approval into first line DLBCL? Or is the only way is to really do a full study. I know you're doing a combination that you alluded to plus or minus R CHOP in the first line.

Speaker 12

I think that you probably don't have data in about 4 years or so, but is there any chance to get an earlier approval? And then secondly, on 3,014, Are you able to release data publicly before J and J's opt in option? Or are you just going to wait for J and J to make a decision and only then present the data because I believe it's your data set. So do you drive the public disclosure of the data? Thank you.

Operator

Thanks for the questions. I think the first question I will hand over to Judith to see whether there are options for potential more aggressive, more rapid Approval for the first line diffuse large B cell lymphoma setting, but let me take the second one for 2014 for HexaBody CD38 is all data and yes, we can release data without the agreement of J and J for sure. So it's the option of Genmab to do that. Judith, maybe you can handle the first question.

Speaker 9

Yes. So the regulations related to accelerated approval to Part

Operator

Thanks, Judith. So that's clear. Let's move to the next question then.

Speaker 1

Thank you. Please stand by. Your next question comes from the line of Xian Deng from UBS. Please go ahead. Your line is open.

Speaker 13

Hi, thank you for taking my questions. 2, please, both on apkoritamab, potentially will be additional indications. So the first one for follicular lymphoma. So in front line, I can see you have a trial, the Phase 3 trials in combination with R2, But you also have lots of other trials in follicular lymphoma with either rituxan or just with rivlimid. So just wondering how do you actually think about the combination partner in follicular lymphoma in general, especially how does it work In terms of this is a much more indolent disease, are you more cautious with combination with other drugs?

Speaker 13

The second question is on CLL. I'm just wondering if you could remind us where are you with epluritumab in CLL? What is your general strategy here? Are you Aiming to potentially target the high risk patients like Richter syndrome first or you're talking to your all commerce? Thank you very much.

Operator

Excellent question, Sian. And I will hand them both over to Judith, who can address them really well. Judith?

Speaker 9

Yes. Thank you. So the Phase 3 ongoing in relapsedrefractory follicular lymphoma is combination with R2 is based on the approved R2 regimen for this particular disease. And this is based I would say very, very nice data of the combination of R2 plus EPCO that was presented in the oral setting in particular in those difficult to treat patients as patients with 1224 or that was refractory. So the Phase 3 is comparing R2, which is approved in this line and setting and versus is given by the fact that there is no restrictions for EPCO to be Additionally, we are testing in a Phase 1b2 which is the approved regimen.

Speaker 9

So this is with regard to R2. With regard to CLL and Richter, All of them failing ibrutinib and most of them BCL2 as well, most of them with mutations, so and there we found a very interesting and encouraging single agent activity. Conference call is being recorded based on the disease, in both disease. This study is actively ongoing and we plan to share more data in these two Thank you.

Speaker 1

We will take our next question.

Operator

Let's move to the next one. Yes, please go ahead.

Speaker 1

Please standby. Your next question comes from the line of Peter Welford from Jefferies. Please go ahead. Your line is open.

Speaker 14

Hi. Thanks for your questions. Just two quick ones. Firstly, a financial one. Just trying to understand the split of the P and L in terms of Should we be thinking about on the COGS side of things, there will be a cost of goods?

Speaker 14

My understanding was that you pay away 50% of the gross profit AbbVie and the cost of goods line. So I got a little bit confused, I guess, as to why that isn't there and how you whether you're going to disclose that in the future. And just on the split of costs, the guidance would seem to suggest relatively modest second half versus first half increase. So So is there any sort of one offs at all in the 2Q R and D that we should think about to explain the phasing? And then secondly, I just wanted to come back to a comment that Anthony made in the opening remarks about the cost where he said that some of the reason was increased and accelerated dose optimization work for EPCO is scheduled to improve the profile.

Speaker 14

Just curious if you can go into any more detail on that in terms of what does increase in accelerated dose optimization work mean? Thank you.

Operator

Thanks, Peter. And I will ask Anthony Pagan to address both of these questions and potentially you to step in on the second one. Anthony, why don't you get

Speaker 2

going? Yes, of course. In terms of The COGS and the elements being there, the cost of the actual product as well as the payaway to AbbVie, Peter, you're exactly spot on. Our view for Q2 was that it wasn't material. Once you have a chance to read the detailed financials, we disclosed that we put that in SG and A for this quarter.

Speaker 2

Moving forward, that will most likely be broken out as a separate line. Your second question around phasing, I wouldn't say there's nothing or anything too specific as it relates to the phasing. What you would have seen in Q1, Our year over year growth rate was 51%. Now on a year to date basis, that has moderated a little bit, now down to 45%. As you would imagine, as we think about H2 of last year, that's when we really started to put our foot on the gas pedal As it relates to a number of investment opportunities, including further building out the U.

Speaker 2

S. Market in anticipation of the launch for epikritamab. So I think the comps in the second half of the year in terms of OpEx will be in a different place relative to where they were in H1. And as it relates to specifically around phasing, there wasn't anything necessarily one offish in the first half of the year. Judith, you

Speaker 8

want to

Speaker 2

take address Peter's question on the dose optimization?

Speaker 9

Yes, sure. Thank you. To potentially provide the data to support it Kenly as best in class in terms of safety and efficacy.

Operator

I think, Peter, that's probably where we can leave it out.

Speaker 14

Sorry, so just to be clear, there's no other plan to make any fundamental sort of any changes beyond in terms of the device or in terms of the drug itself. This is purely for profound some of the work you've talked about before in terms of outpatients and in terms of flicker lymphoma dosing?

Operator

This is the step up dosing regimen, Peter. This is just basically to get a more optimal regimen for follicular lymphoma.

Speaker 14

That's great. Thank you.

Operator

All right. Thanks, Peter.

Speaker 1

Thank you. We will take our next question. And the question comes from the line of Matthew Phipps from William Blair. Please go ahead. Your line is open.

Speaker 6

Thank you for taking my questions. I know it can be tough this early in the launch, but what's any of can you contribute any of the upcoming sales to channel inventory that you might think And then the EMCORE DLBC-one Phase 3 trial recently changed on clinicaltrials dot gov pushing back the primary completion from 2024 to 2028. Wondering if that is what we should expect or if there's kind of other analysis that could come before that. Thank you.

Operator

So Matt, thanks very much for the questions. I missed the first one. I must admit I couldn't hear that. Maybe you can repeat the first one. The second one can definitely be answered by Jurepas for sure.

Operator

Can you repeat the first one, please?

Speaker 6

For Kinley, was there any kind of excessive channel inventory build initially that can sometimes happen, right when a drug

Operator

Okay. All right. Thanks, Matt. The first one, maybe you can Anthony Pekhana can address that one.

Speaker 2

Yes, sure. Happy to. As I highlighted in my opening remarks, look, I mean, we're super pleased With the launch so far, the team is in place. They're executing well. Feedback has been positive as Anthony Mancini highlighted.

Speaker 2

Look, I think we're talking about really pretty small numbers here, around a month of sales. There's nothing in the reported number, Matthew, that I would kind of be pointing you to really, really focus on it at this stage. And again, I think it's just small numbers, A month of sales, nothing that I would particularly get you to focus on other than what's already been said on today's call.

Operator

Thanks, Anthony. And then maybe you need a little bit of color on the time line change on the EPCOR diffuse that B cell lymphoma trial?

Speaker 9

Yes, I think in events driven studies, endpoints at events driven, you can have projections, you follow the course of events and project completion date based on course of events. So this is the only comment I can make.

Operator

Thank you. All right, Matt. That's probably it for these two questions. And then let's move to the next one. Operator?

Speaker 1

Your question comes from the line of Rajan Sharma from Goldman Sachs. Please go ahead. Your line is open.

Speaker 15

Hi. Thanks for taking my questions. Just 2. So firstly, on I and I and obviously that's an area that you're expanding into. So could you just kind of helps us understand where we may get some additional clarity on plans there and whether we may be able to get some clarity on what this specific asset or the first asset in I and I will be in, whether that will be this year.

Speaker 15

And then secondly, just on the additional investment behind EPCO, can Can you just help us understand how much of that is actually kind of a pull forward from what you're expecting to do in future years versus how much is kind of absolutely new?

Operator

Thanks, Sachin, for the questions. Let me give you a bit of color on INI. It's very early days. We have a number of programs internally, Which we are progressing preclinically and then they need to be tested in animal models and then the best ones will be ready potentially for clinical work. So that is a few years from clinical introduction, Rajan.

Operator

We also have, of course, the argenx partnership, where we We have 2 concrete targets we're working on, 1 for INI, 1 for cancer, but we are now creating the lead molecule. So also that is a furious of Clinical introduction. So we will actually update you in the future on the exact phasing, but we are only going for differentiated truly differentiated antibody based therapeutic candidates here. But the good thing is we have a number of programs already ongoing at Genmab And others starting up now with argenx, but the timing is still very much dependent on how effectively we can move forward to the preclinical and animal testing phase. And animal tested, some of the candidates are going to be slaughtered in pretty quickly.

Operator

So we are moving rapidly, But it's still a few years from clinical introduction in patients. Then for EPCO, the Investment question maybe to Anthony Percano.

Speaker 2

Yes. As we think about is investing in our business. We're always on the lookout for opportunities, particularly for epridimab, where we can expand and accelerate. And I outlined for you The areas which we've done that for so far this year in my opening remarks. As I think about the increase here, look, I think this is a little bit on the margin.

Speaker 2

We're probably talking about relatively small numbers. And I would say that the vast majority of this is is probably expansion of work and acceleration. And again, we're always looking for opportunities where it makes sense to From an investment perspective to expand and accelerate, particularly on epridumab, we're going to do just that. So I know, Rajat, I'm not really giving you a precise number, But I would leave you with those remarks and really for you to think about this as more of our investment framework and how we think about investing in our products And the majority would be around expansion.

Operator

Thanks, Anthony. Thanks, Christian. Let's move to the next question operator.

Speaker 1

Thank you. We will take our final question. Your final question comes from the line of Jonathan Chang from Leerink. Please go ahead. Your line is open.

Speaker 16

Hi, guys. This is Seth Kashid on for Jonathan. Just wanted to ask if you could sort of remind us how are you thinking about the potential positioning of opportunities for GEN-ten forty six compared to GEN-ten forty two? For example, like how could these products be potentially complementary to each other versus potentially being like more of an either or type of decision? Thank you.

Operator

That is a very detailed question for which we can give a very lengthy answer. But what I said publicly up to now We believe that we can actually position them differently in different settings and different tumors based on what we see in the clinic right now and that will become clearer Hopefully, in the coming months, when we are going to share data, I hope or we speak about the data at our post ASH events. The short version is we think that we can actually position them in different tumors and different settings. So they will not be an eitheror, Verite will be very clearly developed, we hope, in different therapeutic sessions.

Speaker 16

Thank you.

Operator

Thank you.

Speaker 1

Thank you. I would like to hand back for any closing remarks.

Operator

So thank you for calling in today to discuss Genrops Financial Results for the first half of twenty twenty three. If you have additional

Speaker 9

conference call is being recorded.

Operator

Please reach out to our Investor Relations team. We hope that you all stay safe and remain healthy and very much look forward to speaking with you again soon.

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Earnings Conference Call
PG&E Q2 2023
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