Summary: Genmab reports results for the six month period ended June 30, 2010 and
improved guidance.
Copenhagen, Denmark; August 17, 2010 - Genmab A/S (OMX: GEN) announced today
results for the six month period ended June 30, 2010 and improved guidance for
2010.
“The improvement to the guidance has been driven by the amendment to the
ofatumumab co-development and commercialization agreement with GlaxoSmithKline,
including the receipt of an upfront payment of GBP 90 million (DKK 815 million),
substantially improving the projected cash balance for the end of the year,”
said Prof. Jan van de Winkel, Ph.D., Chief Executive Officer of Genmab. Further
he added, “We are also encouraged and motivated by the growth of Arzerra sales
within the U.S. and the launch of the product in Europe.”
During the six month period ended June 30, 2010, Genmab reported the following
results:
- Revenues were DKK 276 million (USD 46 million) for the first half of 2010. In
the same period of 2009, Genmab recognized revenues of DKK 324 million (USD 53
million). The revenues consist primarily of deferred revenue and milestone
payments.
- An operating loss of DKK 240 million (USD 40 million). This compares to an
operating loss of DKK 213 million (USD 35 million) for the corresponding period
of 2009. The higher operating loss was mainly related to the decrease in
revenues compared to the first half of 2009.
- An income of DKK 65 million (USD 11 million) from net financial items for the
first half of 2010, compared to an income of DKK 18 million (USD 3 million) in
the same period of 2009. The increase was driven by unrealized foreign exchange
adjustments due to strengthening of the USD compared to the DKK.
- A net loss for continuing operations of DKK 191 million (USD 31 million)
compared to a net loss of DKK 201 million (USD 33 million) for the same period
in 2009. The net loss per share for continuing operations was DKK 4.25 (USD
0.70) for the first half of 2010 compared to DKK 4.47 (USD 0.74) for the first
half of 2009.
- A net loss of DKK 219 million (USD 36 million) compared to DKK 314 million
(USD 52 million) in the first half of 2009. This includes the results of our
manufacturing facility, which has been classified as held for sale and presented
as a discontinued operation due to our decision to sell the facility. The loss
for discontinued operation amounted to DKK 28 million (USD 5 million) in the
first half of 2010 compared to DKK 113 million (USD 19 million) in the first
half of 2009.
- Genmab ended the six month period with a cash position of DKK 931 million (USD
153 million), and a cash burn of DKK 350 million (USD 58 million). The cash burn
arises primarily from the investment in our research and development activities.
Highlights
During the second quarter of 2010, Genmab announced a number of business and
scientific highlights, as follows:
For ofatumumab:
- In April, GlaxoSmithKline (GSK) and Genmab announced that the European
Commission had granted a conditional marketing authorization for Arzerra for the
treatment of refractory chronic lymphocytic leukemia (CLL). The authorization
triggered a milestone payment of approximately DKK 87 million to Genmab.
- In April, we published net sales of Arzerra for the first quarter of 2010 of
approximately DKK 42 million, with an expected royalty payment to Genmab of DKK
8 million.
Pre-clinical antibody program:
- In April, we announced a new pre-clinical antibody program, HuMax-cMet™, as
well as a novel next generation bispecific antibody technology.
Change in Board of Directors and management:
- In June, three Genmab employees joined the board upon election in accordance
with the amendments to the Articles of Association adopted at the Annual General
Meeting. They were, Daniel J. Bruno, based in Princeton, N.J. USA, Nedjad Losic,
based in Copenhagen, Denmark and Dr. Tom Vink, based in Utrecht, The
Netherlands.
- In June, Genmab announced changes to its management and Board of Directors.
Lisa N. Drakeman, Ph.D., retired from her position as Chief Executive Officer
and Board Member of the company. The Chief Executive Officer position at Genmab
was filled by Prof. Jan G.J. van de Winkel, Ph.D., the company's former
President, Research and Development and Chief Scientific Officer.
Subsequent to the balance sheet date:
- In July, we amended the ofatumumab co-development and commercialization
agreement with GSK. Under the terms of the amendment, GSK will take
responsibility for developing ofatumumab in autoimmune indications while
continuing to jointly develop ofatumumab with Genmab in oncology indications.
Genmab received an upfront payment of GBP 90 million from GSK and Genmab's
future funding commitment for the development of ofatumumab in oncology
indications will be capped at a total of GBP 145 million, including a yearly
cash funding cap of GBP 17 million.
- In July, we announced positive interim data in the ofatumumab Phase II safety
and pharmacokinetics study in patients with relapsing-remitting multiple
sclerosis (RRMS).
- In July, we published net sales of Arzerra for the second quarter of 2010 of
approximately DKK 73 million, with an expected royalty payment to Genmab of DKK
15 million.
- In August, GSK and Genmab announced top-line results from the concluded
pivotal trial of ofatumumab in patients with fludarabine and alemtuzumab
refractory CLL.
- In August, Genmab announced top-line results from an initial Phase II single
arm open label study of ofatumumab to evaluate the treatment of relapsed Diffuse
Large B-Cell Lymphoma (DLBCL) in patients ineligible for or relapsed following a
stem cell transplant.
Outlook
Genmab is changing its 2010 financial guidance primarily as a result of the
amendment of the ofatumumab co-development and commercialization agreement with
GSK.
We expect our 2010 revenue, exclusive of royalties from Arzerra sales, to be
approximately DKK 475 - 525 million, compared to previous guidance of DKK 350 -
450 million. The improvement is mostly driven by the amended GSK agreement as
well as more certainty regarding the milestone associated with the start of a
new Phase III clinical trial which is anticipated to occur in the third quarter
of 2010. The projected revenue consists primarily of deferred revenue and
milestone payments. The deferred revenue included in this guidance is DKK 212
million, compared to DKK 217 million in the previous guidance. The new guidance
includes the amortization of the GSK upfront payment of GBP 90 million (DKK 815
million at the date of the agreement) as well as a modification to the
amortization of the remaining deferred revenue from the original GSK agreement.
Royalty income from Arzerra sales has not been included in the guidance above as
it is difficult to estimate product revenues given the short period that the
product has been on the market.
We anticipate that our 2010 operating expenses from continuing operations will
be DKK 825 - 875 million, which is lower than previous guidance of DKK 950 -
1,050 million. The decrease is primarily attributable to the amended agreement
with GSK; however, there are a number of partially offsetting items resulting in
the net decrease including:
- no funding of autoimmune development of ofatumumab by Genmab;
- expansion of oncology development of ofatumumab;
- reversal of accruals related to the development of ofatumumab (prior to
amended agreement); and
- expenses related to the departure of Genmab's former CEO.
We expect the operating loss from continuing operations for 2010 to be
approximately DKK 325 - 375 million, compared to the operating loss of DKK 550 -
650 shown in the previous guidance.
The discontinued operation guidance of DKK 60 million relates to the ongoing
running costs of the Minnesota manufacturing facility and represents a full 12
months of activity maintaining the facility in a validated state. This cost
could be lower if the facility is sold before the end of the year. The increase
from the previous guidance of DKK 55 million is solely due to the exchange rate
movement between the USD and DKK. We launched an active sales process and we
remain focused on entering a sale agreement towards the end of 2010. Further
details of the facility can be viewed at http://genmab-facility.com/.
The fair value of the manufacturing facility less costs to sell is estimated at
USD 145 million, approximately DKK 800 million at an exchange rate of 5.50.
Please refer to note 1 of the annual report 2009 for further details.
The cash projection in this guidance includes the upfront payment relating to
the amended agreement of GBP 90 million (DKK 815 million at the date of the
agreement). This payment was not included in the previous guidance.
As of December 31, 2009, we had cash, cash equivalents and marketable securities
of DKK 1,281 million. Therefore, we project a cash balance at the end of the
year of approximately DKK 2,175 - 2,275 million, compared to the previous
guidance of DKK 1,050 - 1,200.
--------------------------------------------------------------------------------
| 2010 Guidance | New | Previous |
--------------------------------------------------------------------------------
| | DKK | USD | DKK | USD |
| | Millions | Millions | Millions | Millions |
--------------------------------------------------------------------------------
| Revenue* | 475 - 525 | 78 - 86 | 350 - 450 | 58 -74 |
--------------------------------------------------------------------------------
| Operating expenses | (825) - | (136) - | (950) - | (157) - |
| | (875) | (144) | (1,050) | (173) |
--------------------------------------------------------------------------------
| Operating loss | (325) - | (54) - (62) | (550) - | (91) - (107) |
| continuing | (375) | | (650) | |
| operations | | | | |
--------------------------------------------------------------------------------
| Discontinued | (60) | (10) | (55) | (9) |
| operation | 800 | 145 | 800 | 145 |
| Facility sale | | | | |
--------------------------------------------------------------------------------
| GSK upfront | 815 | 134 | - | - |
| payment | | | | |
--------------------------------------------------------------------------------
| Cash at beginning | 1,281 | 211 | 1,281 | 211 |
| of year** | | | | |
--------------------------------------------------------------------------------
| Cash at the end of | 2,175 - | 358 - 375 | 1,050 - | 173 - 198 |
| year** | 2,275 | | 1,200 | |
--------------------------------------------------------------------------------
| * Not including Arzerra royalties |
| ** Cash, cash equivalents, and marketable securities |
--------------------------------------------------------------------------------
In addition to factors already mentioned, the estimates above are subject to
change due to numerous reasons, including the timing and variation of
development activities, related income and costs and fluctuations in the value
of our marketable securities, fair value less cost to sell related to our
manufacturing facility and currency exchange rates. The financial guidance also
assumes that no further significant agreements are entered into during 2010 that
could materially affect the results.
Conversion of Certain DKK Amounts to USD
For the convenience of the reader certain DKK amounts have been converted to
USD.
The expected sale of the Minnesota facility has been converted at a fixed
exchange rate of USD 1.00 = 5.50, keeping the DKK value at DKK 800 million,
consistent with the previous guidance. Conversion of all other line items from
DKK to USD in our 2010 guidance has been made using the Danish Central Bank
closing spot rate on June 30, 2010 of USD 1.00 = DKK 6.0702.
Conference Call
Genmab will hold a conference call to discuss the 2010 first half year results
tomorrow, Wednesday, August 18, 2010, at
3.00 pm CEST
2.00 pm BST
9.00 am EDT
The conference call will be held in English.
The dial in numbers are as follows:
+1 866 966 9439 (in the US) and provide conference ID no. 94094535
+ 44 (0) 1452 555 566 (outside the US) and provide conference ID no. 94094535
A live webcast of the call and relevant slides will be available at
www.genmab.com. The webcast will also be archived on Genmab's website.
About Genmab A/S
Genmab is a leading international biotechnology company focused on developing
fully human antibody therapeutics for the potential treatment of cancer.
Genmab's world class discovery and development teams are using cutting-edge
technology to create and develop products to address unmet medical needs. Our
primary goal is to improve the lives of patients who are in urgent need of new
treatment options. For more information on Genmab's products and technology,
visit www.genmab.com.
This Stock Exchange Release contains forward looking statements. The words
“believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions
identify forward looking statements. Actual results or performance may differ
materially from any future results or performance expressed or implied by such
statements. The important factors that could cause our actual results or
performance to differ materially include, among others, risks associated with
product discovery and development, uncertainties related to the outcome and
conduct of clinical trials including unforeseen safety issues, uncertainties
related to product manufacturing, the lack of market acceptance of our products,
our inability to manage growth, the competitive environment in relation to our
business area and markets, our inability to attract and retain suitably
qualified personnel, the unenforceability or lack of protection of our patents
and proprietary rights, our relationships with affiliated entities, changes and
developments in technology which may render our products obsolete, and other
factors. For a further discussion of these risks, please refer to the section
“Risk Management” in Genmab's Annual Report, which is available on
www.genmab.com. Genmab does not undertake any obligation to update or revise
forward looking statements in this Stock Exchange Release nor to confirm such
statements in relation to actual results, unless required by law.
Genmab(R); the Y-shaped Genmab logo(R); HuMax(R); HuMax-CD20(R); HuMax-EGFr(TM);
HuMax-IL8(TM); HuMax-TAC(TM); HuMax-HepC(TM); HuMax-CD38(TM); HuMax-CD32b(TM);
HuMax-TF(TM); HuMax-Her2(TM); HuMax-VEGF(TM); HuMax-Wnt; HuMax-cMet(TM) and
UniBody(R) are all trademarks of Genmab A/S. Arzerra(R) is a trademark of
GlaxoSmithKline.
Contact: Helle Husted, Vice President, Investor Relations, T: +45 33 44 77 30,
M: +45 25 27 47 13, E: h.husted@genmab.com
Stock Exchange Release no. 30/2010
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