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Research Tree provides access to ongoing research coverage, media content and regulatory news on Genmab. We currently have 14 research reports from 1 professional analysts.
Genmab released its Q2 18 results in which the top-line was in line with our estimates while profitability exceeded expectations. Total revenue came in at DKK509.6m (vs. Q2 17: DKK773.3m, which benefited from higher milestone income) with royalties from Darzalex being the largest contributor. Net sales for the multiple myeloma/MM drug reached $511m (+18.3% qoq), resulting in royalties of DKK385m from its collaboration partner, Janssen. Reimbursement income of DKK47m (from Seattle Genetics and BioNTech) and milestone income of DKK40m (from Janssen and Novo Nordisk) were the other key revenue contributors during the quarter. On the other hand, net sales for Arzerra slumped to $4m (-50% yoy; affected by the stiff competition) translating into a c.46% decline in royalties from Novartis (DKK6m). Operating profit for Q2 18 came in at DKK135m (vs. Q2 17: DKK536.4m) as Genmab continued with its budgeted R&D investments (+c.58% yoy; R&D accounted for c.86% of the opex base). In addition, higher employee costs (to support the expansion of the product pipeline) and continued investments to build the commercial infrastructure further suppressed profits. For FY18, management has reiterated its revenue as well as profitability guidance. On the regulatory front, the European Medicines Agency/EMA issued a positive opinion for the use of Darzalex (in combination with Velcade) in the frontline MM setting in July 2018. In addition, Genmab entered into a collaboration agreement with Immatics Biotechnologies to strengthen its presence in the immuno-oncology space (Genmab will pay an upfront fee of $54m). According to the terms of the agreement, Genmab’s duobody technology will be used with Immatics ‘XPRESIDENT’ T-cell receptor capabilities to develop next-generation bi-specific immunotherapies.
Following safety concerns at a planned review, Genmab’s collaboration partner ‘Janssen’ has decided to terminate the phase Ib/II study of Darzalex in combination with Roche’s PD-L1 antibody (Tecentriq) for previously treated non-small cell lung cancer. The findings of the study prompted Janssen to discontinue the phase I study of Darzalex along with Janssen’s PD-1 blocker for multiple myeloma as well.
Genmab released its Q1 18 results in which the top-line came in broadly in line with our estimates while profitability came in a tad below expectations. Total revenue for the quarter jumped to DKK681m (vs. Q1 17: DKK251m) benefiting from a c.DKK300m upfront payment from Novartis (due to an amendment in Arzerra’s collaboration agreement). In addition, net sales for multiple myeloma/MM drug ‘Darzalex’ reached $432m (vs. Q1 17: $255m), generating royalties of DKK310m for the Danish biotech firm. However, the sluggish performance continued for Arzerra (net sales of $7m vs. $10m in Q1 17) resulting in a decline in royalty income to DKK8m (vs Q1 17: DKK14m). As the benefits of higher revenue were partly offset by increased operating expenses (due to investments in tisotumab vedotin and other R&D pipeline), operating income came in at DKK324m for Q1 18 (vs. Q1 17: DKK46m). Management has reiterated its financial targets for FY18. On the regulatory front, the US FDA approved Darzalex (in combination with Velcade; based on ALCYONE study) as a first line of treatment for MM in May 2018.
Genmab released its FY17 results in which the top-line came in broadly in line with our estimates while profitability came in a tad above expectations. Total revenue jumped to DKK2.36bn (vs. FY16: DKK1.82bn), benefiting from higher royalties from multiple myeloma/MM drug ‘Darzalex’. Net sales for the drug reached $1.24bn (+117% yoy; within the guidance range of $1.1-1.3bn), resulting in royalties of DKK1.01bn from collaboration partner, Janssen. In addition, milestone income of DKK1.13bn (primarily from Janssen) was the other key revenue contributor. On the other hand, net sales for chronic lymphocytic leukaemia drug ‘Arzerra’ slumped to $36m (-22% yoy; affected by the stiff competition) translating into a c.24% decline in royalties from Novartis (DKK48m). For FY17, the operating profit came in at the higher end of the guidance range (DKK1.35bn vs. guidance: DKK1.19-1.39bn) due to lower than anticipated R&D expenses. For FY18, management expects revenue to be in the DKK2.7-3.1bn range, primarily consisting of Darzalex royalties of c.DKK1.75bn (based on net sales of $2-2.3bn; average royalty rate: c.13.5%). In addition, Darzalex milestones of c.DKK550m and one-time payment of c.DKK300m from Novartis (related to the transition of Arzerra from commercial availability to compassionate use programmes in non-US markets) would bolster the top-line further. With anticipated operating expenses of DKK1.4-1.6bn, operating profit is expected to be in the DKK1.3-1.5bn range for FY18.
Genmab is down c.30% from its lifetime high levels (in March 2017) as a lower than expected sales performance for Darzalex in Q3 17 triggered a sell-off in October 2017. Moreover, the 40-50% increase in operating expenses guided for FY18 further aggravated the pain in December 2017 (on a FY17 base of c.DKK1.1bn; primarily related to R&D). Below we analyse whether Genmab is still a worthy ‘Buy’?
Genmab released its Q3 17 results which were well below the street’s expectations. The reported revenue came in at DKK323.5m as the growth momentum decelerated (on a sequential basis) for the multiple myeloma/MM drug ‘Darzalex’. Genmab’s collaboration partner Janssen/J&J reported net sales of $317m for the drug (vs AV’s estimate: $355m; +6% qoq vs Q2 17: +17.3%) resulting in royalty income of DKK253m for the Danish biotech firm (accounted for c.78% of Q3 17 revenue). Note that, as sales of Darzalex have exceeded $750m in a calendar year (9M 17 sales: $871m), the royalty rate has moved up to the next tier (13% vs 12% earlier). Also, with dismal performance continuing for Arzerra (net sales of $9m vs Q3 16: $10m), royalties from Novartis were down 21.4% yoy (DKK11m; accounted for c.3% of Q3 17 revenue). The remainder of the revenue was derived from milestone income, deferred revenue and reimbursement income under R&D collaboration agreements with various pharmaceutical firms. The operating profit came in at DKK58.3m as Genmab continued with its budgeted R&D investments despite lower revenue (R&D accounted for c.86% of the opex base). In addition, higher than expected financial charges (forex movements negatively impacted the dollar-denominated portfolio) resulted in a net loss of DKK5.7m for Q3 17. On the regulatory front, Darzalex was approved as a second line treatment for MM in Japan in September 2017 (triggering a milestone payment of $25m/c.DKK160m upon the first sale in November 2017). As anticipated, Genmab received milestone income of $50m in November 2017 as sales of Darzalex crossed $1bn in a calendar year. Also, based on encouraging data from the phase I/II clinical trial of tisotumab vedotin in recurrent/ metastatic cervical cancer, Genmab/Seattle Genetics initiated a new phase II study in October 2017 (patient enrolment to start in H1 18; trial could form the basis for approval in the US). With earlier than anticipated launch of Darzalex in Japan, management has upgraded its FY17 revenue (DKK2.11-2.31bn; +DKK160m vs previous guidance) and operating profit guidance (DKK1.06-1.26bn).
Genmab released its Q2 17 results, wherein revenue and profitability came in slightly ahead of our estimates as well as market consensus. Reported revenue increased to DKK773.3m (vs AV’s estimate: DKK763m; Q1 17: DKK250.8m) primarily driven by higher than expected milestone income from the multiple myeloma/MM drug ‘Darzalex’ (DKK489m vs AV’s estimate: DKK475m; mainly related to second-line approval in Europe and third-line approval in the US). Net sales for the drug reached $299m (vs AV’s estimate: $305m; +177% yoy) resulting in royalty income of DKK243m from the collaboration partner Janssen (including milestones and royalties, Darzalex accounted for c.96% of group’s revenue in Q2 17). However, due to stiff competition in the chronic lymphocytic leukaemia space, sales for Arzerra were down 38.5% yoy (Q2 17: $8m), translating into a 35.3% decline in royalties from Novartis (DKK11m; accounted for c.2% of group’s revenue in Q2 17). Operating profit came in at DKK536m (vs AV’s estimate: DKK513m), led by the operating leverage. However, higher than expected financial charges (currency movements negatively impacted the dollar-denominated portfolio) and tax expenses (deferred tax assets not utilised yet) lowered the EPS to DKK5.05 per share (vs AV’s estimate: DKK8.2 per share). For FY17, management has reiterated its revenue (DKK1.95-2.15bn) and operating profit guidance (DKK0.9-1.1bn). On the regulatory front, Darzalex reported strong interim data in the front-line MM setting (phase III ALCYONE study combining Darzalex with Velcade met its primary endpoint; improved progression free survival by 50%). In addition, Genmab reported encouraging preliminary data from an ongoing phase I/II study of tisotumab vedotin in relapsed cervical cancer. Foreseeing additional potential in six other solid tumours, Seattle Genetics has opted-in for the drug’s co-development programme (costs and profits to be shared equally going forward).
Genmab released its Q1 17 results which werer slightly below our estimates (both top-line and profitability). Reported revenue came in at DKK251m (vs AV’s estimate: DKK280m; +47% yoy) as the increase in royalty income (DKK225m vs Q1 16: DKK100m) was partially offset by lower than expected milestone income (nil vs Q1 16: DKK45m; milestones deferred by a few months). Net sales for the multiple myeloma ‘MM’ drug ‘Darzalex’ reached $255m (vs Q1 16: $101m), resulting in a royalty income of DKK211m (c.84% of Q1 17 sales) from its collaboration partner ‘Janssen’ (royalty rate: c.12%; Q1 16: DKK83m). However, net sales for Arzerra (c.6% of Q1 17 sales) were down 17%, translating into an 18% decrease in royalties from Novartis (DKK14m vs Q1 16: DKK17m; impacted by continued competitive pressure in the refractory chronic lymphocytic leukaemia market). Operating income came in at DKK46m (vs AV’s estimate: DKK50m) as the additional investments in pipeline products led to a 33% increase in operating expenses (reached DKK205m in Q1 17). For FY17, management has reiterated its revenue (DKK1.95-2.15bn) and operating income (DKK0.9-1.1bn) guidance. On the regulatory front, Darzalex received a label expansion approval in Europe in April 2017, wherein the drug was approved as a second-line of treatment for MM (first sale to trigger milestone payment of $48m from Janssen). The drug will be used in combination with either Revlimid or Velcade, the same arrangement which was approved in the US in November 2016. In addition, the US FDA approved the drug in the third-line setting in June 2017 (in combination with Pomalyst; triggered milestone payments of $25m).
Genmab released Q4 FY16 results broadly in line with our estimates as well as market consensus. The reported revenue came in at DKK927m (+61.2% yoy), primarily on the back of higher royalties and milestone payments under the Darzalex collaboration agreement with Janssen. For FY16, the reported revenue reached DKK1,816m (+60.3% yoy; -10bp vs AV’s estimate) with Darzalex being the primary contributor (accounts for c.86% of FY16 revenue). Sales for the drug reached $572m (vs FY15: $20m), resulting in higher royalty income for Genmab (DKK458m vs FY15: DKK16m). Moreover, a number of regulatory submissions/approvals in the US and Europe triggered milestone payments of DKK1,096m during the year (vs FY15: DKK587m; FY16 number also includes sales volume milestone payment of $25m). However, net sales for Arzerra were down 19% yoy (accounts for c.4% of FY16 revenue), resulting in a 17% decrease in royalty income from collaboration partner ‘Novartis’ (DKK63m vs FY15: DKK76m). The operating margin came in at 58% (+50bp vs AV’s estimate) on the back of higher revenue, but was slightly offset by increased investments in the R&D (DKK661m vs FY15: DKK488m). Moreover, higher financial income (due to favourable currency movements) and tax credits underpinned the EPS to DKK19.83 (vs AV’s estimate: DKK17.4). For FY17, management expects revenue and operating income to come in at around DKK1,950-2,150m and DKK900-1,100m, respectively.
Recommendation and upside We are initiating coverage of Genmab (market cap. of DKK68.6bn/€9.2bn and a float of 100%) with an ‘Add’ recommendation and a target price of DKK1,238 (c.9% upside). Our upside is driven by the company’s multi-blockbuster potential drug ‘Darzalex’, strict cost management and a cash surplus business model. Darzalex’s approval as a fourth line of therapy for multiple myeloma ‘MM’ in November 2015 triggered a spectacular rally in the stock, with the share price surging c.70% in the subsequent seven months. However, the stock has remained range-bound since then and is currently trading c.15% below its all-time high. Moreover, Darzalex’s recent approval as a second line of treatment for MM (in November 2016) has triggered the next growth phase for the stock. Given the clinical profile, we also expect Darzalex to get approval in the frontline setting as well (by 2019/20) and thus further propel growth in the long run. While we acknowledge Genmab’s upside potential, we restrict our recommendation to an ‘Add’, as we await the ‘on the ground’ performance of the drug in the second line setting and interim data from the frontline studies. Business and Trends Genmab is a Denmark-based biotech company with two approved antibodies for cancer treatment – Darzalex (c.79% of 9M 16 revenue) and Arzerra (c.5% of 9M 16 revenue). The remainder of the revenue is attributed to deferred/reimbursement income from the pipeline drugs. Darzalex was approved by the FDA in November 2015 (Europe in May 2016), as a monotherapy for the fourth line of treatment for MM. Based on superior clinical efficacy data vs rival drugs, Darzalex was also approved in the second line setting (Europe approval expected by H1 17). The second line approval has significantly expanded the target population of the antibody, more than doubling the number of patients eligible to use Darzalex. Moreover, patients tend to stay on therapy for a long time (patients are less sick when the treatment starts in second line vs third line), resulting in higher revenue per patient and, in turn, higher royalties for Genmab. The company is also conducting trials for the third line and frontline setting, and, once approved, Darzalex has the potential to change the current landscape of the MM industry further. The global market for MM is valued at $8.9bn and is dominated by Revlimid/Celgene (c.43% share) and Velcade/Takeda/Janssen (c.33% share), with Darzalex holding an insignificant market share (<5%; it was used in the third line-plus setting until late 2016). The MM market size is expected to more than double to $22.4bn by 2023 and, given the better clinical profile of Darzalex, it is expected to grab a significant slice of the market in the mid/long term. Genmab’s other antibody ‘Arzerra’ was approved in 2009 in the US (Europe in 2010); however, it has not been a commercial success due to its narrow label approval and the lack of differentiation vs the market leader ‘Rituxan/Roche’. Genmab is now working to revive its Arzerra franchise by making inroads in the multiple sclerosis ‘MS’ market. Although the $14.9bn MS market offers larger market opportunities, it would not be easy for Genmab to compete with Roche in this domain. Need to know Genmab has relied on strategic partnerships with pharmaceutical companies to fund its R&D activities and bring the products to the market (Darzalex is out-licensed to Janssen/J&J and Arzerra is out-licensed to Novartis). Genmab is entitled to milestone payments (c.52% of 9M 16 revenue) and royalties (c.39% of 9M 16 revenue) under these collaboration agreements, which are also the primary FCF drivers as the operating expenses have been kept under control over the last five years. However, the royalty income is expected to contribute the lion’s share in the top-line post Darzalex’s approval in the second line setting. Genmab is also building a pre-clinical pipeline of c.25 programmes to identify the ‘next big winner’ and ensure sustainable long-term value creation. The company plans to bring the next product to the market by 2025 with complete/significant ownership (plans to hold on to at least 50% of the rights) and is focusing on next-gen antibody technologies (duobody, hexabody and antibody drug conjugate). The diversity of antibodies in the clinical pipeline reaffirms our belief in Genmab’s long-term growth potential. Upcoming triggers We expect the next triggers for the company to be the second line approval of Darzalex in Europe (expected by H1 17) and third line approval (in combination with pomalyst and dexamethasone) in the US (expected to come before the PDUFA date of June 2017). Moreover, the interim data from one of the studies in the frontline setting (expected in H2 17) is also highly awaited.
Q1 sales were DKK 170m (vs DKK107m); operating expenses were DKK154m (vs DKK110m); operating income was DKK16m (vs 173m); the cash position was DKK3,491m similar to the end-FY15 position.
Daratumumab accounted for 62% of FY15 revenues (DKK1,133m) and is expected to account for 82% in FY16. FY15 operating income was DKK730m and is expected to be between DKK25-75m in FY16. The cash position at end of year was DKK3.5bn and is expected to be DKK3.3-3.4bn at end of FY16.
1/ The FDA has granted accelerated approval to Daratumumab for multiple myeloma patients who have received at least three prior treatments. Approval comes ahead of the 9 March Pdufa date. 2/ Q3 revenues increased by 2.3%, operating profit by 2.9% and net profit decreased by 12.5%. The cash position at the end of September is DKK3,206m. For the first nine months, revenues decreased by 12%, adjusted operating profit by 12.2% and net profit increased by 61%.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Genmab. We currently have 14 research reports from 1 professional analysts.
Here we go again – the company reporting season is gathering pace. The MPC is likely to leave rates unchanged although expectations still remain for an increase next year. The UK economy expanded at a faster pace in July helped by the weather and better retail sales. General sentiment continues to be impacted by tariff concerns, combined with Brexit uncertainty. As Table 1 shows, all major indices have fallen over the last month. In Share News & Views, we comment on AorTech*, Bonhill*, DeepMatter*, EU Supply* James Fisher, Haynes, Hunting , Location Sciences*, Marshall Motor and Synectics*.
Companies: AOR APC BMS CRPR DMTR ESC EUSP FDM FA/ GETB LSAI PCF SNX TCN W7L
Medica is the UK market leader in teleradiology, providing outsourced image analysis and reporting services to the NHS and private sector. It is benefitting from structural growth in demand for complex medical images and an NHS struggling to manage workflows efficiently. We view the current share price weakness as being temporary and offering a strong buying opportunity. The valuation is very attractive given the strong mid-teens organic growth outlook. We initiate coverage with a Buy recommendation and 186p TP, offering a TSR of 30%.
Companies: Medica Group
September’s Hardman Monthly features an article from guest contributor, Tim Ward. Tim is the Chief Executive of the Quoted Companies Alliance (QCA), an organisation that champions the interests of small to mid-size quoted companies.
Companies: OPM AVO AGY APH ARBB AVCT BNO CMH DNL EVG GDR INL KOOV MCL MUR NSF OXB PHP RE/ REDX SCLP SCE SIXH TRX TON VAL W7L
The UK market for social services for children and adults is worth £16bn and growing at 3-4%. CareTech is one of the most experienced providers, and delivers above-sector regulatory scores, below-sector staff churn and margins 2x that of its peers.
Hutchison China MediTech’s (HCM) lead TKI asset, fruquintinib, has received China registration approval from the National Medical Products Administration of China (NMPA) for the treatment of CRC (third line). The approval serves as a major validation of the R&D innovation strategy, which HCM has cultivated over the years. This is the first innovative drug for an oncology indication, discovered and developed in China through a randomized clinical trial, to be unconditionally approved in that country. We expect launch in China by HCM and partner Eli Lilly during Q418. The approval has triggered a $13.6m milestone payment to HCM from Lilly. Our revised valuation is £74/ share.
Companies: Hutchison China Meditech
Interim results to 30 June 2018 showed like-for-like (IAS18) 13% revenue growth to £3.63m, which resulted in a reduced pre-tax loss of £0.22m (£0.39m). Period-end cash was £0.88m. The transition to IFRS 15 standards, in which software revenues will be recognised over the period of a contract rather than immediately, has proved to be more egregious than anticipated, resulting in IFRS15-based revenues of £2.75m. Consequently, we are reducing our FY 2018 and 2019 revenue and EBITDA forecasts by £1m and £0.9m, respectively. That said, the company is considered to be in a most interesting phase of commercialisation with clearly identified sales drivers and a raft of new products generating substantial interest from large pharma, as manifest in yesterday’s first contract for its voice biomarker cognition product, NeuroVocalix. A book to bill ratio of 1.77, strong order book (129% up on prior year) and watershed moment in mental health assessment underpins our belief in the investment case and, therefore, we maintain our 175p price target.
Companies: Cambridge Cognition
In Q2, UK equities regained some of their poise after the draw down in Q1, although uncertainty around Brexit continued to grab the headlines. On the back of this, investor concern about the UK economy has been understandable in recent months given a number of negative data points. However, we see reasons for optimism for UK Plc with wage growth supporting an improving outlook for the consumer and business investment holding up. That said, continuing UK political disruption clearly remains a risk going forward.
Companies: AMER EMR HMI JOG PDG ABBY AMS AVON BLVN PIER CGS CALL CSRT TIDE DTG DEMG ELM EMR FPM FPO GTLY GENL GOR GEEC HDY HMI HAYD HEAD HILS HTG HUR IBPO IOG INDI JHD JOG LAM MACF MKLW NAH OXIG PCA PKG CAKE PDG RBW REDD RSW RNO RKH ROR SUS SCPA SHG SIV TRAK TRI VTC ZTF
Bioquell has reported a strong set of interim results, with reported revenues +9% to £15.7m. Excluding Defence sales and the disposed-of Airflow business, like-for-like revenues increased by 15% on a constant currency basis. In light of the strong H1 showing and positive commentary over the outlook, we upgrade our EPS forecasts by 10% this year and 13% in FY19, the fourth double digit upgrades we have made in the last 12m. The growth opportunity is by no means exhausted however and we see the FY19 rating of under 10x EV/EBITDA as extremely undemanding.
Highlights from Hutchison China MediTech’s (HCM) H118 results relate to the substantial pipeline-related newsflow expected in 2018/19, the recent expansion of its US and international operations (which will enable HCM to execute its international R&D and commercialization strategies) plus strong operational and financial performance by the China commercial platform division. Fruquintinib (third-line CRC) remains on track to launch in China by year end (approval decision expected by the CNDA in the next few months). Encouraging Phase II data so far on savolitinib (first-line NSCLC exon14m/deletion) could lead to accelerated approval in China, contingent on final data (expected in 2020) being consistent with data to date. We value HCM at $6.4bn.
Companies: Hutchison China Meditech
GSK’s Q2 revenue came in line with our expectations, but was marginally ahead of the street. Pharma remained mediocre, consumer health was steady and vaccines robust. Guidance for the year was upgraded. Apart from reiterating the decision to keep the group intact, GSK announced some strategic decisions – a restructuring programme with annual cost savings of £400m by 2021, R&D focused on immune system and genetics and a collaboration with 23andMe for research in genetics.
Hardman & Co’s analysts have direct experience of uncovering accounting frauds. In this article, Steve Clapham outlines why we might see a surge in them over the next few years. He is engaged by institutions to teach their fund managers and analysts how to identify risks brought about by such frauds. Hardman & Co is pleased to offer this service to private investors.
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Yesterday’s deal with Norgine does several critical things to transform the outlook for Shield. Firstly, the upfront payment ensures that Shield has enough capital for at least 12 months including filing and potential approval of Feraccru in the US (for which Shield retains the economics).
Companies: Shield Therapeutics
Another strong year, in line with market expectations. FY18 revenues were +6% yoy in l.c. with adj PBT +9% to give adj EPS +15% and div +10%. ABS was the main contributor to growth while EU & LatAm PIC displayed strong royalty expansion (+32% and +15% yoy).
Orexo’s appeal of the US District Court’s invalidation of the ‘330 patent, which had been anticipated for some months, has been successful. Zubsolv is Orexo’s largest and fastest-growing product – we anticipate sales of c SEK620m and over 25% growth in FY18. The initial invalidity of the ‘330 patent had weighed on the shares since 2014 and this overhang has now been removed. The exclusivity of the Zubsolv patents runs until 2019 and 2032. We have updated our valuation ahead of the Q318 results.
The acquisition of Vocare (announced 6 October 2017) sees Totally move into the provision of urgent care, in-line with the company’s stated buy and build strategy within the NHS outsourced, out-ofhospital care market. We believe there are clear opportunities within the urgent care market as the NHS seeks to relieve the strain on its A&E service. Further the acquisition should offer integration opportunities with Totally’s existing services. We issue updated financials, including the acquisition, and re-instate our Buy recommendation.