Ad-hoc | 9 November 2010 17:37
Genmab A/S
09.11.2010 17:37
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- Significant reduction in operating loss to DKK 73 million in first nine months
of 2010 compared to DKK 361 million in 2009
- Fair value of Minnesota manufacturing facility reduced by DKK 130 million;
projected sale moved into 2011 impacting projected cash balance in the updated
guidance
- Updated guidance includes Arzerra royalty income and DKK 125 million
improvement in operating loss
Copenhagen, Denmark; November 9, 2010 - Genmab A/S (OMX: GEN) announced today
results for the nine month period ended September 30, 2010 and updated 2010
financial guidance.
'We have made a number of significant steps towards securing Genmab's future
during the third quarter, including updating our corporate strategy, clarifying
plans for ofatumumab and zalutumumab and implementing a reorganization that will
reduce operating expenses by DKK 30 million annually,' said Jan van de Winkel,
Ph.D., Chief Executive Officer of Genmab. Further he added, 'Our focus on the
most dominant priorities has led to a significant reduction in operating
expenses which will help us grow into a sustainable and profitable business.'
During this period, Genmab reported the following results:
- Revenues were DKK 491 million (USD 90 million) for the nine months period
ended September 30, 2010. In the same period of 2009, Genmab recognized revenues
of DKK 393 million (USD 72 million). The revenues consist primarily of deferred
revenue and milestone payments.
- An operating loss of DKK 73 million (USD 13 million). This compares to an
operating loss of DKK 361 million (USD 66 million) for the corresponding period
of 2009. The improved operating result was mainly related to an increase in
revenues and a reduction in the research and development costs compared to the
first nine months of 2009.
- A net loss for continuing operations of DKK 66 million (USD 12 million)
compared to a net loss of DKK 228 million (USD 42 million) for the same period
in 2009. The net loss per share for continuing operations was DKK 1.46 (USD
0.27) for the first nine months of 2010 compared to DKK 5.08 (USD 0.93) for the
first nine months of 2009.
- A net loss of DKK 238 million (USD 44 million) compared to DKK 403 million
(USD 74 million) for the first nine months 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 172 million (USD 32 million)
for the first nine months of 2010 compared to DKK 175 million (USD 32 million)
for the first nine months of 2009. The fair value less cost to sell the facility
has been reduced from approximately USD 145 million to USD 120 million as of
September 30, 2010, resulting in a non-cash impairment charge of approximately
DKK 130 million (USD 24 million). This charge is included in the DKK 172 million
(USD 32 million) mentioned above.
- Genmab ended the nine month period with a cash position of DKK 1,694 million
(USD 310 million). This represents a net increase of DKK 413 million (USD 75
million) compared to the end of December 2009 which is primarily related to the
upfront payment received from GSK partially offset by the ongoing investment in
our research and development activities.
Third Quarter 2010 Highlights
- In July, GSK and Genmab announced an amendment to the ofatumumab
co-development and commercialization agreement. Under the terms of the
amendment, GSK will take responsibility for developing ofatumumab in autoimmune
indications whilst continuing to jointly develop ofatumumab with Genmab in
oncology indications.
- In September, GSK and Genmab announced plans to focus on the development of
the subcutaneous delivery of ofatumumab in autoimmune indications and will stop
further development work on the intravenous route of administration in
autoimmune disease.
- In September, the first patient was treated in the Phase III study of
ofatumumab in patients with indolent B-cell non-Hodgkin's lymphoma (B-NHL) who
did not respond to or progressed during, or within 6 months of a rituximab
containing regimen. This event triggered a milestone payment to Genmab of
approximately DKK 116 million.
- In September, Genmab updated its corporate strategy whereby it will focus on
its core competence of antibody creation and development, turn science into
medicine by producing antibodies with significant commercial potential, while
striving to build a profitable and successful company.
- Genmab entered into a research collaboration agreement with Seattle Genetics
to utilize Seattle Genetics' antibody-drug conjugate technology with HuMax-TF in
September.
Subsequent to the balance sheet date
In October Genmab announced:
- An agreement to create and develop antibodies for central nervous system
disorders with H. Lundbeck A/S. If all milestones in the agreement are achieved,
the total value of the agreement to Genmab would be approximately EUR 38 million
(approximately DKK 283 million at the date of the agreement), plus single-digit
royalties.
- An update on the potential regulatory pathway for zalutumumab following
preliminary, non-binding discussions with a number of selected national European
regulatory authorities and the FDA.
- Net sales of Arzerra for the third quarter of 2010 of approximately DKK 78
million, with an expected royalty payment to Genmab of DKK 15.6 million.
- Plans to reorganize its workforce and reduce staff by approximately 33
positions as part of its strategy to build a profitable and successful biotech
company. The annualized impact of the reorganization is estimated to yield
savings of approximately DKK 30 million.
- The start of a Phase III study of single agent ofatumumab compared to single
agent rituximab in patients with follicular non-Hodgkin's lymphoma (NHL) that
has relapsed at least 6 months after completion of treatment with a
rituximab-containing regimen to which they responded.
Outlook
Genmab is changing its 2010 financial guidance primarily as a result of a
reduction in the fair value of the Minnesota manufacturing facility and a delay
of the anticipated sale into 2011. We have also, for the first time, included
Arzerra royalty income in the financial guidance.
We expect our 2010 revenue, including DKK 55 million of royalties from Arzerra
sales, to be approximately DKK 575 - 585 million compared to the previous
guidance of DKK 475 - 525 million. This improvement is mostly driven by the
inclusion of the royalty income from Arzerra sales, although given the
difficulty of estimating product revenues due to the short period that the
product has been on the market the estimated royalties for the fourth quarter
have been kept constant with the actual royalties reported in the third quarter.
We anticipate that our 2010 operating expenses from continuing operations will
be DKK 775 - 825 million compared to DKK 825 - 875 million shown in the previous
guidance. The decrease is primarily attributable to an anticipated reduction in
the charges from GSK relating to the development of ofatumumab.
The operating expense also includes the impact of the reorganization which was
announced on October 25, 2010, with an approximate reorganization and transition
expense impact of DKK 29 million in 2010.
We expect the operating loss from continuing operations for 2010 to be
approximately DKK 200 - 250 million, compared to the operating loss of DKK 325 -
375 shown in the previous guidance. The improvement is due to the increased
revenue, including the inclusion of royalty income and decreased operating
expenses as discussed above.
The discontinued operation guidance of DKK 55 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. The decrease
from the previous guidance of DKK 60 million is mostly due to the exchange rate
movement between the USD and DKK.
In September, a non-cash impairment charge of approximately DKK 130 million was
recognized, as the fair value less cost to sell of the manufacturing facility
has been reduced from approximately USD 145 million to USD 120 million as of
September 30, 2010. Sales related costs are still estimated to be approximately
USD 5 million. Please refer to the Manufacturing section and note 2 in the
interim report for further details.
In 2009, we launched an active sales process and we remain focused on entering a
sales agreement. However, the sale of the facility has been removed from the
2010 guidance as it is now projected that the sale will take place in 2011 due
to a change in the general market conditions.
The cash projection includes the upfront payment relating to the amended
agreement of GBP 90 million (DKK 815 million at the date of the agreement) as
included in the previous guidance.
As of December 31, 2009, we had cash, cash equivalents and marketable securities
of DKK 1,281 million. Excluding the sale of the manufacturing facility, the
projected cash balance is now expected to be approximately DKK 1,475 - 1,525
compared to DKK 1,375 - 1,475 in the previous guidance.
As the anticipated sale of the facility has been moved into 2011, the projected
cash balance shown above will be below the previous projected balance at the end
of the year (including the facility sale) of approximately DKK 2,175 - 2,275
million.
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| 2010 Guidance | Revised | Previous |
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| | DKK | USD | DKK | USD |
| | Millions | Millions | Millions | Millions |
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| Revenue | 575 - 585 | 105 - 107 | 475 - 525 | 87 - 96 |
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| Operating expenses | (775) - | (142) - | (825) - | (151) - |
| | (825) | (151) | (875) | (160) |
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| Operating loss | (200) - | (37) - (46) | (325) - | (60) - (69) |
| continuing | (250) | | (375) | |
| operations | | | | |
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| Discontinued | (55) | (10) | (60) | (11) |
| operation | (130) | (24) | - | - |
| Non-cash | | | | |
| impairment charge | | | | |
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| Opening cash* | 1,281 | 235 | 1,281 | 235 |
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| GSK upfront | 815 | 149 | 815 | 149 |
| payment | | | | |
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| Closing cash with | 1,475 - | 270 - 279 | 1,375 - | 252 - 270 |
| GSK* | 1,525 | | 1,475 | |
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| Facility sale | - | - | 800 | 147 |
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| Closing cash with | 1,475 - | 270 - 279 | 2,175 - | 398 - 417 |
| MN and GSK* | 1,525 | | 2,275 | |
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| * cash, cash equivalents and marketable securities |
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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. Unless otherwise indicated, conversion herein of financial information from
DKK to USD in our 2010 guidance has been made using the Danish Central Bank
closing spot rate on September 30, 2010 of USD 1.00 = DKK 5.4601.
Conference Call
Genmab will hold a conference call to discuss the results for the nine month
period of 2010 tomorrow, Wednesday, November 10, 2010, at
3.00 pm CET
2.00 pm GMT
9.00 am EST
The conference call will be held in English.
The dial in numbers are as follows:
+1 877 941 8631 (in the US) and provide conference ID no. 4378926
+1 480 629 9819 (outside the US) and provide conference ID no. 4378926
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.
Contact:
Helle Husted, Vice President, Investor Relations
T: +45 33 44 77 30, M: +45 25 27 47 13, E: h.husted@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-TF(TM);
HuMax-Her2(TM); HuMax-Wnt(TM); HuMax-cMet(TM) and UniBody(R) are all trademarks
of Genmab A/S. Arzerra(R) is a trademark of GlaxoSmithKline.
Stock Exchange Release no. 45
News Source: NASDAQ OMX
09.11.2010 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Genmab A/S
Denmark
Phone:
Fax:
E-mail:
Internet:
ISIN: DK0010272202
WKN:
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