Genmab A/S (GMAB) Q3 2021 Earnings Call Transcript

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Genmab A/S (GMAB 1.31%)
Q3 2021 Earnings Call
Nov 19, 2021, 4:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Hello and welcome to the Genmab Q3 2021 Conference Call. Throughout the call, all participants will be in a listen-only mode and afterwards there will be a question-answer session. And just to remind you, this conference call is being recorded.

During this telephone conference you may be presented with forward-looking statements that include words such as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding the future nor to confirm such statements in relation to actual results unless this is required by law. Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities in order to update you on Genmab going forward. Please refer to our website for more information on Genmab and our privacy policy.

So today, I'm pleased to present Jan van de Winkel. Please go ahead with your meeting.

Jan G.J. van de Winkel -- President and Chief Executive Officer

So, hello and welcome to the Genmab conference call to discuss the company's financial results for the first nine months of 2021. With me today to present these results is our CFO, Anthony Pagano and for the Q&A, we will be joined by our Chief Development Officer. Judith Klimovsky and our Chief Operating Officer, Anthony Mancini.

Let's move to Slide 2. As already said, we will be making forward-looking statements, so please keep that in mind as we go through this call. Let's move to Slide 3. Genmab has a science-focused and innovation-based culture and collaborations and partnerships have always been part of our DNA. During today's presentation, we will reference some of the products being developed under these strategic collaborations and these slides acknowledges those relationships.

Let's move to Slide 4. Genmab has never been in a better position to achieve our ambitious vision of transforming cancer treatments. The solid foundation we have built is supporting our evolution into a fully integrated biotech innovation powerhouse. We achieved a major milestone in this evolution during the third quarter with the FDA approval of tisotumab vedotin, TIVDAK.

Let's move to Slide 5. Throughout Genmab's history, we have been focused on using our deep antibody expertise to create and develop antibody products that have the potential to improve patient's lives. There are now five products on the market that incorporate our innovation and for the first time, we, in collaboration with our partner of this on TIVDAK, Seagen, are in a position to bring our own medicine to patients.

In September, approximately three weeks before the PDUFA dates, the FDA granted accelerated approval for TIVDAK for recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. As the first and only ADC approved in this indication, TIVDAK may provide a much needed new treatment option for patients.

This incredible achievement was only possible because of the efforts of our dedicated and talented team, the excellent collaboration with Seagen and the patients, families and caregivers, as well as the nurses, physicians and study teams who participated in our clinical trials. TIVDAK was available for qualifying patients 48 hours following approval and Genmab and Seagen are co-promoting TIVDAK in the USA. We look forward to providing you with further updates on the launch of TIVDAK in due course.

So now let's look at slide -- to Slide 6 and look at some of the other recent achievements in our pipeline and beyond. In addition to the exciting approval in collaboration with Seagen, we also have a broad clinical development program in place for tisotumab vedotin. Notably, data from the innovative 205 study, this combines tisotumab vedotin with other therapies and then earlier lines of cervical cancer was presented during an oral session at ESMO in September.

Also in September, dose escalation data from the EPCOR NHL-1 study of epcoritamab, a product in development at AbbVie was published in The Lancet. More recently, ASH announced abstracts accepted for presentation. We are very pleased that there will be multiple presentations of epcoritamab data, including preliminary results CLL, as well as data of epcoritamab in combination with R-CHOP and then combination with Revlimid and Rituxan.

Some of our other DuoBody programs will be featured later this week at the SITC conference. Presentations during this event include the first pre-clinical presentation of a new DuoBody program, DuoBody CD3xB7H4 and for the products we are developing with BioNTech, there will be a rapid oral on dose escalation data for GEN1042 and a poster presentation on the expansion cohort data for Gen1046. excitingly, there are also pipeline updates for both of these programs.

A Phase II study of GEN1046 as monotherapy and in combination with pembrolizumab in patients with recurrent or refractory metastatic non-small cell lung cancer is anticipated to start before the end of this year. In addition, the ongoing Phase 1/2 study of GEN1042 was recently updated to include multiple expansion cohorts in combination and then additional indications. These include GEN1042 in combination with pembrolizumab in first-line non-small cell lung cancer, in first-line head and neck squamous cell carcinoma and in first-line melanoma and in combination with pembrolizumab and chemotherapy in first-line head and neck squamous cell carcinoma and in first-line pancreatic ductal adenocarcinoma.

At this time, I would also like to inform you about some further changes to our pipeline. Following the recommendation of our portfolio board, we have decided that we will not advance the development of HexaBody-DR5/DR5 and in agreement with our partner, AbbVie, DuoBody CD3x5T4. As I've stated previously, at Genmab, we have very high efficacy standards for our clinical pipeline and we are rigorous in our decision taking.

All decisions are driven by data and initial results for both programs showed that they were insufficiently competitive compared to other product candidates in a robust, next generation antibody product pipeline. With our goal of transforming the lives of patients and minds, we look forward to continuing to progress our strong clinical candidates and to bringing additional candidates into our pipeline as we continue to create and develop truly differentiated antibody products.

In this context, I'm pleased to inform you that we expect to dose the first patient with DuoBody CD3xB7H4 imminently. The power of Genmab's innovation is also reflected in products being developed by other companies. Just last month, Janssen received a positive opinion from the CHMP recommending conditional approval -- conditional marketing authorization in the EU for amivantamab for the treatment of adult patients with advanced non-small cell lung cancer with activated EGFR exon 20 insertion mutations after failure of platinum-based therapy. If approved by the European community, it will be the first approval of -- in the European Union for therapy created using our proprietary DuoBody technology.

Further validation for the DuoBody technology is reflected in two other areas: first, multiple DuoBody products in development with our collaboration partners are anticipated to enter Phase 3 developments. These include Janssen's teclistamab and Novo Nordisk's Mim8 ma'am, which are both published on clinicaltrials.gov.

Second, as you may have recently seen, there will be data from Janssen's teclistamab and talquetamab at ASH including in combination with daratumumab. We are very encouraged to see focus in various DuoBody programs and look forward to seeing data from products, leveraging our world-class DuoBody technology at ASH in December.

DARZALEX continues to evolve and subcutaneous daratumumab is now the only approved therapy for AL amyloidosis in China and Japan. Sales in the first nine months of the year were also strong and J&J reported $4,378 million in the net sales, an increase of 49% over the first nine months of 2020 resulting in DKK4,167 million in royalties to Genmab.

I will now turn the call over to Anthony, who will discuss our revenue in more detail. Anthony, the floor is yours.

Anthony Mancini -- Executive Vice President and Chief Operating Officer

Great. Thanks, John. Let's move to slide 7. As I've done in the past, I'll start with an overview of our financial framework and the related key drivers. first off, let's think about our revenue profile. At the beginning of 2020, we had just one product on the market, which was DARZALEX and today, we have five. For me, that's just remarkable to go from one to five products in less than 24 months. Now, on the left, you can see our recurring revenue streams as TIVDAK, DARZALEX, Kesimpta, TEPEZZA and RYBREVANT. Taken together, we expect them to generate significant cash flows for us in the years to come.

Moving to the right-hand side of the page, as always, we continue to be focused in our investments. In particular, we're accelerating and expanding the potential winners in our pipeline and we're also investing in our commercialization capabilities for TIVDAK, ensuring, we are ready to launch should epcoritamab be approved. So, with that background, let's jump into our Q3 numbers and take a look at DARZALEX sales on Slide 8.

We saw continued strong performance for DARZALEX in the first nine months of the year. You can see that in the chart on the left. Overall, DARZALEX sales grew by 49%, that's net sales of approximately $4.4 billion, which translates to DKK4.2 billion in royalty revenue. This exceptional growth was driven by continued strong market shares across all lines and by the strong uptake of the SubQ formulation.

So, DARZALEX remains a key driver of our revenue, as you can see on Slide 9. Our recurring revenues grew by 52% in the first nine months of the year, primarily due to higher DARZALEX royalties. We've already spoken about DARZALEX and the very strong performance there. So, moving to Kesimpta. We're encouraged by the nice quarter-over-quarter growth seen in the first nine months of the year. Here, sales grew by 64% in Q3 versus Q2.

As you know, we didn't report any royalties for TEPEZZA in the first quarter due to the supply chain disruption, but Horizon recommenced supply in April and reported strong sales in the second and third quarters. Here, sales grew by 36% in Q3 versus Q2. Taken together, Kesimpta and TEPEZZA generated DKK524 million of royalties for the nine months ended 2021, compared to DKK179 million for the same period last year. That's growth of DKK345 million and this really illustrates the power of our recurring revenues.

We're also enthusiastic about the approvals of RYBREVANT and TIVDAK, and look forward to seeing how sales progress for both of these. So, our revenue profile continues to get stronger with increases both in recurring and non-recurring revenue, after excluding of course, the one-time upfront payment from AbbVie in 2020. And we're taking our strong recurring revenues and investing in a highly focused way, as you can see on the next slide.

Total operating expenses grew 38% in the first nine months of the year and here you can see where we invested. We continue to accelerate our investment in our product portfolio, especially the expansion of both, epco and DuoBody-PD-L1x4-1BB. We've also continued to invest strategically on expanding our team, hiring key team members to support our growing product pipeline and we continue to build our commercialization and broader organizational capabilities to support our expanding pipeline and increasing capabilities for our own commercial products. And finally, we're leveraging the AbbVie collaboration by utilizing your expertise and significant financial contributions to further expand and accelerate our partnership programs.

Now, let's take a look at our financials as a whole on Slide 11. Here you can see our summary P&L. For the first nine months of the year, revenue came in at approximately DKK5.9 billion. That's up 60% on last year if we exclude the one-off payment from AbbVie in 2020. Total expenses were about DKK3.7 billion, with 79% being R&D and 21% G&A. And our operating income came in at a very strong DKK2.2 billion.

Our net financial items amounts to income up DKK808 million, which was primarily driven by the strengthening of the U.S. dollar against the Danish kroner on our U.S. dollar-denominated cash and investments. Then, we have our tax expense of DKK725 million, which equates to an effective tax rate of 24%. And that brings us to our net income of around DKK2.3 billion. So, as you can see, extremely strong financial performance for the first nine months of the year.

Now, let's take a look at our guidance on Slide 12. Given the continued strong numbers in the last quarter, we once again improved our 2021 guidance. We now expect our revenue to be in the range of DKK7.9 billion to DKK8.5 billion, driven primarily by the continued strong growth of DARZALEX. Our opex guidance is now in a range of DKK5.3 billion to DKK5.6 billion, a decrease compared to the previous guidance, driven primarily by the timing of some of our investments in R&D activities and organizational capability built. We anticipate that we'll continue to step up our investments in Q4 and the following quarters in line with our overall strategy and key priorities. Putting this all together, we're planning for substantial operating income in 2021 in a range of DKK2.3 billion to DKK3.2 billion.

And now, from my final slide, let me provide a few closing remarks. In summary, we've had a very strong first nine months. We've created growing recurring revenue streams based on products with exceptional growth profiles. And that gives us a backbone of significant underlying profitability and we're investing those revenues in a highly focused way to realize our vision and capitalize on the significant growth opportunities in front of us.

On that note, I'll hand it back to Jan to discuss our key priorities.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Anthony. Let's move to Slide 14. As you can see, due to events in the third quarter, we met a number of our 2021 key priorities and we anticipate meeting more of these very soon with the presentation of first-in-class bispecific next-generation checkpoint immunotherapy data at SITC. We're also looking forward to ASH this year. We will hold a virtual 2021 R&D update and ASH Data Review events following ASH on December 14th. Details about this event will be available on our website in the coming days.

And over the past nine months, we have made great strides in our evolution into a leading, fully integrated, biotech innovation powerhouse. And we are looking forward to the rest of what has already been an extremely strong year. Let's move to our final slide. That ends our presentation of Genmab's financial results for the first nine months of 2021.

Operator, please open the call for questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Wimal Kapadia from Bernstein. Please go ahead.

Wimal Kapadia -- Bernstein -- Analyst

Oh, great. Thank you very much for taking my questions. So, could I just ask, as there is a lot of attention on SITC on 1042, but I'm actually just curious more on the B7H4 target. First, I'm -- I was unaware of it. So, just as we're seeing some preclinical data. I'm just curious to hear more given that the expression of B7H4 is believed to be inversely correlated to PDL1. And given that combined with interesting preclinical data, how should we really think about this target and how you think it stacks up with the rest of your pipeline?

And then, my second question is just on talquetamab, the GPRC5 x CD3 bispecific, the ASH abstracts look quite compelling, particularly in combination with dara. So, I'm just thinking about how should we think about the profile of this molecule and how it stacks up versus some of the other BCMA bispecifics in development? Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Wimal, for the questions. I will part the first one because I will hand that over to Judith Klimovsky and then let me address briefly talquetamab. I mean, talquetamab is an antibody from Janssen and they are just using our DuoBody technology platform to actually target to the GPRC5D molecule that seems to be very, very efficacious. And I think, it's up to Janssen to actually provide further perspective, Wimal, on how this one stacks up against the BCMA and against other targets. It's probably not good for me to do that. But so, I will refer to Janssen to give more perspective and they will certainly do that I think at ASH because they are very, very excited about that program I know and the data actually is already flagged up together with dara look really encouraging, the first data. So, I think they have to position this one versus the teclistamab, it's just got into Phase 3 I think last week recruiting the first patient. So, that one is moving ahead very rapidly as well.

So, let me pause there, Wimal, and hand the first question over to Judith. Maybe Judith, you can give a bit more perspective on the CD3xB7H4 program. And we will have preclinical data, Wimal, also at SITC, which is upcoming. Judith? Judith, are you there? Maybe there's connection problem, Wimal. Let me address that one then...

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Can you hear me?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Oh, yes. Now, we can hear.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Can you hear me now?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Yes, Please go ahead Judith. I think we cannot hear you now. I think there is a connection issue Judith. So should I answer this question then. So B7H4, Wimal, is expressed actually very, very nicely on a number of solid cancers and also at expression level, so it make it a very, very good target for a CD3 bispecific retargeting approach. We have some very exciting preclinical data. Some of that data will be shared with all of you at SITC and we believe, it sets up very nicely versus some other targets we are working on with CD3 retargeting approaches in our preclinical pipeline.

So, we are very excited to actually start dosing the first patient almost imminently in the coming days or weeks for sure. And then we will do dose escalation and see how the safety profile looks like in our hands, but I think, there will be a lot more detail at SITC in the coming days. Maybe handing it back to the operator.

Wimal Kapadia -- Bernstein -- Analyst

Thanks so much.

Operator

And the next question comes from the line of James Gordon from J.P. Morgan. Please go ahead.

James Gordon -- J.P. Morgan -- Analyst

Hello. James Gordon from J.P. Morgan. Thanks for taking my questions. One was also about SITC and the abstracts for GEN1042 and GEN1046. Starting with GEN1042, I know there have been quite a bit of excitement about this product. But, if I read the abstract right, it looked like there were 2 out of 49 patients had a response. So, it didn't look like a very high ORR so far, but why is it then that's driven the excitement? Is it that there's a certain dose or tumor type or some other way of dissecting the data that looks a lot more exciting?

And for GEN1046, the lung data looks good. I know there were these other nine cohorts. Have you seen data for other cohorts that do look promising for GEN1046 or should we really think about this as a drug that is for high PDL1 expression lung cancer, but probably not for other areas? But just based on this, we haven't seen anything else in the 12 months since the last SITC.

And then, sort of a question is really just timing and for epco, the ASH data look very good. But any update on what you're thinking on timing for potentially earliest you could file it? Could that -- could it still be potentially a 2022 filing? And J&J arbitration, could that still be maybe H1 next year we might hear anything? What's the latest thinking on timing for that and why that's taking longer?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, James for sneaking in four questions, actually, and you are allowed only one. But we will answer them, all four, I can assure you. The first two, I'll probably hand over to Judith Klimovsky, if we can. Oh, I think we have a real connection problem there. But, the epco, let me start with the epco question, James. We definitely are on schedule and we'll aim for potential filing in '22 for -- in at least one indication. And we are very much I think aligned with AbbVie and the teams to allow us to do that. So that next year will be very exciting for epcoritamab. And I think the abstract data looks good. And I think the actual data at ASH which will be presented will be an update to the data and the abstracts, James. So, we very much look forward to the ASH conference this year.

Then, the final question, the J&J arbitration, I cannot really provide any further comments on timing because this is up to the arbitrators. What I can tell you is that the process is in full swing. I think it's going well from a technical side and we very much hope that we will soon hear from the arbitrators on a potential binding verdicts there to remove this potential overhang on the company as soon as possible and we definitely look forward to that.

So, let's see that I can bring Judith online here for 1042 and 1046. Judith?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you. Can you hear me now?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Yes. Perfect.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Okay. I'm sorry for the problem in the connection. So, I will start by CD3xB7H4. So, as we know, bispecific having successful in heme malignancies and also that in solid tumors. We think that our technologies and knowledge of the target put us in a better position to try to tap this holy grail of oncology. So, in essence, B7H4 is a great target because it's expressed in tumor cells, but it's not expressed in normal tissue. And it's expressed as we alluded in the abstract and we see more data in a very common tumor type, but unfortunately is not well served today, particularly breast cancer, ovarian cancer, lung cancer and is inversely related, as you said, with the expression of PDL1 pre-clinically.

So, we are ready to move this to the clinic in the near future. And we -- just to test, because, as we know, I mean, it could -- cell therapies or bispecifics having been able to modify that treatment paradigm of solid tumors. So, this is the tumors that we will study initially, if we -- after the dose escalation and we see a signal. This is with regard to CD3xB7H4. With regard to the second question was on GEN1042, correct?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Yes. The question was basically why are we so excited that only 2 out of 49 responders, that is what James asked. What drives the enthusiasm, maybe a bit more color on 1042, Judith?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you. So, as you say, we have two confirmed PRs, one in melanoma, one in lung met, but we are all -- overall enthusiastic about the 51% disease control rate, which is not to be disregarded, particularly taking into account the patient population, which exhausted every prior line of therapy. And as you know, with immunotherapy, ORR is only one part of the story, but the way that immunotherapy works is usually modifying the time to event curve, not so much on ORR. So, we are excited because given the patient population and given the CD40 target plus 4-1BB, we really expected limited activity in terms of tumor shrinkage, but the DCR, disease control rate is relevant in these tumor population. Yes. And I don't know if there were more questions when I was disconnected. I'm sorry again.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Just one more question on 1046. We basically have good data and lung data which will be described of course at SITC. And the question is, well, did we also see data in other cancers to drive our enthusiasm or is this a lung cancer only type program?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. So, we -- you will see more data in the poster soon, which is on November 12. But just what we decided of the Phase 1 with expansion was to learn on the biology of this asset, which is so novel, particularly 4-1BB to guide us next step and the totality of the data including in other tumor types speak to the same facts that we have seen in non-small cell lung cancer. So, the totality of the data is helping us to guide us on next step, lung or not lung.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thank you, Judith, and James hopefully that pleases you and then more to come at SITC in a few days. Back to the operator. Thanks, Judith.

Operator

And the next question comes from the line of Kennen MacKay from RBC. Please go ahead.

Kennen MacKay -- RBC Capital Markets, LLC -- Analyst

Hi. Thanks for taking the question and congrats on the commercial progress here. Maybe two questions, if I may. So, for Judith, relating to GEN1046, I wonder if you can talk a little bit more about the rationale behind the dose decision there. You mentioned, this is a little bit of sort of a Goldilocks drug, where just treating to the absolute max tolerable dose potentially isn't the right way to go here. So just again wanted to understand the rationale behind the dose decision there? And then, maybe for Jan is, you're narrowing the pipeline here. I'm always curious what in the early stage pipeline you're most excited about next Thanks so much.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Kennen. And I would like Judith to think about the 1046 question. So I can say that we are rigorous in our decision taking, Kennen, as it relates to the pipeline and we stopped two programs, as I said in my introductory remarks, the DR5 [Phonetic] program, and the 5T4 program. And I can tell you that the early stage pipeline is very, very exciting. We are very excited about the DuoHexaBody-CD37 program. And we will probably come with a short update this year and a more data kind of next year and we can show the whole dose escalation data.

And also the HexaBody-CD38 program is of very, very high interest and it's moving ahead nicely. Also there, you will get this year the short status update from us and then more on the dose escalation data next year in the New Year when we have all that data present. And then, we will also plan to move in at least two, but even more products -- new products into the clinical pipeline in the New Year in 2022.

So '22 will be a very exciting year for the Company, I think, not only with the potential filing for epco -- initial filing for epco, but also with hopefully moving one or two programs to the late-stage clinical development and that can also include programs like 1042, 1046, which are now on the radar screen basically of everybody. So, we are very excited about the pipeline, Kennen. I think, there's never been a stronger pipeline than it is right now. But, you will continuously have to read through and identify the real winner, potential winners and then stop the other programs because I think focus is very important.

That has brought Genmab to where we are right now, focusing on the right molecules, on the right technologies to create differentiated antibody medicines. And I think we're getting better and better in that. So, I think the quality of the pipeline is increasing and not everything will work, but not necessarily because molecules are not active, but they are simply not competitive enough for our internal high standards as it relates to novel products. And we believe that we need to focus all of our attention and efforts, Kennen, and molecules that can be transformational.

We believe that epcoritamab will be transformational for B-cell cancers. I think the data will show that, which you will see hopefully also, again, we confirm that at ASH and we are now putting a very large military machine at AbbVie behind that program. So, I think the pipeline is in very good shape and we're very pleased with that. Let me hand over to Judith to speak a bit more about the dose -- the exact choosing of the doses for 1046. Judith?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you, Jan. And we are presenting a poster at SITC as well on a semi-mechanistic PK/PD model where we put a lot of preclinical and clinical data to -- because as you alluded, there is this Goldilocks effect or bell-shaped curve and allows us to choose the dose of 100 milligrams as it's the perfect dose for trimer formation, that means the trimer between PDL1, the bispecific and 4-1BB.

And this is why it was chosen and interestingly enough when we filed the model, even with translational data, everything was very, very strong that at 100 milligrams is the dose where we optimize the trimer formation and the agonistic effect for 4-1BB. So, we are very confident with the dose that was selected based on multiple data points that we put in the model.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Judith. Hopefully, Kennen, that is OK for you. Otherwise, we'll get back -- get back to us separately in a call. Operator, we can move to the next question?

Operator

Sure, yes. The next question comes from the line of Jonathan Chang from SVB Leerink. Please go ahead.

Jonathan Chang -- SVB Leerink -- Analyst

Hi, guys. Thanks for taking the questions and congrats on all the progress. First question on the epco ASH abstract and relapsed/refractory CLL. I'm curious to get your thoughts on what the appropriate benchmarks are in this late-line CLL setting? What kind of data would you need in this later-line study to support development in earlier-line CLL setting?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks Jonathan for the question. I will hand it over to Judith. Maybe Judith, you can give some perspective on benchmarks for the very heavily pre-treated CLL population that we included in the first epco study.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you for the question. So, it depends not only on the prior lines of therapy, but the categories of agents that patients got and particularly whether they exhaust the BTK inhibitors and Venclexta or not. So, the population that we enroll was heavily pretreated and most of them got BTK inhibitors and furthermore most of them had a very bad biological prognostic characteristics at 17P deletions. So there, the bar is low, unfortunately for those patients. So, it's getting some level of remission and durability is important as well. So, it's not a single factor. As you know, [Indecipherable] because they are down the road. So, it's response, it's durability of response and tolerability.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thank you, Judith. Thanks, Jonathan.

Jonathan Chang -- SVB Leerink -- Analyst

Got it. Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Let's move to the next question.

Operator

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

Michael Schmidt -- Guggenheim Securities, LLC -- Analyst

Hey, guys. Thanks for taking my questions. I had two questions. Another one on 1046. I think I heard you say that you're planning a Phase 2 study in combination with pembro in relapsed-refractory non-small cell lung cancer patients. I'm trying to understand the rationale given that the bispecific antibody probably already blocks the PD1 interaction. I'm just curious how much added or synergistic efficacy one would expect there and why?

And then, the second question was on epcoritamab. I know you have the R-CHOP combo Phase 1 data at ASH. I was just curious how you think the Roche's POLARIX results may potentially affect your plan to move epco into first-line DLBCL down the road? Thanks so much.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Michael for the questions. I think, I will hand them over to Judith and then see whether I can add further perspective there. Maybe Judith, you can address both the 1046 question and the epco R-CHOP question.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

So, let's start with 1046. As you have seen in the abstract, there are very important biological observations. So, in 26 patients that had tumor samples to assess PDL1 presence, those that were PDL1 positive that were only 10 tumor samples from 10 patients, seven had a tumor shrinkage. On the converge, 16 patients or tumor samples belonging to patients that were PDL1 negative, most of them, like 12 out of 16 had any -- no tumor shrinkage. So, there is a clear association between PDL1 presence and the activity of this compound.

We also showed in the PK/PD model that the receptor occupancy for PDL1 is not optimal, which is 100%. So, with PDL1 4-1BB because I said before that dose was selected to optimize the agonistic effect, we leave PDL1 30% without inhibition. And we know from other PD1, PDL1 inhibitors in the market that for them to be fully active, you need like 100% of receptor occupancy. These plus the fact that as we show in the abstract, the activity that -- what we saw in the expansion is much more higher for those patients that were treated with a PD1, PDL1 inhibitor in the last eight months and the receptor occupancy is still there than the patients that didn't makes -- gives us the rationale that combining with a PD1 inhibitor is the right next step to optimize the potential benefit of 1046.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Then, maybe the epco question, well, how the POLARIX impact or diffuse large B-cell lymphoma front-line development strategy, Judith?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you. So, we will hear more details on the POLARIX data at ASH. We only hear what everybody knows, like the high-level results and based on the actual data, we will assess whether expanding more our clinical development plan or amending if necessary and we will react accordingly. So, we are waiting for more results to understand how this could impact our clinical development plan.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Judith. Thanks, Michael.

Operator

And the next question comes from the line of Sachin Jain from Bank of America. Please go ahead.

Sachin Jain -- Bank of America/Merrill Lynch -- Analyst

Hi. Thanks for taking my questions. I've got a couple on 1042 and 1046 if I may. So, on 1042, Jan, I think you at the introduction listed a bunch of combination studies with KEYTRUDA or KEYTRUDA chemo combination. If I heard you correctly, lung is a bit tough. And so, I just wondered what combination data you have that are supporting those combinations studies versus the mono data we've seen in the abstracts. The second question is, you very clearly commented on the ORR and why we should focus on the disease control rate? I wanted you to comment on the second aspect that has been investor focus, which is the one grade 4 liver event? And how you think about that? And any further data you got on liver-tox there?

The second question was on 1046. You referenced further development, I think your partner BioNTech said that the Phase 2 study was going to start in 4Q '22, next year. So, just wondering what's taking so long for that study start? And then, I had a clarification question on what's coming at SITC. It seems from Judith's answer that we will be getting updated lung data and updated data on other cohorts rather than just markers of response in lung, as we saw in the abstracts. So, I just wanted to clarify that. Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Sachin. So, 1042 and 1046 are very popular for sure. That keeps I think Judith quite busy. So, I will hand over both questions to you, Judith, and then I see that I can add. Maybe start with 1042 and the combi data, what evidence we have preclinically I think is probably the right angle here.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. So, thank you, Jan. As Jan said, I mean, we have very compelling preclinical data of the synergy activity of 1042 plus pembrolizumab. And we -- the cohorts of combinations of 1042 plus pembro are in clinicaltrials.gov. And I am pleased to tell you that we are actively enrolling. So, we expect to have actual clinical data of the combination in coming months. So, it's moving nicely. So, this is for 1042.

The other question on 1042 was the liver tox or the tox in general. In general, 1042 is very well tolerated with most of the safety events, grade 1 or grade 2. We have seen 10% increase -- 10% of the patients increase of AST, ALT elevation; grade 3 or above, only a 6% that means two patients. So, we are following, but so far it seems manageable and percentages are what we consider very well tolerated -- in a very well tolerated range. So, this is for 1042. Any other question on 1042, if I am missing?

Jan G.J. van de Winkel -- President and Chief Executive Officer

No. I think you can move to 1046 and the timing of the Phase 2, I think that caused some confusion, I think caused by our friends at BioNTech.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

So, we are expecting to finalize the randomized Phase 2 to assess more data. So, we have some expansions ongoing in different combinations or in different settings that will guide us on the next steps on the randomized Phase 2. So, everything is linked. So, we are waiting to data sets coming from the current expansions to guide us of the activation on the randomized Phase 2, which will occur next year.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Judith. And then, maybe some comments on data from other cancers within 1046 at SITC, maybe a bit on what type of data basically?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. So, thank you. And I alluded to that before, what we -- the data that you will find in the poster is aligned -- in the other solid tumors aligned with the biological signals that we found for non-small cell lung cancer. In terms of the PDL1 expression and in terms of finding their biological rational to guide us on next steps. So, these include a non-small cell lung cancer and other tumor types.

Sachin Jain -- Bank of America/Merrill Lynch -- Analyst

Very clear. Can I just take one -- can I take one follow-on on 1042, pembro combo data you referenced is coming in the next months? Could you be more specific on that? Just a chance on that?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. Thank you. Yes. Can you hear me?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Yes.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Okay. So, we amend the protocol and it's updated in clinicaltrials.gov that we added cohorts of combinations with pembrolizumab in head and neck, in non-small cell lung cancer and in melanoma. So, those data sets will guide us on next decisions. And we expect to have these data in next months.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks Judith. So, these cohorts are recruiting very quickly, yes, Sachin. So, I think that is a reflection of our enthusiastic thoughts about 1042 as well. But, I think more to come at SITC and then certainly more to come next year.

Sachin Jain -- Bank of America/Merrill Lynch -- Analyst

Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Sachin. Maybe next question.

Operator

The next question comes from the line of Matt Weston from Credit Suisse. Please go ahead.

Matt Weston -- Credit Suisse -- Analyst

Thank you. Can I ask a cost question, please? So, obviously a key element of the guidance raised for this year was a change in the cadence of spending. I'm very interested in how the change in cadence of spending is then going to run into 2022? Jan, you've outlined a raft of new trials, which are starting. Clearly, you have a lot of commercial opportunity in terms of setting the scene for your early portfolio and the launch. So, any comment on how we should anticipate the cadence of costs going into '22 would be very helpful? Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Matt, for the question. I will hand it over to Anthony Pagano. As you know, he will give guidance in February next year. But, maybe let's see whether Anthony can provide a bit more color for you, Matt. So, Anthony, please go ahead.

Anthony Pagano -- Executive Vice President and Chief Financial Officer

Yes, thanks, Jan. Thanks, Matt. First of all, you're right. With the expense run rate for the first nine months, costs were a bit on the low side relative to our previous full year guidance, so -- and our revised guidance in the range of DKK5.3 billion to DKK5.6 billion in opex, as you're kind of pointing out, is due really to timing of our investments for certain R&D activities and overall organizational capability we have built. The R&D expenses were impacted really around phasing of costs related to various pipeline programs.

So, here for me, it's really a matter of timing, and we expect costs related to our R&D activities to ramp up in the coming quarters. Again, but it's important to understand, this is really aligned with our overall strategy and our key priorities and we'll continue to be focused and disciplined as we move forward. And as a reminder, Jan alluded to this, for epco together with AbbVie, we are planning to start a number of late-stage trials in the coming quarters.

On SG&A, our focus in the short-term is really on the launch of TIVDAK and also preparing for potential epco launch. And it's important here to highlight that this will also entail as we're heading to potential epco launch that this will also entail additional investments in building the commercialization infrastructure and pre-launch activities. So overall, the revised '21 guidance on opex primarily reflects shift or phasing.

So, I think Matt, the key takeaways is that, look, we have a wonderful business, solid set of technologies, exciting pipeline, and we're evolving to become this fully integrated biotech. We're starting off with TIVDAK. We're super excited about the opportunity there. But moving forward, we have all eyes and we'll be super focused on epco as we move forward, both from a development as well as a commercialization readiness perspective. More to come in terms of our exact business plan activities and our guidance ultimately here for 2022 as we move forward, particularly around our '21 earnings release in February.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Anthony. Thanks, Matt, for the question.

Matt Weston -- Credit Suisse -- Analyst

Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Let's move to the next one, operator

Operator

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

Peter Welford -- Jefferies International Ltd. -- Analyst

Hi, thanks. Yes, I've got just two left. Firstly just on 1042, wonder if you just talk a little bit about the selection of the dose for that molecule? You talked a bit about 1046. 1042, are you also looking to optimize the transformation and also the agonistic effect for 4-1BB? Or are there other factors to bear in mind for this? Can you just talk a little bit about how you got to the recommended beta test for the expansion cohorts?

And then, secondly, just with regards to the J&J DuoBody. It might just be an emission for simplicity sake. But it looks as though, according to your pipeline chart is that other than teclista and talquetamab, if I said this right, so are the other programs like the CD3 [Indecipherable] CD33, PSMA, are now omitted, but are in the clinic. Is that just the simplicity or has J&J decided to focus its DuoBody collaboration now on teclistamab and talquetamab in the remaining programs? Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Peter. So, I hand over the both questions actually to Judith and then see where I can add on the J&J question. Judith, maybe on 1042, a bit more color on the dose selection and the dose finding?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes, thank you. So, in case of CD40, 4-1BB, both are agonistic targets and both have what we call the Goldilocks effect. So, we did a very thorough assessment based on PK/PD and the dose of 100 milligrams is the dose that optimizes the trimer formations for both targets, CD40 and 4-1BB. So, we are very confident that this is the dose. This is why we didn't even escalate till MTD, because we have the optimal biological dose at 100 milligrams. So, we feel very confident with the dose. The second question was with regard to the J&J DuoBody platform. This was a question on other assets?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Exactly. They have seven basically in the clinic. And Peter asked, why are we focusing on amivantamab, teclistamab and talquetamab, what about the others basically?

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Yes. I mean, what we know is what is in the public domain and the assets that have data on the public domain, who makes us excited about, for sure amivantamab, teclistamab and talquetamab. So, they are early on and there is not too much in the public domain for us to be excited about.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Exactly, Peter. So, they're still in the clinical development, some of them are post recruiting, others are basically recruiting as we understand it, but we actually decided to focus on the more interesting exciting ones, it's either moving into Phase 3, like teclistamab or are already on the market, like amivantamab and also in Phase 3 and talquetamab is triggering a lot of enthusiasm right now, it's in Phase 2 and probably also will move to further lines of clinical development soon. And then, there's still I think potential for one or two of the others, Peter, to also move forward, but we decided to put less emphasis on that.

Peter Welford -- Jefferies International Ltd. -- Analyst

Thanks clear. Thank you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Operator, maybe we can move to the next question.

Operator

Yes. Our last question comes from the line of Asthika Goonewardene from Truist Securities. Please go ahead.

Asthika Goonewardene -- Truist Securities -- Analyst

Hi, guys. Thanks for taking my question. I'd like to start off, maybe one to Judith. On GEN1042, two-part question here. Is there any rationale for this drug in the monotherapy setting or is this largely going to be a combination? And then, also on GEN1042, will you be look at serial biopsies? And what do you expect to see in terms of T-cell infiltration into the tumor microenvironment? And I've got a couple of follow-ups.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Asthika, for the questions. And Judith, I think I will keep you busy today. So, these will both be for you.

Judith Klimovsky -- Executive Vice President and Chief Development Officer

So, thank you for the question. We think that GEN1042 should be developed in combination because of the biology of CD40x4-1BB. So, this is why we started the combinations early on. And as I said, we are already enrolling 1042 plus pembro and there are two other cohorts in clinicaltrials.gov in combination with chemo plus/minus pembro. So, it's clearly the biology of these compounds needs something else and this is we're adding to, this is the combination.

Then, your second question is a great question. And one of the cohorts in 1042 is a melanoma cohort with a very heavy translational research component. Part of it is pair biopsies that will allow us to understand in depth the integration of the tumor with lymphocytes and other pharmacodynamic markers of activity, which are really relevant because of the novelty of the target.

And as we put in the poster and put in the abstract, and you will see more data in the Phase 1. We're able to modulate a TARC, which is very important because that means that this compound is really targeting CD40 and activated dendritic cells, which is what we want from 1042. So, more to come as we gather more data, but the biological rationale and premise behind the compound is being shown in the Phase 1 and with the pharmacodynamic markers and we are including these in the abstract and you will see more in the poster.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thanks, Judith. Asthika, any follow-up?

Asthika Goonewardene -- Truist Securities -- Analyst

Yes. Jan, I think around this time last year, you -- when asked the question, what are your top priorities for -- your top three priorities for 2021, I think you've kind of articulated 1046, 1042 and epco. If we ask you the same question for 2022, what would you say?

Jan G.J. van de Winkel -- President and Chief Executive Officer

Yes. These are still the top three priorities, but we'll add actually a number of other to that. So, the company gets, I think broader and I think also -- I think, increasingly professionally organized. So, I think we will actually broaden our pipeline, Asthika. And as already alluded to in an earlier question, is we are very excited about some of the early stage clinical programs. We believe that some of them have the potential to move to late stage. So, we will still keep these three as our top priorities, Asthika, but we'll probably CD37 and CD38 to those priorities for '22.

Asthika Goonewardene -- Truist Securities -- Analyst

Great. Thanks for taking my question, guys.

Jan G.J. van de Winkel -- President and Chief Executive Officer

Thank you. Thanks, Judith. Operator, are there any further questions?

Operator

There are no further audio questions. I'm handing back to you.

Jan G.J. van de Winkel -- President and Chief Executive Officer

All right. So, thank you for calling in today to discuss Genmab's financial results for the first nine months of 2021. If you have any additional questions, which later come up, please reach out to our Investor Relations team. We hope that you all stay safe and remain healthy and optimistic. And very much look forward to speaking with you again soon.

Operator

[Operator Closing Remarks]

Duration: 58 minutes

Call participants:

Jan G.J. van de Winkel -- President and Chief Executive Officer

Anthony Mancini -- Executive Vice President and Chief Operating Officer

Judith Klimovsky -- Executive Vice President and Chief Development Officer

Anthony Pagano -- Executive Vice President and Chief Financial Officer

Wimal Kapadia -- Bernstein -- Analyst

James Gordon -- J.P. Morgan -- Analyst

Kennen MacKay -- RBC Capital Markets, LLC -- Analyst

Jonathan Chang -- SVB Leerink -- Analyst

Michael Schmidt -- Guggenheim Securities, LLC -- Analyst

Sachin Jain -- Bank of America/Merrill Lynch -- Analyst

Matt Weston -- Credit Suisse -- Analyst

Peter Welford -- Jefferies International Ltd. -- Analyst

Asthika Goonewardene -- Truist Securities -- Analyst

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