Genmab Earnings: Robust Darzalex Royalty Revenue Drives Growth; Shares Appear Fairly Valued

Narrow-moat Genmab GMAB reported solid first-quarter results highlighted by revenue of DKK 2.8 billion, representing a 35% year-over-year increase. Robust royalty revenue grew 32% from the prior-year period to DKK 2.4 billion. The increase in royalties was driven by higher net sales of Darzalex and Kesimpta and exchange rate tailwinds. We’re maintaining our fair value estimate at DKK 2,650, and we view the stock as fairly valued. We maintain our narrow moat rating, which is based on intangible assets from the development of Genmab’s antibody therapeutics for cancer.

Darzalex, in partnership with Johnson & Johnson, remains deeply entrenched in the standard of care for multiple myeloma. Net sales of Darzalex were nearly $2.3 billion during the quarter, representing a 22% increase from the prior-year period, which translates to over DKK 1.9 billion in royalty revenue. Darzalex’s strong sales were driven by share gains in all regions, continued market growth, and strong adoption of Darzalex Faspro (subcutaneous formulation), which received FDA approval in May 2020.

We forecast Genmab will achieve about DKK 15.6 billion in revenue in 2023, and we anticipate low-double-digit to high-single-digit sales growth over the next several years. Our narrow moat rating is largely based on Darzalex’s leading position in the multiple myeloma market, which we think is well protected from competition as its patents do not expire until 2031-35.

We like that Genmab’s pipeline candidates are continuing to progress in development, and epcoritamab, in collaboration with Abbvie, has an upcoming PDUFA date in May 2023. We assign epcoritamab a 75% probability of approval in our base case, and if approved, we estimate it could generate probability-weighted revenue of roughly DKK 2 billion by 2029.