Genmab Earnings: Strong Royalty Revenue From Darzalex Drives Growth; Shares Fairly Valued

Genmab GMAB reported positive results for first-half 2023, highlighted by revenue exceeding DKK 7 billion, representing a 34% increase compared with the prior-year period. Darzalex, in partnership with wide-moat Johnson & Johnson, remains deeply entrenched in the standard of care for multiple myeloma, and it accounted for 70% of Genmab’s total sales. We maintain our fair value estimate of DKK 2,650 and 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.

Net sales of Darzalex were $2.4 billion in the second quarter, representing over a 22% increase from the prior-year period, which translates to over DKK 2.9 billion in royalty revenue. Darzalex’s strong sales were driven by additional market share gains in all geographic regions and strong adoption of Darzalex Faspro (subcutaneous formulation), which received U.S. Food and Drug Administration approval in May 2020.

Kesimpta, developed in partnership with wide-moat Novartis for relapsing multiple sclerosis, has seen strong patient uptake. We forecast Genmab will achieve Kesimpta royalty revenue growth in the double digits over the next few years and that it will steadily decline as the compound patent for Kesimpta expires in the U.S. in 2030.

We forecast Genmab will achieve about DKK 16.3 billion in revenue in 2023. 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 begin to expire until 2031.

Genmab’s pipeline candidate, epcoritamab, was approved by the FDA in May as the first bispecific antibody treatment for adults with relapsed or refractory diffuse large b-cell lymphoma. It is marketed under the name Epkinly, and Genmab already recognized DKK 39 million in sales since it launched in the U.S. in May. We forecast Epkinly could generate about DKK 2 billion in revenue by 2028.