Genmab Reports Positive Year-End Results

Narrow-moat Genmab GMAB reported strong 2022 results highlighted by revenue of DKK 14.6 billion, representing a 72% increase from 2021, which includes a 30% foreign exchange tailwind. Genmab achieved robust royalty revenue of DKK 11.9 billion thanks to continued growth from Darzalex, Tepezza, and Kesimpta. We don’t anticipate a significant change to our fair value estimate of DKK 2,650 per share as Genmab is largely tracking our expectations. The average U.S. dollar/Danish krone exchange rate in 2022 was 7.1, and management is projecting an exchange rate of 6.8 in 2023, which is lower than our previous estimate of 7.15 for the year. We view the shares as currently fairly valued, trading in 3-star territory. We maintain our narrow moat rating, which is based on intangible assets from the development of its antibody therapeutics for cancer.

Darzalex, in partnership with Johnson & Johnson, remains deeply entrenched in the standard of care for multiple myeloma. Genmab reported Darzalex sales grew 32% in 2022 to $8 billion, which translates to over DKK 10 billion in royalty revenue. This robust growth was due to strong market share, further uptake of the subcutaneous formulation (approved by the U.S. Food and Drug Administration and European Union in 2020), and foreign-exchange tailwinds as the company has continued to benefit from the strong U.S. dollar. 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.

Kesimpta and Tepezza achieved an increase of DKK 747 million in royalties compared with 2021, and Kesimpta (developed in partnership with Novartis) achieved blockbuster status in 2022 after it generated more than a billion dollars in sales during the year.