Genmab – at a glance

Genmab has had yet another great start this year and is up from 380 at the start of the year, trading now in the 640-680 range. The company will present their quarterly report august 11th. I don´t anticipate any surprises but I am eager to learn the sales/royalty figures for Arzerra this quarter.

Bluecrest is maintaining their short position at 0,7% of the shares. Not a very good position so far, but one must admire their stubborness. This position could turn from bad to worse once Daratumumab (95%) is approved in Multiple Myeloma. It could happen within 4 month. and maybe sooner. That will make the stock spike in my opinion. Take notice that whilst Genmab is not guiding for Daratumumab approval in 2015, many analysts are.

Fiscally Genmab is in fine shape with a cash position of around 3 billion DKK (approx. 450 MUSD). At some point they need to decide what to do with the money but at this point it seems premature to speculate.

This quarter saw an unprecedented regulatory activity with filings in Arzerra too. The maintenance setting will be very interesting to follow, not at least after more reviews like this from “Managed Care” on Idealisib and Arzerra.

One thing is the FDA process, but what is far more important, is how the community, doctors and physicians who administer the drug sees the future. The maintenance setting has been hailed as the big revenue booster for Arzerra by CEO Jan Van de Winkel on a number of conference calls and investor presentations.

For anyone interested there was this telling walk through of the CLL setting and its main drugs (Arzerra was one of them). The takeaway is that arzerra is a drug in later, refrac, stages once Rituxiamab has been given. 

There is continuing speculation in Genmab of takeover. If that should be the case I believe the 2 most likely candidates are Johnson&Johnson or Gilead. I believe that at this valuation a takeover will only be relevant if and when Daratumumab is approved. Not before. The valuation of the company is simply too high and too correlated with the short and midterm development of Daratumumab.

The average takeover premium is about 42% in the industry and that sounds about right for Genmab if Daratumumab is approved. P/E 150-200 is not absurd in the biotech industry right now. Genmab currently trading below 100. But again no takeover without prior Daratumumab approval would be my call.

My overall position in Genmab is that I want to wait for 2017 to see the unfolding of the full sales potential of Arzerra and Daratumumab and then decide what to do with my position.