Genmab

Genmab Q3 2024 $GMAB (-0.59%)

Financial performance:

• Revenue: Total revenue for the first nine months of 2024 amounted to DKK 15.085 million, an increase of 29% compared to DKK 11.715 million in the same period in 2023.
• Net profit: Net profit for the first nine months of 2024 amounted to DKK 3.999 million, compared to DKK 3.649 million in the same period last year.

Balance sheet overview:

• Total assets: As of September 30, 2024, total assets amounted to DKK 39.660 million, an increase against DKK 35.335 million as of December 31, 2023.
• Equity: Equity at September 30, 2024 was DKK 31.922 million, compared to DKK 31.656 million at December 31, 2023.

Profit and loss account:

• Operating result: Operating profit for the first nine months of 2024 amounted to DKK 4,543 million, compared with DKK 3,570 million in the prior-year period.
• Operating expenses: Operating expenses amounted to DKK 10.542 million compared to DKK 8.145 million in the same period in 2023.

Cash flow overview:

• Operating activities: Net cash flow from operating activities amounted to DKK 5,059 million for the first nine months of 2024, compared with DKK 5,708 million in the same period in 2023.
• Investing activities: Net cash flow for investing activities amounted to DKK -9.989 million, primarily due to the acquisition of ProfoundBio.
• Financing activities: Net cash flow for financing activities amounted to DKK -3.922 million, primarily due to the repurchase of own shares.

Key ratios and profitability metrics:

• Equity ratio: Equity ratio decreased to 80% at September 30, 2024, compared to 90% at December 31, 2023.
• Earnings per share: Basic earnings per share for the first nine months of 2024 amounted to DKK 62.09, compared with DKK 55.88 in the prior-year period.

Competitive position:

• Genmab has entered into over 20 strategic partnerships with companies in the biotechnology and pharmaceutical industries.

Forecasts and management commentary:

• Revenue forecast: Revenue guidance for 2024 updated to DKK 21.1 - 21.7 billion, reflecting growth of 30% YoY.
• Operating profit: Operating profit forecast raised to DKK 6.2 - 7.1 billion (excluding acquisition and integration costs).

Risks and opportunities:

• Risks: A lawsuit filed by Chugai in Japan against Genmab and AbbVie for alleged patent infringement in connection with EPKINLY.
• Opportunities: Expansion of the product pipeline and further development of own clinical products.

Summary of results:

Positive aspects:

• Sales growth: Sales increase of 29%.
• Net profit increase: Net profit increased to DKK 3,999 million.
• Strategic acquisitions: Acquisition of ProfoundBio to strengthen the product pipeline.
• Improved forecast: Adjusted revenue and operating profit forecast.
• Strong partnerships: More than 20 strategic partnerships.

Negative aspects:

• Decrease in cash flow: Decrease in cash generated from operating activities.
• Rising liabilities: Increased level of debt.
• Decrease in equity ratio: Decrease in equity ratio from 90% to 80%.
• Patent lawsuit: Ongoing patent lawsuit in Japan.
• High acquisition costs: High capital outflow due to the acquisition of ProfoundBio.

1st tranche at $GMAB (-0.59%)

The weekly RSI has never been at such a low level. I also like the rising volume. There seems to be a lot of interest here.

Genmab A/S

Company presentation

Genmab A/S is a Danish biotechnology company specializing in the development of innovative therapies to fight cancer. Founded in Copenhagen in 1999, the company is primarily dedicated to the research and production of monoclonal antibodies for oncology treatment. An outstanding product of $GMAB (-0.59%) is the proprietary Duobody® technology platform, which aims to optimize the treatment of various types of cancer.

Core business and key products

Genmab's core business is the development and commercialization of antibody therapies. Key products include:

• Darzalex (daratumumab): A monoclonal antibody for the treatment of multiple myeloma.
• DARZALEX FASPRO: A subcutaneous formulation of daratumumab.
• Duobody® technology platform: A proprietary platform for the development of bispecific antibodies.

Mission and vision

Genmab's mission is to develop innovative and differentiated antibody products that sustainably improve the lives of cancer patients. The company's vision is to be a leader in oncology through pioneering research and development in antibody therapy.

Historical development

Founded in 1999, Genmab went public on the Copenhagen and Frankfurt stock exchanges in 2000. The IPO raised 1.56 billion Danish kroner (approximately 209 million euros) for the company. In 2002, Genmab was delisted again in Frankfurt.

Business model & core competencies

Genmab's business model is based on the development and commercialization of innovative antibody therapies. The company's core competencies lie in the research of monoclonal antibodies and the Duobody® technology platform. This technological expertise gives Genmab a significant competitive advantage in the field of cancer therapies.

Future prospects & strategic initiatives

Genmab is continuously investing in the further development of its antibody technologies and the expansion of its product pipeline. This promising pipeline points to strong growth potential.

Market position & competition

Genmab has established itself as a major player in the field of antibody therapies. The company competes with large pharmaceutical companies such as $ROG (-0.42%) , $NOVN (-1.81%) and $GSK (-0.11%) , with which it also has development and marketing partnerships. Genmab's market position is strengthened by its innovative technologies and strong partnerships.

Total Addressable Market (TAM)

The global market for monoclonal antibodies in cancer therapy is growing steadily. In view of the increasing incidence of cancer and the growing demand for targeted therapies, Genmab has considerable growth potential.

Development

Sales are growing at a CAGR of 31%, while the gross margin is growing at a CAGR of 30%. EBIT shows a fluctuating but increasing development with a CAGR of 20%, and net profit is growing at a CAGR of 22%. The number of shares issued is also falling.

Darzalex is clearly the sales driver and therefore the company's most important product. Nevertheless, the other products are also making progress and growing steadily.

Licensing has enabled the company to maintain a gross margin of 100 % for a long time. However, as it is now beginning to take marketing into its own hands, this margin is expected to decline. At the same time, however, the operating and net profit margins should increase. Overall, however, the margins are encouraging, with a net profit margin of over 25%

SBC has risen well, but remains in line with the company's performance. Moreover, there is no dilution of shares due to the buybacks. The free cash flow (FCF) has also increased solidly, so there is nothing to complain about here.

The shareholder yield is just under 4%. The ratio of enterprise value (EV) to EBITDA falls when EBITDA rises and market capitalization falls. In addition, the ratio of net debt to EBITDA is negative, which is also positive.

Genmab's capital efficiencies are exceptional and are all above 10%.

Conclusion

Genmab A/S, with its focus on innovative antibody therapies and a promising product pipeline, is well positioned to capitalize on the growing opportunities in the field of cancer treatment. The company's solid financial performance and strategic partnerships highlight its potential for future growth and innovation in the biotechnology sector.

Although the share price has fallen recently, Genmab still has significant growth opportunities ahead. The promising pipeline and the upcoming launch of new products are expected to contribute significantly to operating income. In addition, the company has an impressive capital efficiency and benefits from the positive economic situation in Denmark.

Denmark has traditionally established itself as a center for medical technology and biotechnology. The explosive development of companies like Novo Nordisk could also have positive spillover effects for other medical companies, including Genmab. Overall, this is an interesting company that I believe is undervalued based on my DCF analysis.

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