Genmab ups R&D spending to accelerate early-stage cancer programs

Genmab (CPH:GEN) is looking to build on the success of its Johnson & Johnson ($JNJ)-partnered drug Darzalex by upping its R&D spending. The plan is to increase operating expenses by 40% or more this year to position a CD3-CD20 bispecific antibody and a clutch of other early-stage programs to barrel into the clinic over the next 18 months.

After 5 years of flat spending, Genmab had already identified 2016 as the year to take its R&D outlay to another level. Now, with early Darzalex sales outperforming expectations, the Danish antibody specialist has ratcheted up its expense forecast by another couple of notches. The current plan is to spend between DKK 800 million ($120 million) and DKK 850 million. If Genmab hits the upper end of that range, it will represent a 47% year-on-year jump in operating expenditure.

Copenhagen, Denmark-based Genmab has taken the, by its standards, unusual move of increasing its spending forecast partway through the year in order to accelerate the progress of its early-stage pipeline, notably its CD3-CD20 bispecific antibody. Specifically, Genmab has used the money to seize on an opportunity to wrap up some CMC work on the bispecific earlier than expected, setting it up to forge ahead with development of an asset it has talked up strongly over the past 8 months.

Genmab unveiled the program at the JP Morgan Healthcare Conference in January, at which time it revealed that the CD3 bispecific in its pipeline would also target CD20. The CD20 target is one Genmab knows from its work on ofatumumab, and the history of that drug is tied to the bispecific. When GlaxoSmithKline ($GSK) transferred the ofatumumab collaboration to Novartis ($NVS) in 2014, Genmab regained the right to develop follow-on CD20 products, leading to the CD3-CD20 product. Roche’s ($RHHBY) Genentech published preclinical data on its CD3-CD20 program last year.

The plan at Genmab is to get the bispecific into Phase I next year, making it part of a wave of experimental drugs the company is developing to fatten its early-phase pipeline. These programs are consuming a substantial slice of Genmab’s money and attention.

“Four key projects--Tissue Factor-ADC, AXL-ADC, DR5 and CD3-CD20--account for about DKK 320 million of our total expenses in 2016,” Genmab CFO David Eatwell said on a conference call with investors. At the midpoint of the expense forecast, that means four drugs account for approximately 40% of projected outgoings at Genmab.

The DR5 program is notable in that it puts Genmab on a path that has ended badly for a host of leading drugmakers. Amgen ($AMGN), Novartis ($NVS) and others have looked at DR5, short for death receptor 5, but preclinical promise has yet to translate into clinical success.

If all four of Genmab’s preclinical programs progress smoothly through the upcoming tests, something Eatwell acknowledges would be unusual in drug development, then spending at the company will continue to tick up in the years to come. Even if some of the assets fall into the potholes of drug development, Genmab’s costs may continue to ramp up as its second wave of preclinical programs breaks.

This second wave could see Genmab advance assets, notably immuno-oncology bispecific antibodies, into the clinic at what, for it, would be an unprecedented rate. All this will take money. But, with J&J pushing hard to make Darzalex a big blockbuster, that is something Genmab may have plenty of in the years to come.

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