It must be admitted, European biotechnology companies do not dot the stock markets of the Old Continent as they abound on the Nasdaq. Which makes Genmab all the more deserving.
The story takes place in Denmark, a country where the health industry is overrepresented on the stock market. The reason ? The importance taken by the insulin giant Novo Nordisk, in whose shadow several laboratories have managed to prosper. Genmab, founded in 1999, quickly rose through the ranks by focusing its research on therapeutic antibodies. His specialty, oncology, is both a medical field where discoveries are long in coming, but also one of those that affect the most patients in the world. The group’s platform has brought six treatments to the commercialization stage, which is considerable over such a short period of time. The best known of them, called Darzalex, has become the first monoclonal antibody validated by the American Medicines Agency (FDA) in multiple myeloma. Developed with support from Janssen, it generated nearly $8 billion in revenue in 2022, which translated into nearly $1.5 billion in royalties for Genmab. Analysts estimate the treatment will hit $14 billion to $15 billion in annual revenue at its peak. The laboratory also receives royalties from other partners, in particular from Novartis, which owns the rights to Kesimpta, one of the treatments developed by the Danish.
These examples illustrate Genmab’s ability to transform drug candidates into effective treatments, with the support of leading manufacturers. The model is certainly less lucrative than a development, then a solitary operation, but it has the advantages of reducing the risks, of financing the tests, and of delegating the distribution and the marketing to large specialized structures. Thanks to this strategy, the Danish company has been able to finance itself for several years. The take-off in turnover is much more recent. The effect is all the more spectacular as the 2022 financial year benefited from a sharp appreciation of the dollar against the Danish krone. Thus, Genmab recorded just over $ 2 billion in revenue in 2022, an increase of 72% year on year, for a net profit improved by 80%, to $ 792 million. The level of growth in 2022 is quite atypical, but it is part of a larger movement of gradual arrival on the market of new treatments. In ten years, revenues have been multiplied by 22 and net profit by 50.
A solid portfolio in the commercialization phase
But let’s not dream, this era is over and, in the years to come, the evolution of the income statement will normalize. This is not a break in the economic history of the company, but rather a further step on the road to maturity. The balance of risk and potential still tips in favor of Genmab. The laboratory is well managed, recognized in its universe and has a solid portfolio in the commercialization phase. Its balance sheet is very robust and its valuation is correct with regard to the usual profile of biotechnology companies. The fall in the title at the start of the year on the Copenhagen Stock Exchange, since the urgency around health issues dropped a notch, made it more affordable. Last asset, the file is surrounded, for all the aforementioned reasons, of a light speculative perfume because the targets begin to be rare on this side of the Atlantic. On the other hand, the development horizon is somewhat sparse between drug candidates in the early phase and those which are marketed or about to be. This is the main reservation expressed by analysts currently, and a point of vigilance in the success story of Genmab.