Genmab A/S

CSE:GMAB

Earnings Call Transcript 2018-Q2

[Operator]

Good day, and welcome to the Genmab First Half 2018 Financial Results Conference Call. Today's conference is being recorded. During this telephone conference, you may be presented with forward-looking statements that includes such words as believes, anticipates, plans or expects. Actual results may differ materially, for example, as a result of delayed or unsuccessful development projects. Genmab is not under any obligation to update statements regarding future, nor to confirm such statements in relation to actual results, unless this is required by law. Please also note that Genmab may hold your personal data as indicated by you as part of our Investor Relations outreach activities in order to update you on Genmab going forward. Please refer to our website for more information on Genmab and our privacy policy. At this time, I would like to turn the conference over to Mr. Jan van de Winkel, CEO. Please go ahead, sir.

[Jan G. J. van de Winkel, Co]

Hello, and welcome to the Genmab conference call to discuss the company's financial results for the quarter ended June 30, 2018. David Eatwell, our CFO, is joining me on today's call. Let's move to Slide 2. As already said, we will be making forward-looking statements. So please keep that in mind as we go through this call. Let's move to Slide 3. Over the past few months, we have made significant progress in moving our pipeline forward. DARZALEX continues to advance in multiple myeloma with the label expansion in the U.S. for the use of daratumumab in combination with bortezomib, melphalan and prednisone, or VMP, as frontline treatments for patients with multiple myeloma who are not considered candidates for stem cell transplantation. We also recently received a positive opinion from the EMA's committee for Medicinal Products for Human Use, or the CHMP, in the same indication and look forward to a key frontline approval in Europe. In addition, just today, we announced that Johnson has submitted regulatory applications in the U.S. and in Europe to revise the dosing for DARZALEX. If approved, the label will be updated to give health care professionals the option to split the first infusion of DARZALEX over 2 consecutive days. The applications are based on data from the Phase I MMY1001 study of DARZALEX in combination with other multiple myeloma therapies, which showed that splitting the first dose of DARZALEX effectively reduced the duration of the first infusion while demonstrating a similar rate of infusion-related reactions.Sales of DARZALEX in approved multiple myeloma indications continue to be strong, with a net sales reaching $943 million in the first 6 months of 2018, resulting in DKK 695 million in royalties to Genmab. We've reported disappointing use for daratumumab in May, when the data monitoring committee for the Phase Ib/II study of daratumumab and atezolizumab, or Tecentriq, in patients that previously treated non-small cell lung cancer recommended that the study be stopped. The committee determines that there was no observed benefits with the combination of daratumumab and atezolizumab compared to atezolizumab monotherapy. In addition, there was a numerical increase in number of deaths in the combination arm, though these were primarily related due to disease progression. Johnson has contacted pharma companies conducting studies combining daratumumab with other PD, PD-1 or PD-L-1 products to discuss ceasing enrollments and dosing in those studies. We do anticipate 2 further of data sets for daratumumab this year from the MAIA and CASSIOPEIA studies, both in frontline multiple myeloma. The tisotumab vedotin program, which we are collaborating on with Seattle Genetics, also continues to move forward. The first patient was dosed in 2 studies recently, and the potential registration Phase II study in relapsed refractory cervical cancer and in the Phase II basket study in a number of other solid tumors. Other pipeline highlights this quarter included that patients recruitment was completed in the Phase III studies of the subcutaneous formulation of ofatumumab in relapsing multiple sclerosis. We believe that the value and the future of the ofatumumab program is likely to be in relapsing MS.As this quarter, we also saw that the Phase III study of IV ofatumumab in indolent non-Hodgkin's lymphoma didn't meet the primary endpoint. On a more positive note, we are making excellent progress with our other pipeline products beyond daratumumab and ofatumumab. The Phase I/II study of HuMax-AXL-ADC in solid tumors has progressed into the expansion phase of the study, triggering a milestone payment from Genmab to Seattle Genetics. We also saw the first patient dosed in the HexaBody-DR5/DR5 during the second quarter, and more recently, in the DuoBody-CD3xCD20 program. In addition, in July, we announced the strategic immuno-oncology partnership with Immatics Biotechnologies. This research collaboration combines Genmab's proprietary DuoBody technology and world-class antibody expertise that Immatics XPRESIDENT target discovery and T-cell receptor capabilities. The collaboration will help us discover and develop next-generation bispecific immunotherapies for cancer, strengthening Genmab's position in immuno-oncology space and increasing our ability to create differentiated cancer drugs. Finally, our financials are well on target and we improved our revenues by DKK 167 million or 16% in the first 6 months of 2018, compared to the same period in 2017. I will now turn the call over to David to present our financial results for the first 6 months of this year. David?

[David A. Eatwell, Executive VP & CFO]

Thank you, Jan. Let's move to Slide 4, on the income statement for the 6 months ended June 30. Revenue for the period came in at DKK 1,191 million. That's an increase of DKK 167 million or 16% compared to the first 6 months of 2017. The increase was primarily driven by the payment from Novartis related to the transition from Arzerra from commercial availability to compassionate use programs in non-U.S. markets, and that was $50 million or just over DKK 300 million. We also had higher DARZALEX royalties, and this is partially offset by the lack of DARZALEX milestones in H1 2018. The total expenses in the first 6 months of 2018 was DKK 732 million, an increase of DKK 290 million or 66%, and that was driven by the rapid progress of tisotumab vedotin and also additional investment in our product pipeline and an increase in the employees to support our expansion of our pipeline and the buildup of commercial capabilities. However, it should be noted that this expense increase was partially offset by reimbursements from our collaboration partners, which we're required to record as revenues. If we are able to net these reimbursements against our expenses, then the net revenue growth in expenses for the first 6 months of 2018 would be DKK 193 million or a 45% growth, and this compares to the growth in DARZALEX royalty income of DKK 241 million in the same period. Of course, this accounting treatment has no impact on the operating result. And we had an operating income of DKK 459 million for the first half of 2018 compared to DKK 582 million in the same period for 2017. The decrease of DKK 123 million or 21% was driven by the increased operating expenses, which were partially offset by the higher revenue in 2018. Net financial items were a net income of DKK 132 million in the first half of 2018, compared to a net loss of DKK 171 million in the first half of last year. The main driver for the variance between the 2 periods is foreign exchange rate movements, which positively impacted our U.S. dollar-denominated portfolio and cash holdings in 2018. The corporation tax expense for the first 6 months of 2018 was DKK 132 million compared to DKK 88 million in the same period in 2017. The estimated annual effective corporation tax rate in the first 6 months of this year was 22% compared to 21% in the first half of last year. And that brings us to the net result, which was a net income of DKK 459 million in the first 6 months of '18, compared to a net income of DKK 323 million in the same period of 2017, an increase of DKK 136 million or 42%. Now let's move to Slide 5 and the revenue. The revenue breakdown by category is shown on the left-hand side of this page. In the first 6 months of 2018, royalties were again the largest portion of the revenue at DKK 709 million compared to DKK 479 million in 2017. The increase of DKK 230 million was driven by higher DARZALEX royalties, which were partially offset by lower Arzerra royalties. License fees were the second largest portion of revenue at DKK 336 million in the first 6 months of '18, compared to DKK 47 million in the first 6 months of 2017. The increase was driven by the $50 million upfront payment from Novartis and also from additional DuoBody income from Janssen and also additional DuoBody income from Novo Nordisk. In the first 6 months of 2017, the license fee income of DKK 47 million related to deferred revenue. You'll also see the reimbursement income amounted to DKK 106 million in the first 6 months of 2018 compared to just DKK 9 million in the first 6 months of 2017. The increase of DKK 97 million was driven by collaboration agreements with Seattle Genetics and BioNTech. The graph on the right bridges the revenues between the 2 periods. The largest increase in net revenue was again the Arzerra payment from Novartis of $50 million or about DKK 304 million. The DARZALEX royalties grew from DKK 454 million in the first half of 2017 to DKK 695 million in H1 2018, an increase of DKK 241 million. The royalties were based on Janssen's DARZALEX sales of $943 million in the first 6 months of 2018 compared to $554 million for the same period of 2017. The increase in sales of $389 million or 70% growth was driven by the continued strong uptake in the U.S., the EU and Japan. The cost reimbursement increase, again, was driven by the income from our collaboration agreements with Seattle Genetics and BioNTech. Compared to the first half of 2017, there was a decrease in the DARZALEX milestones of DKK 489 million. As I said before, milestone income can fluctuate significantly period-to-period and year-to-year. The year-on-year decrease is due to the rapid progress of DARZALEX program in 2017, which enabled Genmab to achieve multiple milestones in Q2 of 2017 related to the first commercial sales of DARZALEX in the second and third indications under the expanded label granted by the European Commission in April 2017, and the filing of the first commercial sale of DARZALEX in the fourth indication in the U.S. in June 2017. As mentioned last quarter, effective 1st of January 2018, we adopted new revenue recognition standard, IFRS 15, and the deferred revenue of DKK 151 million on our balance sheet as of December 2017 was reclassified to accumulated deficit in the first quarter of 2018. And as a result, there is no deferred revenue income in 2018. Next, the expenses in the operating income on Slide 6. The graph on the left compares the change in expenses between the first 6 months of 2017 and 2018. As you can see, there was an increase in the operating expenses of DKK 290 million, which was driven by an acceleration of the investment in the products in our portfolio. 2/3 of the total expense increase was due to the additional investment in our product pipeline, including the advancement of tisotumab vedotin, the HuMax-AXL-ADC and selected investments in our preclinical programs. The FTE costs have also increased year-over-year as we're undergoing careful control growth and have hired key personnel to support our growing product pipeline and building up our commercial efforts and medical affairs capabilities. Looking at the chart on the right, you can see a decrease in the operating income, DKK 582 million to DKK 459 million. And as previously discussed, the decrease of DKK 123 million was mainly due to the increased operating expenses, partially offset by the higher revenue. Now let's take a look at the guidance on Slide 7. We are again maintaining our 2018 financial guidance, which was initially published on February 21 of this year. We expect our 2018 revenue to be in the range of DKK 2.7 billion to DKK 3.1 billion. Our projected revenue for 2018 consists of DARZALEX royalties of around DKK 1.75 billion, and that's based on Genmab's estimate of DARZALEX sales between $2 billion and $2.3 billion. And with sales of $943 million at the half year, we remain very confident with our range. We also project DARZALEX milestones of DKK 550 million in 2018. In addition, the 2018 guidance includes the payment of Novartis of the DKK 300 million I mentioned earlier. We anticipate our 2018 operating expenses will be in the range of DKK 1.4 billion to DKK 1.6 billion, which mainly consists of the advancement of our key programs and an increase in the employees to support the expansion of our product pipeline. With total DARZALEX royalty income of around DKK 1.75 billion, we'll be more than covering all of our expenses. In 2018, we'll spend about DKK 765 million on the 10 key projects or approximately 51% of our total expense base. And we expect the operating income for 2018 to therefore be in the range of DKK 1.3 billion to DKK 1.5 billion. Note, as usual, the 2018 guidance does not include any new large potential deals or potential proceeds from future warrant exercises. Now back to Jan to provide an update on our 2018 goals. Jan?

[Jan G. J. van de Winkel, Co]

Thank you, David. Let's move to Slide 8. We have made significant pipeline progress this year and continue to work towards our key goals for 2018. We have already received FDA approval for DARZALEX to be used to treat frontline multiple myeloma based on the Phase III ALCYONE study and have received a positive opinion from the EMA's committee for Medicinal Products for Human Use, or CHMP, in the same indication. We anticipate the start of a number of new daratumumab trials, including a Phase III study in multiple myeloma. And as mentioned earlier, the study of daratumumab in lung cancer was stopped. We expect to report key data in 2 Phase III studies of daratumumab in the frontline multiple myeloma setting. Other multiple myeloma studies are continuing to progress with the recent completion of patient recruitment in both Phase III CONDOR study combining daratumumab with Kyprolis and dexamethasone in relapsed refractory multiple myeloma and in the Phase II GRIFFIN study combining daratumumab with Revlimid, Velcade and dexamethasone in frontline multiple myeloma. Patient recruitment in the 2 large Phase III studies evaluating the subcutaneous formulation of ofatumumab in relapsing MS was completed, and data from these studies is anticipated in 2019. And if positive, Novartis could submit regulatory applications and launch the product in 2020. For tisotumab vedotin, together with Seattle Genetics, we have started the Phase II potential registration study in cervical cancer. At first quarter end, the first patient was dosed in a Phase II study and 4 other solid tumors.We're also making excellent progress with our own other pipeline projects. The expansion phase in the Phase I/II HuMax-AXL-ADC trial started in the second quarter. We have now treated the first patients at HexaBody-DR5/DR5 and with DuoBody-CD3xCD20. We will also accelerate our proprietary immuno-oncology DuoBody programs towards the clinic. To grow our pipeline of the future, we continue to work towards our new product or technology collaborations, like the one with Immatics. We're also excited about the progress we are seeing with our existing partner programs, such as the DuoBody collaborations with Janssen and Novo Nordisk, for which we have earned $11.3 million in cash this year, bringing the cumulative cash from our DuoBody deals to over $90 million. We continue to be committed to disciplined financial management with controlled company growth and smart investments, including investment in our highly innovative differentiated antibody pipeline. Let's move to Slide 9. That ends our presentation of Genmab's Q2 2018 financial results. Operator, please open the call for questions.

[Operator]

[Operator Instructions] Our first question is from James Quigley of JPMorgan.

[James Patrick Quigley, Analyst]

On MAIA and CASSIOPEIA, could you give us an update of when we should be expecting the data? I think, previously, you said around the summer time, we're getting towards end of the summer, so when can we expect the data? Then, on GRIFFIN as well, I mean, is there any chance that could slip into the later part of this year? I think, clinicaltrials.gov is saying the primary endpoint is around December or so. Then, on DARZALEX sales development, have you seen any uptake whatsoever in the U.S. in the first line VMP? I know it's not really used out there, but has there been any sort of uptake? Then, can you give us an update on how you're doing in Europe as well in terms of number of countries online and approvals in the different countries, as well as do you have any sense that there is any sort of bolus or warehouse patients awaiting the VMP approval? And I think I'll probably leave it there.

[Jan G. J. van de Winkel, Co]

Thanks, James, for the questions. I will definitely park the last 2 with David to give you further color on the DARZALEX uptake in the U.S., and also to give you a fuller picture, James, on the launch and the reimbursement status in the different European countries. For as much as we can report that to you from what we've heard from Janssen, let me give you a little bit more color on MAIA and CASSIOPEIA. We think that MAIA will read out quicker than CASSIOPEIA. And we still expect MAIA to read out basically in the coming months. We cannot be more precise. And if we get more information from Janssen, we will definitely update the market on that. CASSIOPEIA may definitely move into the Q4 part of this year, but MAIA will be before that, we hope. So if there are further updates there, James, we will definitely do that in the coming weeks or so. Then as it relates to GRIFFIN, what I understand from our colleagues at Janssen is that we will see the data in 2019, but there could be further data from the so-called [indiscernible] part of that study at ASH this year in December. But it's up to Janssen, I think, to see whether they can report data from that. But for the full GRIFFIN data, I will definitely expect that to be in the 2019, so not a high chance to see that this year. What I can tell you is that there have been over 25 abstracts submitted to ASH. We don't know what will be accepted, but there will be some very exciting, I think, updates on trials you've already heard upon up to now and as far as some new data also potentially in other tumor indications. So this will be a very exciting ASH, we hope. And for sure, we would hope to present data from MAIA at that conference, if that were to come available in time. So David, why don't I move over to you and to see whether you can give further color on the uptake in frontline in the U.S., as James has asked.

[David A. Eatwell, Executive VP & CFO]

Yes, certainly. Thank you for the questions, James. With DVMP in the U.S., as we anticipated, we didn't think that, that would be a large sales opportunity because VMP is not really used in the U.S. It's really a European and also a Japan treatment regime. So we've seen very little -- from the market data that we've collected, we've seen very little penetration in the frontline or use of VMP. Of course, the big thing for the U.S. and hopefully growth for 2019 and then even more growth in 2020 would be the combination with Revlimid the DRD, which, of course, we're all eagerly awaiting to see the data. In terms of the European countries, as Janssen mentioned on their earnings call, is now commercially available in 31 European countries as well as Japan. In terms of the European countries where we're seeing the strongest sales, continue to be good sales coming through from Germany and France, which really led the way with the initial launch in 2017. But as we saw in the back half for 2017 and continuing into 2018, we're also seeing Spain and Italy being the larger contributing countries. The only 1 missing out the EU 5 there is the U.K., which at this stage, is only through the cancer fund and only in the monotherapy setting for the U.K. In terms of DVMP for Europe, that's obviously a far bigger event because VMP is used in Europe. And of course, you saw that we've got the CHMP positive opinion in July. So in the coming months, we would look and hope for full approval. I would expect for the 2018 that it will probably be just Germany that would likely contribute sales in the frontline setting with DVMP. But of course, that will be a good opportunity for growth in 2019 as more countries come on stream in the frontline setting with Dara with VMP.

[James Patrick Quigley, Analyst]

Can I just have a quick follow-up? On the guidance, obviously, you didn't change the guidance for DARZALEX sales. Everything seems to be going quite well in terms of the trajectory in the numbers that J&J reported, and especially ex U.S. is also very, very strong. So what's holding you back from narrowing up to the bottom end of that guidance?

[David A. Eatwell, Executive VP & CFO]

I think, overall, if you look at us, as I said, we've got the half year sales of $943 million. And if you look at Q2, it was $511 million. So if you just look and said Q3, Q4 come through exactly the same as Q2, then if you add up $943 million plus $511 million, $511 million, that would bring you up to $1.965 billion. So that would be just below the bottom end of our guidance overall. Now of course, we would expect some growth to come through, both from U.S. and from Europe in Q3 and Q4. We might see a little bit of flattening of that growth in rest of world because, certainly, when you get a very fast and rapid launch that we've been very pleased with in Japan, it is going to flatten a little bit as you go through later in the year. Can't keep growing at that same dollar rate quarter-on-quarter. But even if you looked at it and sort of say, well, look, let's assume that Q3 grows by another $50 million, let's assume that Q3 -- Q4 was also another cumulative $50 million, i.e., an extra $100 million compared to Q2, I think that will bring you up to $2.115 billion. If you look at our midpoint, we've got $2 billion to $2.3 billion, so our midpoint is $2.150 billion. So I think we feel very confident with the range, and that midpoint of $2.150 billion that we've got there, I think, is pretty close to where you can imagine the growth could be at this point. If you look at the consensus, we had collected consensus again from 14 analysts, and their average was $2.176 billion. So I think we're all around the same number. The challenge is if I start playing with the bottom end of the range going to start moving up the midpoint, then we're chasing our tails. So I think, again, we're very confident of the range of $2 billion to $2.3 billion. And I think with where we are at the half year, the $2 billion is very secure.

[Operator]

Our next question is from Wimal Kapadia of Bernstein.

[Wimal Kapadia, Research Analyst]

Wimal Kapadia from Bernstein. So just a couple, please. So firstly, on tisotumab, I guess, I'm just trying to get a good understanding of how should we think about the market opportunity of first-line cervical versus second-line cervical? So just your thoughts there. Given that we've got multiple studies ongoing in both settings, just in terms of market opportunities for both. And then, could you just talk a little bit about the idea of DARZALEX retreatment? So at ASCO this year, we saw some more an update or discussion at least around the use of ATRA in combination with Dara in terms of CD38 regulation. So I'm going to guess, do you think that we need to have these sort of products to see retreatment for DARZALEX? Or do you think that, actually, DARZALEX retreatment is something that we will see physicians do without some form of combination product?

[Jan G. J. van de Winkel, Co]

Thanks, Wimal. Let me speak a little bit about the market size. The market size for second-line cervical, we think, is actually quite small, but obviously, the market is free, and we think we can reach the greatest potential even for the ongoing Phase II trial. And the frontline cervical market is actually considerably bigger, but it's also getting more competitive now, there's more new molecules entering and we fully intend to penetrate both the second-line and also move towards the first-line therapy. We are now setting up trials and go into initial studies in that direction. Do not forget that we also have recently started a basket trial and 4 other indications for tisotumab, lung cancer, pancreas, head and neck and colon. And I already said on the Q1 conference call that we would have at least a handful of other tumors. So there will be at least another solid tumor, we think, that we have great chance to penetrate the market with tisotumab vedotin. But we hope to do [indiscernible] in the second half of this year to give you further color on the -- actually 7 tumors where we already tested out tisotumab vedotin in the Phase I/II setting. And we are quite encouraged with what we see there. So we think that the market's potential of tisotumab vedotin is actually potentially much wider than just cervical cancer. Initially, it will be second-line cervical that we think has some significant opportunities also to move toward frontline cervical. We are refining the strategies as we speak. That's probably where I want to leave at that at this time. Then for DARZALEX retreatment, we think that DARZALEX is actually a fantastic drug to use in different lines of treatment for multiple myeloma. We have some very good data in all of the lines of treatment, potentially with the most exciting data yet to come from the frontline with the combination with Revlimid in the MAIA study. We hope to see that pretty soon. But there's also now studies this week, there was a beautiful paper in the British Medical Journal. I don't know whether you've seen that. They're looking at all the patients studied, both within and outside of DARZALEX clinical studies, are looking at the sensitivity of multiple myeloma, even refractory multiple myeloma to for example iMiDs and proteasome inhibitors. And then, once they are treated with DARZALEX, they become actually again sensitive to these iMiDs and proteasome inhibitors. So it's like DARZALEX is sensitizing these tumors to become yet again responsive to drugs, which tumors initially become refractory to. So I think DARZALEX is going to be a drug which is going to be used very, very actively for retreatment of patients also to make -- potentially make these tumors again sensitive to tumor treatments with other drugs. And I can tell you that of the over 25 abstracts submitted to ASH, several relating to new combinations with new types of drugs to go for combination therapy with DARZALEX, which are on the basis of very strong preclinical data. So we think that, actually, retreatment is a very, very significant opportunity for DARZALEX. I should probably leave it at that, Wimal.

[Operator]

[Operator Instructions] We'll take our next question from Peter Welford from Jefferies.

[Peter James Welford, Senior Equity Analyst]

Firstly, just on the Immatics deal. I guess, a question for David. Could you just run through how you're going to account for that deal, presumably not expense it through the P&L, but how we should think about that going through your financial statements? And perhaps you could just talk a little bit more about what drove you to do that deal given obviously the internal platforms you already have and also some of the other I/O deals that you've done with [indiscernible], et cetera. And then, just secondly on the HexaBody-DR5/DR5 and the AXL-ADC programs, I wonder if you could outline when we might be able to see the early safety data from both of those 2 now that the studies are initiated?

[Jan G. J. van de Winkel, Co]

Thanks, Peter, for the questions. I will definitely park the first question for David to deal with the accounting of the Immatics partnership and then give you a little bit more rationale first, Peter. We are super excited about the potential of combining the knowledge from Immatics in identifying totally tumor-specific peptides. It can be intercellular peptides, which are presented in the context of MHC molecules on the surface of cancer cells and not on healthy cells in the body. Immatics has done some amazing work, which we're very, very impressed by, showing not only that you can detect this totally tumor-specific targets to which one can generate antibodies that we have now selected 3 targets, Peter, and we have an option for another 2, under the existing deal. And they are totally specific for the tumor. And we know that some of these MHC presented targets have very low expression levels. So what we did is we tested a proof of principle experiment, a CD3 bispecific approach is using our DuoBody technology, which is Genmab's proprietary technology towards some of these targets, and we saw some amazing antitumor data that is in the order of magnitude, Peter, we have never seen that before with any other CD3 bispecific approach for solid tumor. So we think that combining the expertise and the knowledge of both of these companies can really move us into unlocking solid cancers for very effective T-cell mediated tumor cell killing. This is not being shown now with any other approach, neither CAR T, neither other CD3 bispecifics up to this moment. So we believe very strongly that this can basically unlock a completely new field, which is solid cancers for us to engage in developing very, very potent anticancer drug. So we are very excited about the partnership. The partnership has already started. And we also have -- yes, I actually looked at this for a very long time. I can tell you that we have compared at least 6 other companies' technologies with what Immatics was doing, and we reached the conclusion that is this is basically the absolute front-runner in this new area. So the answer is to open up a new area for cancer therapy. This is not accessible right now for T-cell mediated killing of tumors. I should probably leave it at that and then ask David a little bit later to explain you the accounting advice, how we deal with the upfront payment and so on. And then, as it relates to HexaBody-DR5/DR5, there, we have actually treated multiple patients now already with this new, which is actually a combination of 2 HexaBody molecules targeting that receptor 5. DR5 is, I think, a validated target for anticancer therapy. But most of the programs, which have been pursued by 5 other companies, pharma companies, have been stopped because of lack of efficacy. This combination is super potent preclinically. And I can tell you, we are moving very rapidly forward in the trial. And hopefully, end of the year, Peter, you can get some initial safety data from this study from us, probably towards the end of the year. And the same holds for CD3, CD20, where we have also started -- starting to dose the patients. And we know that this molecule is the most potent CD20 antibody we have ever seen preclinically. And the big question mark, of course, is whether this will be safe in human patients. And up to now, it looks fine, but I would say also there, towards the end of the year is when you can expect to get some updates from Genmab. Maybe, David, you can give further attention to the accounting treatment of the Immatics deal.

[David A. Eatwell, Executive VP & CFO]

Certainly. You're absolutely right, Peter, it won't be an immediate impact to the P&L with these types of deals. And we'd take the upfront payment, in this case, $54 million, and we will amortize that over a 7-year period.

[Operator]

[Operator Instructions] Our next question is from Richard Parkes from Deutsche Bank.

[Richard J. Parkes, Director]

Firstly, on the split infusion, I just wondered if you could talk about how widely that's already being utilized? I know that it already started to be integrated in some centers. And to what extent infusion bets are limiting uptake in the U.S.? I don't know whether you can update us on where you are in terms of penetration and the various lines with Dara in the U.S. as well at the same time. And then, the second question is on tisotumab vedotin. I just wondered if you could outline the rationale for starting the baskets study. Is that based on something that you've seen in the Phase I/II, so you can know that also recruited multiple tumor types. I'm just trying to understand the reasoning behind that opening that second study better.

[Jan G. J. van de Winkel, Co]

Thanks, Richard, and thank you for the questions. And I will ask -- I will start with the split infusion, the filing. This is done today by Janssen. It's I think very exciting, which can lead to a label, which allows the doctors to basically split the first infusion. What I understand is that it is already happening more and more frequently in the United States as well as in Europe. And also, for the subsequent infusions, there's a modification to do an accelerated infusion, a 90-minute infusion rather than the over 3 hour and 20 minutes standard infusion that DARZALEX is also increasing used. But Janssen, of course, cannot promote for that because it's not yet in the label. And we think that there is really is a bottleneck in -- especially with the first dose that this is actually quite challenging and seen as challenging by U.S. physicians for sure and community health care centers. So this is really holding up the use of Dara. So we believe that once actually the split infusion over 2 days becomes more common, that, that will remove the bottleneck and that will actually accelerate the use of DARZALEX, for sure, in the U.S., but probably also beyond that. I think that's probably all we can say about that, and I will ask David to give you a little bit further information on the recent June brand impact data on the penetration in the different lines of treatment, which is super exciting, I can assure you. But let me first give you further color, Richard, on tisotumab vedotin, the rationale behind the basket study. I already said that it will be yet another solid tumor, which we will start together with our partner, Seattle Genetics, pretty soon in clinical trials. And it's a combination, Richard, of what we have seen in the Phase I/II dose escalation part in 7 cancers. And you will see data in a second part of this year of that dose escalation parts. And I can tell you that some of the cancer looks very encouraging. And my answer, earlier answer, I already said that we think that this is to [indiscernible] that we think that the market for tisotumab will be a lot broader than just cervical cancer. And the other rationale is for pancreatic cancer in the basket trial, Richard. We haven't done clinical studies there, but the strongest preclinical data we've ever generated with tisotumab vedotin was in pancreatic cancer models. And there's a very good rationale also why tissue factor will be a good target there. But initially, in the Phase I/II dose escalation part, we didn't want to include pancreatic cancer because of still this perceived risk for bleeding complications because of the fact that tissue factor is involved in coagulation. We now know that, that is not observed, so now, we said, let's now try pancreatic cancer because of the strong data in the preclinical setting and different animal models. Amazing data there. So it's a combination of what we have seen in Phase I/II dose escalation, Richard, and in the preclinical setting. And maybe David can give you further information on the brand impact data recently for June as it relates to Dara for the different lines of treatment. David?

[David A. Eatwell, Executive VP & CFO]

Thank you, Jan. Yes, happy to do that. So this is, as Jan said, brand impact market survey data that Genmab collects. And this is 3 months rolling data that we collected and this is updated as of June 2018. So starting with the second line setting. In Q1, we had about a 20% market share for DARZALEX-containing regimes. And for the Q2, the equivalent data is now at an all-time high of 24%, so a nice increase in the second-line setting for DARZALEX in Q2. As we expected and as we reported in the past, the iMiDs are more popular combinations than the PIs, and it's fairly evenly split in the second-line use between Dara pom dex and Dara Revlimid dex. In the third-line setting, that's also moved up a little bit from Q1. DARZALEX-containing regimes are now at about a 40% market share. And the most popular, as you would expect, in third-line is the Dara pom dex combination again. In the fourth line setting, it's sort of relatively stable. I think we're sort of maxing out at about the market share we can gain there. And in the June quarter data, DARZALEX regimes were at 47%. So somewhat similar to where we were in Q1. Again, Dara pom dex is the most used in that particular setting with about 20% market share overall. Also as a sort of generalization when we're looking at the combined second, third and fourth-line, overall, we're seeing that the new patient starts are still -- are slightly above where we are in terms of market share. So there's still some room for growth in that combined second, third and fourth-line setting. Also, just one comment on Japan. We -- I think I mentioned last quarter that we were starting to collect IMS data, but we're a little nervous of sharing it at the early stage until we're able to compare with the Janssen commercial sales. Of course, I can't talk to you about the individual country sales that we get reported from Janssen. But looking at the Japan data for Q1, it was about $19 million of sales reported by IMS for Japan in Q1. So as I said, that's off to a fantastic start. And we're now sort of a monthly rate coming through, according to the IMS data, of somewhere between $8 million and $9 million a month coming through. So when you look at that, we look to be good for a pretty good number, a pretty good contribution for Japan for 2018. And hopefully, going forward into 2019, we can start to get into the frontline once the Dara VMP is filed in Japan as well. Hopefully, that answers your question.

[Richard J. Parkes, Director]

That's perfect. I'd like -- if I could just have one follow-up. Just to expand on the question that Wimal asked around DARZALEX retreatment. And I think you outlined that you've got good data showing that DARZALEX treatment can resensitize tumors to drugs that patients have previously failed on. But I suppose what we're trying to understand is how much data you've got showing that you can -- patients can get a response after failing on a prior DARZALEX therapy if you'd retreat with DARZALEX maybe with a different backbone, is there still a benefit with DARZALEX that it could be integrated into multiple lines of therapy in that way? I don't know, I'm trying to understand whether you've got very much data in that context.

[Jan G. J. van de Winkel, Co]

Okay, Richard. So we have little data in that context. There's data in monotherapy from the original monotherapy studies data from Sweden. And that is published so you can find that, or Rachel can help you with those papers. There's data 2 years ago at ASH from Emory University, the Dara pom dex showing that you can basically retreat refractory patients and then you still see over 30% of the patients becoming sensitive again to pom dex -- Dara pom dex combination treatment. And what I understand is that also in the ASH submissions, several abstracts on retreatment showing that actually, yes, you can retreat patients that have become refractory to Dara-based regimens than you had in another Dara-based regimen. But that's not in the public domain as I know at this time, but I think data is accumulating that this can actually be done quite effectively.

[Operator]

[Operator Instructions] It appears -- my apologies. We now have a question from Ram Selvaraju of H.C. Wainwright.

[Julian Reed Harrison, Associate]

This is Julian on for Ram. How should we be thinking about Merck's recent NDA filing of cladribine in the context of ofatumumab for MS?

[Jan G. J. van de Winkel, Co]

I should probably take that question. I think that the ofatumumab program is definitely, I don't know, Novartis leadership. They are super enthusiastic about the potential for subcu ofa. So we think that we have a rationale to be better, very competitive versus Ocrevus. What I understand is that in MS, there are several new regimens now introduced, but there's still a very big need for effective new therapies. And I think we'll have to wait the data from the 2 large Phase III studies and then see how competitive that is relative to the Merck program and to other programs. I cannot give you any further feedback at this time.

[Operator]

It appears there are no further questions. I'd like to turn the conference back to our host for any further or closing remarks.

[Jan G. J. van de Winkel, Co]

Thank you. So thank you for calling in today to discuss Genmab's financial results for the first 6 months of 2018, and we look forward to speaking with you again soon. Have a nice day.

[Operator]

This concludes today's call. Thank you for your participation. You may now disconnect.