On Thursday, BTIG updated its outlook on Genmab A/S (NASDAQ:GMAB), raising the price target to $47.00 from the previous $46.00, while maintaining a Buy rating on the stock. The adjustment follows the U.S. Food and Drug Administration's (FDA) accelerated approval of Epkinly (epcoritamab-bysp) for the treatment of adult patients with third-line or higher follicular lymphoma (FL), after at least two systemic therapies.
Epkinly has now secured its second indication in just over a year, distinguishing itself as the first subcutaneously administered T-cell engaging bispecific antibody approved in the United States for relapsed or refractory FL. FL is the second most common form of non-Hodgkin lymphoma (NHL), accounting for 20-30% of all NHL cases. Genmab's addressable patient population for this therapy is estimated at around 5,000 individuals annually.
The FDA's approval was based on the response rate observed in the FL dose expansion cohort of the Phase 1/2 EPCORE NHL-1 clinical trial. The trial reported an overall response rate (ORR) of 82% and a complete response rate (CRR) of 63%, with a minimal residual disease negativity rate of 67%. These promising results highlight Epkinly's potential to provide durable responses for patients with limited options after relapse.
BTIG's updated price target reflects an increase in the probability of success (PoS) to 100% from the previous 80%, with a projected peak penetration of 25% by 2029. This change in valuation is a direct result of the recent FDA approval.
Comparatively, Epkinly shows response rates on par with other bispecific antibodies approved or in late-stage development for FL, such as mosunetuzumab (Lunsumio) and odronextamab. Despite recent clinical regulatory letters (CRLs) concerning odronextamab relating to the enrollment status of confirmatory trials, no efficacy, safety, trial design, labeling, or manufacturing issues were noted. Genmab continues to advance its research with an additional FL expansion cohort focused on optimizing the first treatment cycle to further reduce cytokine release syndrome (CRS).
In other recent news, Copenhagen-based pharmaceutical firm Genmab A/S has made significant strides in its operations and strategic initiatives. The company has been actively executing its share buyback program, aligning with its ongoing capital allocation strategy. Genmab also recently reported robust first-quarter results in 2024, with notable revenue growth driven by strong sales of DARZALEX and KESIMPTA.
Further, Genmab completed a $1.8 billion acquisition of ProfoundBio, Inc., acquiring global rights to three clinical-stage candidates and novel ADC technology platforms. This move is expected to bolster Genmab's capabilities in antibody-drug conjugates and fortify its clinical pipeline.
In product developments, Genmab's drug Acasun, used in the treatment of PD-1 progressed lung cancer, has been highlighted by Truist Securities as a potential $2 billion revenue opportunity, leading to a stock upgrade. In addition, Genmab has issued restricted stock units and warrants to its employees, aligning the interests of employees with those of shareholders.
InvestingPro Insights
Following BTIG's optimistic revision of Genmab's price target, it's noteworthy to consider Genmab's current financial health and market performance through the lens of InvestingPro data and tips. Genmab holds a strong cash position, with more cash than debt on its balance sheet, which can be a reassuring sign for investors looking for financial stability in a company. Additionally, Genmab's liquid assets exceed its short-term obligations, suggesting a comfortable liquidity cushion.
From a valuation perspective, Genmab is trading at a P/E ratio of 21.44, which is relatively high when considering near-term earnings growth. This could indicate that the market has high expectations for the company's future profitability. Furthermore, Genmab's gross profit margin for the last twelve months as of Q1 2024 stands at an impressive 97.69%, reflecting strong operational efficiency. However, it is also trading near its 52-week low, which may present a potential entry point for investors, especially considering analysts predict the company will be profitable this year.
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