Innovating antibodies, improving lives Annual Report 2011 table of contents What makes Directors Report Shareholder Letter . 4 2011 Highlights . 6 today’s Genmab? Consolidated Key Figures . 7 Page 11 Signifi cant Progress: 2011 Objectives . 8 2012 Outlook. 8 Looking Ahead: 2012 Objectives . 9 Our Three-Pronged Strategy . .10 Product Pipeline . .12 Collaborations . 20 Antibody Technology and Streamlined Development . 24 Intellectual Property . 25 Manufacturing . 25 Corporate Governance . 25 Corporate Social Responsibility (CSR). 30 Human Resources . 30 Environment . .31 Risk Management . .31 Subsequent Events to the Balance Sheet Date . 34 Financial Review . 34 Becoming a partner Financial Statements of choice – providing Financial Statements for the Genmab Group innovative technology and and the Parent Company . 39 differentiated products Additional Information Investor Relations . 94 2011 Company Announcements . 95 See our Product Pipeline Board of Directors . 96 Page 12 Senior Leadership Team . 98 Statements Directors’ and Managements’ Statement on the Annual Report . .100 Independent Auditor’s Report . .101 about genmab a/s Genmab is a publicly traded, international biotechnology company specializing in the creation and development of differentiated human antibody therapeutics for the treatment of cancer. Founded in 1999, the company’s fi rst marketed antibody, ofatumumab (Arzerra®), was approved to treat chronic lymphocytic leukemia in pa- tients who are refractory to fl udarabine and alemtuzum- ab after less than eight years in development. Genmab’s validated and next generation antibody technologies are expected to provide a steady stream of future product candidates. Partnering of innovative product candidates and technologies is a key focus of Genmab’s strategy and the company has alliances with top tier pharmaceu- tical and biotechnology companies. For more informa- tion visit www.genmab.com. core purpose To improve the lives of patients by creating and developing innovative antibody products Page 11 core values Passion for innovation Work as one team and respect each other Determined – being the best at what we do Integrity – we do the right thing Page 11 DIRECTORS REPORT Shareholder Letter We have created the foundation to build a sustainable company DEAR SHAREHOLDER, were also pleased to enter our fi rst DuoBody research col- We achieved a great deal in 2011, making signifi cant laboration with an as yet unnamed pharmaceutical partner. progress with our new strategy and advancing the com- While we should recognize and celebrate these suc- pany towards a sustainable future. Sales of our antibody cesses, it is also important to acknowledge when things ofatumumab, which is marketed by GlaxoSmithKline (GSK) do not turn out as we had hoped. We were unable to fi nd under the trademark Arzerra®, grew by 40%. The prod- a partner for zalutumumab or a buyer for the manufactur- uct was launched in several new markets and physicians ing facility last year. We still hope to fi nd a partner for the gained more experience with the drug. The development zalutumumab program and we remain highly committed to and label expansion of ofatumumab is key to our goal of selling the Minnesota facility and are focused on closing a becoming a profi table company. sale in 2012. Our success also rests on developing our CD38 anti- body daratumumab, advancing our pre-clinical pipeline and progressing our DuoBody™ bispecifi c antibody tech- “Our key priorities in 2012 include nology. By executing on our strategy, leveraging existing partnerships and keeping a strong focus on managing entering new partnerships and costs we believe we can build on the foundations in place making progress with ofatumu- to create a sustainable company. In the future we will be mab and daratumumab” able to create additional value by selectively investing in new products and innovative technologies. Key Priorities for 2012 2011 in Review In addition to executing a sale of the facility, our major During the year, we reported ofatumumab data in diffuse priorities in 2012 include entering new partnerships and large B-cell lymphoma (DLBCL), Waldenstrom’s macroglob- making progress with ofatumumab and daratumumab. ulinemia (WM) and rheumatoid arthritis (RA) and present- We plan to start two studies of daratumumab in combi- ed numerous abstracts at the American Society of Hema- nation with two marketed multiple myeloma treatments in tology (ASH) annual meeting. Ofatumumab was launched 2012, potentially expanding the multiple myeloma market. in seven new countries and the number of countries where In addition, we aim to select a partner for daratumumab the drug is nationally reimbursed also grew. who has the resources to develop the product to its full The fi rst data from the daratumumab study in multiple commercial potential. Our partnership efforts were given myeloma was also reported last year. The safety profi le a boost following the encouraging preliminary data we was acceptable and we were encouraged by the level of presented in December 2011 at the ASH annual meeting. response seen in the three patients who could be evalu- Turning to ofatumumab, we expect our alliance partner ated for effi cacy. This study continues to progress and we GSK to fi le an application to market ofatumumab for refrac- look forward to reporting additional data during 2012. tory chronic lymphocytic leukemia (CLL) in an additional We also made important progress with our DuoBody territory this year and launch the product in additional platform when we validated a large scale manufacturing countries. We expect sales levels to increase over time as process using our proprietary technology. This is a signifi - ofatumumab commercialization under the current label cant achievement as it shows we can effi ciently produce develops, more data become available and indications are bispecifi c antibodies in large quantities, an advantage over approved and physicians become more familiar with using some other bispecifi c antibody technology platforms. We the product. 4 Genmab Annual Report 2011 In 2012 we expect to report data from the Phase II study in which patients from the pivotal CLL study are retreated with ofatumumab. There will also be two other events to report: an interim analysis for futility for the Phase III DLBCL head-to-head study evaluating ofatumumab plus chemotherapy versus rituximab plus chemotherapy, and safety interim data from the Phase III CLL maintenance study, to determine whether the studies will continue. In addition, we expect publication of data from multiple Investigator Sponsored Studies. We will also continue to expand our pipeline and look forward to reporting proof-of-concept data for some of our antibody-drug conjugate (ADC) and DuoBody product candidates. We are also excited about the prospect of entering into new partnership agreements for DuoBody products. We remain focused on our core competence and on building a profi table and successful biotech company. At Genmab, our ultimate goal is to improve the lives of patients by creating and developing innovative antibody products. We can only hope to meet this goal with the support of our investors and dedicated employees. Thank you for your continued support and confi dence in our company. Sincerely yours, Jan van de Winkel, Ph.D. President & Chief Executive Offi cer 5 DIRECTORS REPORT 2011 Highlights BUSINESS PROGRESS Progressing Next Generation Technologies » Presented update on DuoBody platform at R&D Day Maximizing the Value of ofatumumab » Validated large scale manufacturing process for DuoBody » Launched in 23 countries by end of 2011 under the trade products name Arzerra » Increased sales in British pounds by 40%, resulting in FINANCIAL PERFORMANCE DKK 75 million in royalty income to Genmab » Revenue decreased by DKK 231 million, 40%, from DKK » GSK initiated fi rst study of subcutaneous ofatumumab in 582 million in 2010 to DKK 351 million, mainly due to the relapsing remitting multiple sclerosis (RRMS) inclusion of two milestone payments from GSK in 2010. » More than 75 Investigator Sponsored Studies (ISS) on- » Operating expenses decreased by DKK 143 million, 19%, going or planned from DKK 743 million in 2010 to DKK 600 million. » Operating loss was DKK 249 million in 2011 compared Progressing Our Pipeline to DKK 161 million in 2010. Despite the reduction in » Initiated three new clinical studies revenue the increase was limited to DKK 88 million due » Phase III study of ofatumumab versus physician’s to a continued focus on cost control. choice in bulky fl udarabine refractory CLL » Due to the diffi cult general market conditions, worsen- » Phase II study of subcutaneous ofatumumab in ing economic outlook and other factors, the fair value RRMS (conducted by GSK) less cost for a sale of the company’s manufacturing » Second Phase II study of RG1512 (conducted by Roche) facility has been reduced from approximately USD 120 » Published data from nine clinical studies million to USD 58 million, resulting in a non-cash impair- » First data from Phase I/II study of daratumumab in ment charge of DKK 342 million. The expected sale was multiple myeloma (MM) moved to 2012. » Phase III study of ofatumumab in active RA patients who » 2011 year end cash position of DKK 1,105 million com- have had an inadequate response to TNF-α inhibitors pared to DKK 1,546 million as of December 31, 2010. » Phase I/II study of ofatumumab in active RA who » Exceeded original and latest guidance for continuing have previously failed one or more disease modify-