Summary: Genmab has revised its 2009 financial guidance and provided
information on the financial impact of the reorganization plan announced today.
Copenhagen, Denmark; November 5, 2009 - Genmab A/S (OMX: GEN) announced today it
is revising its 2009 financial guidance.
Genmab announced a reorganization plan in a separate stock exchange release
(no.41/2009) including a contemplated reduction in headcount of approximately
300 positions and decision to sell its manufacturing facility in Brooklyn Park,
Minnesota, USA. As a result, Genmab is revising its 2009 financial guidance.
At certain Genmab locations the reduction in headcount and severance packages
offered are subject to consultation discussions and therefore the estimates
included in this release are subject to change. However, we estimate that the
cash cost of the reduction in workforce including severance, retention payments
and other costs to be approximately DKK 105 million. We currently estimate a
cash impact of DKK 38 million in 2009 and DKK 67 million in 2010.
We estimate that the re-organization charges above will impact the 2009 income
statement by approximately DKK 80 million, including non-cash warrant expenses
of approximately DKK 22 million.
We will also recognize an impairment charge in the fourth quarter of 2009
related to the proposed sale of the Brooklyn Park facility. We have estimated
the fair value of the facility to be approximately USD 150 million less sales
related costs of approximately USD 5 million, resulting in a fair value less
cost to sell of approximately USD 145 million (DKK 737 million as of November 3,
2009), which resulted in a non-cash impairment charge of approximately USD 83
million (DKK 420 million as of November 3, 2009). The fair value less cost to
sell and impairment is based on the best information available and may be
subject to change.
The Brooklyn Park facility will be classified as held for sale and will
therefore be presented as a discontinued operation in the fourth quarter of
2009. This change in presentation is not yet reflected in the revised guidance
below. The facility will be kept in maintenance mode pending the sale, incurring
an estimated annualized expense of USD 10 million (DKK 50 million).
The annualized impact of the reorganization is estimated to yield savings of
approximately DKK 300 million, including non-cash items of approximately DKK 60
million.
This revised guidance also includes some other changes to the previously issued
2009 guidance. We expect our 2009 revenue to be approximately DKK 640 million
compared to the previous estimate of DKK 750 million. The reduction in revenue
is primarily due to the delay of a milestone payment to 2010 that was originally
expected in 2009 under the Arzerra(TM) (ofatumumab) collaboration with
GlaxoSmithKline.
We anticipate that our operating expenses will be approximately DKK 1.3 billion,
DKK 100 million below our previous guidance of DKK 1.4 billion due a continued
focus on cost control. This will result in a revised operating loss of
approximately DKK 660 million before the reorganization charges, as compared to
our previous guidance of DKK 650 million.
Including the impact of all of the items discussed above we estimate a revised
operating loss of approximately DKK 1,160 million, as compared to our previous
guidance of DKK 650 million.
After reflecting the impact of the reorganization we expect the cash burn for
2009 to be approximately DKK 700 million which is at the same level as our
previous guidance. Therefore, Genmab still projects a cash balance at the end of
the year of approximately DKK 1.1 billion.
We therefore anticipate that the guidance after reflecting the impact of the
reorganization and other items discussed above to be as follows:
--------------------------------------------------------------------------------
| 2009 Guidance | New | | Previous |
--------------------------------------------------------------------------------
| | With | | Before | | Before |
| | Reorganizatio | | Reorganization | | Reorganization |
| | n | | | | |
--------------------------------------------------------------------------------
| | DKK | USD | | DKK | USD | | DKK | USD |
--------------------------------------------------------------------------------
| | Milli | Milli | | Millio | Millio | | Millio | Millio |
| | ons | ons | | ns | ns | | ns | ns |
--------------------------------------------------------------------------------
| Revenues | 640 | 126 | | 640 | 126 | | 750 | 148 |
--------------------------------------------------------------------------------
| Operating | 1,300 | 256 | | 1,300 | 256 | | 1,400 | 275 |
| expenses | | | | | | | | |
--------------------------------------------------------------------------------
| Reorganization | 80 | 15 | | - | - | | - | - |
| charges | | | | | | | | |
--------------------------------------------------------------------------------
| Impairment | 420 | 83 | | - | - | | - | - |
| charge | | | | | | | | |
--------------------------------------------------------------------------------
| Operating loss | (1,16 | (228) | | (660) | (130) | | (650) | (127) |
| | 0) | | | | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Cash burn | (700) | (138) | | (660) | (130) | | (700) | (138) |
--------------------------------------------------------------------------------
| Cash at end of | 1,060 | 209 | | 1,100 | 216 | | 1,050 | 207 |
| year* | | | | | | | | |
--------------------------------------------------------------------------------
| *Cash, cash equivalents and marketable securities |
--------------------------------------------------------------------------------
In addition to factors already mentioned the estimates above are subject to
change due to numerous reasons, including the timing and variation of
development activities, related income and costs and fluctuations in the value
of our marketable securities, fair value less cost to sell related to our
manufacturing facility and currency exchange rates. The financial guidance also
assumes that no further significant agreements are entered into during 2009 that
could materially affect the results.
Conversion of our 2009 guidance has been made using the Danish Central Bank
closing spot rate on September 30, 2009 of USD 1.00 = DKK 5.0839.
Conference Call
Genmab will hold a conference call to discuss today's news today at:
4:30 pm CET
3:30 pm BST
10:30 am EST
The conference call will be held in English.
The dial in numbers are as follows:
+1 888-549-7750 (in the US) and provide conference ID number 4181672
+1 480-629-9866 (outside the US) and provide conference ID number 4181672
A live and archived webcast of the call will be available at www.genmab.com.
About Genmab A/S
Genmab is a leading international biotechnology company focused on developing
fully human antibody therapeutics for the potential treatment of cancer.
Genmab's world class discovery, development and manufacturing teams are using
cutting-edge technology to create and develop products to address unmet medical
needs. Our primary goal is to improve the lives of patients who are in urgent
need of new treatment options. For more information on Genmab's products and
technology, visit www.genmab.com.
This Stock Exchange Release contains forward looking statements. The words
“believe”, “expect”, “anticipate”, “intend” and “plan” and similar expressions
identify forward looking statements. Actual results or performance may differ
materially from any future results or performance expressed or implied by such
statements. The important factors that could cause our actual results or
performance to differ materially include, among others, risks associated with
product discovery and development, uncertainties related to the outcome and
conduct of clinical trials including unforeseen safety issues, uncertainties
related to product manufacturing, the lack of market acceptance of our products,
our inability to manage growth, the competitive environment in relation to our
business area and markets, our inability to attract and retain suitably
qualified personnel, the unenforceability or lack of protection of our patents
and proprietary rights, our relationships with affiliated entities, changes and
developments in technology which may render our products obsolete, and other
factors. For a further discussion of these risks, please refer to the section
“Risk Management” in Genmab's Annual Report, which is available on
www.genmab.com. Genmab does not undertake any obligation to update or revise
forward looking statements in this Stock Exchange Release nor to confirm such
statements in relation to actual results, unless required by law.
Genmab(R); the Y-shaped Genmab logo(R); HuMax(R); HuMax-CD20(R); HuMax-EGFr(TM);
HuMax-IL8(TM); HuMax-TAC(TM); HuMax-HepC(TM); HuMax-CD38(TM); HuMax-CD32b(TM);
HuMax-TF(TM); HuMax-Her2(TM); HuMax-VEGF(TM) and UniBody(R) are all trademarks
of Genmab A/S. Arzerra(TM) is a trademark of GlaxoSmithKline.
Contact: Helle Husted, Vice President, Investor Relations, T: +45 33 44 77 30,
M: +45 25 27 47 13, E: h.husted@genmab.com
Stock Exchange Release no. 42/2009
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