Genmab: A Strong Contender in the Biopharma Market

Genmab is a global biotechnology company focused on developing antibody based therapies, particularly in cancer treatment. The company combines deep scientific expertise with proprietary technology platforms and a partnership driven business model that has historically generated significant royalty income from successful medicines. In recent years, Genmab has been evolving into a more integrated biotech company by expanding its own commercial capabilities and building a portfolio of proprietary products. With a strong pipeline of late stage drug candidates, growing product sales, and a solid financial foundation from its royalty portfolio, Genmab aims to drive long term growth while reducing its reliance on partner driven revenue. The question remains: Does this innovative biotech company deserve a spot in your portfolio?

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The Business

Genmab was founded in 1999 in Copenhagen and has grown into one of Denmark’s most successful biotechnology companies. The company specializes in antibody-based medicines, mainly for cancer and other serious diseases, and has built its business around deep expertise in antibody discovery, development, and commercialization. Antibodies are proteins that can recognize specific targets in the body, and Genmab uses this biology to create medicines that help the immune system identify and attack diseased cells. This makes Genmab an important player in immunotherapy, a field focused on using the body’s own immune system to fight disease. The company’s core strength is its ability to design differentiated antibody medicines that may be more targeted, more powerful, or able to attack disease in more than one way. Genmab has developed several proprietary technology platforms, including DuoBody, HexaBody, DuoHexaBody, HexElect, and antibody drug conjugate technologies. DuoBody makes it possible to create bispecific antibodies that can bind to two different targets at the same time. HexaBody is designed to make antibodies more powerful by improving their ability to eliminate harmful cells. DuoHexaBody combines dual targeting with enhanced potency, while HexElect is designed to make antibodies more selective by activating only when two specific targets are present on the same cell. Through the acquisition of ProfoundBio, Genmab also added antibody drug conjugate technology, which works by attaching a powerful drug to an antibody so the treatment can be delivered more directly to diseased cells. These technologies give Genmab a strong scientific foundation and help the company create potential first-in-class or best-in-class medicines. Historically, Genmab has operated through a partnership-driven model, working with large pharmaceutical companies to develop and commercialize its medicines. This has allowed Genmab to benefit from the scale, regulatory experience, manufacturing capacity, and global sales networks of partners such as Johnson & Johnson, AbbVie, Pfizer, Novartis, Amgen, and others. In return, Genmab receives upfront payments, milestone payments, profit sharing, and royalties on product sales. This model has been highly attractive because it allows the company to generate revenue from successful medicines without carrying the full cost and risk of global commercialization. Its most important success is DARZALEX, a treatment for multiple myeloma developed with Johnson & Johnson, which has become a major global medicine and a key source of royalty income for Genmab. The company also receives royalties from several other approved medicines, including RYBREVANT, TECVAYLI, TALVEY, Kesimpta, TEPEZZA, and BIZENGRI. At the same time, Genmab is no longer only a royalty-based biotech company. It is gradually transforming into a more fully integrated biotechnology company with greater control over selected products and markets. The company co-commercializes EPKINLY with AbbVie and Tivdak with Pfizer, and it also has wholly owned late-stage programs such as Rina-S and petosemtamab. This transition gives Genmab the opportunity to capture more of the value from its own innovation over time, while still benefiting from the lower-risk royalty and partnership revenue that helped build the company. Genmab’s competitive moat is built on its antibody expertise, proprietary technology platforms, intellectual property, partnership network, and growing commercial capabilities. The company’s scientific knowledge is one of its most important advantages. Antibody drug development is complex, and Genmab has spent more than two decades building the research skills, discovery systems, and clinical development experience needed to turn antibody science into approved medicines. This track record is difficult to replicate because it requires not only strong science, but also experience in selecting the right disease targets, designing effective antibodies, advancing them through clinical trials, and working with regulators and commercial partners. Its proprietary technology platforms strengthen this moat by giving Genmab tools that can be used across many different medicines and partnerships. These platforms are not tied to one single product, but can help create multiple product candidates over time, which gives the company a repeatable engine for innovation. Intellectual property adds another important layer of protection. Genmab owns and licenses thousands of patents and patent applications covering its medicines, product candidates, antibody technologies, and related methods of use. These patents help protect its products from direct competition for many years and make it harder for competitors to copy its technologies without a license. Genmab’s partnership model also reinforces its competitive position. Large pharmaceutical companies do not partner with biotechnology companies lightly, and Genmab’s long-standing relationships with some of the world’s largest drugmakers show that its science and technology are highly valued. These partnerships help expand Genmab’s pipeline, reduce development risk, and create recurring revenue streams through milestones and royalties. The royalty model is especially attractive because it can generate high-margin income while partners handle much of the manufacturing, regulatory, and sales burden. This gives Genmab financial flexibility to reinvest in research, acquisitions, and its own commercial infrastructure. The company’s growing commercial capabilities create another potential advantage. By retaining more ownership of selected products and building its own presence in markets such as the United States, Japan, and Europe, Genmab can gradually capture more economics from its pipeline instead of relying only on partners. This shift increases execution risk, but it also gives the company a larger long-term opportunity if its proprietary medicines succeed. Overall, Genmab’s moat comes from the combination of proven antibody science, protected technology platforms, successful partnerships, high-margin royalty income, and a growing ability to bring medicines to market itself. This makes Genmab more than a traditional biotech with a single product bet. It is a platform-driven oncology biotech with multiple approved medicines, a strong royalty base, and a clear ambition to become a fully integrated biotech company over time.

Management

Jan van de Winkel serves as the CEO of Genmab, a position he has held since 2010 after previously serving as the company’s President of Research & Development and Chief Scientific Officer. He co-founded Genmab in 1999 and has played a central role in shaping the company’s scientific strategy, culture, and long-term direction. His leadership is unusual because he combines deep scientific expertise with decades of experience in building a biotechnology company from early research into a commercial-stage business. Before co-founding Genmab, Jan van de Winkel served as Vice President and Scientific Director of Medarex Europe, a biotechnology company focused on monoclonal antibodies. He holds both an M.S. and a Ph.D. from the University of Nijmegen and is a professor of immunotherapy at Utrecht University. His scientific contributions are significant, with more than 300 scientific publications and more than 150 patents and pending patent applications. This background gives Jan van de Winkel a strong understanding of antibody biology, which is especially important for a company like Genmab, where the competitive advantage is built on science, proprietary technologies, and the ability to turn research into medicines. Under his leadership, Genmab has become one of the most successful antibody-focused biotechnology companies in the world. The company’s biggest commercial success has been DARZALEX, developed in partnership with Johnson & Johnson, which became a major global medicine in multiple myeloma and created a large royalty stream for Genmab. This success gave the company financial strength and helped fund the next phase of its development. Jan van de Winkel has also guided Genmab through an important strategic transition. Historically, the company relied heavily on partnerships and royalties, allowing larger pharmaceutical companies to handle development and commercialization while Genmab benefited from milestone payments and royalties. More recently, Jan van de Winkel has pushed Genmab toward a more integrated model, where the company keeps greater ownership of selected medicines and captures more of the long-term value. This can be seen in products such as EPKINLY, which Genmab co-commercializes with AbbVie, and Tivdak, which has expanded Genmab’s own commercial responsibilities. The strategy increases complexity and execution risk, but it also gives Genmab a larger opportunity if its medicines succeed. Jan van de Winkel has also shown a willingness to make bold capital allocation decisions to strengthen Genmab’s future. The acquisitions of ProfoundBio and Merus expanded Genmab’s pipeline and added important technologies and late-stage product candidates, including antibody drug conjugate capabilities and petosemtamab. These moves support Genmab’s ambition to become a fully integrated biotechnology company rather than remain only a royalty-driven business. His decision-making reflects a long-term mindset, where the goal is not simply to protect short-term profitability, but to build a broader and more durable oncology company. In addition to his role at Genmab, Jan van de Winkel is chairman of the board of Hookipa Pharma and serves on the board of Novo Nordisk, where he is also chair of the Research & Development Committee. His appointment to Novo Nordisk’s board further reflects his standing within the global life sciences industry. Given his scientific background, founder mindset, long operating history, and role in transforming Genmab from a research-focused biotech into a commercial-stage company, Jan van de Winkel appears well suited to lead Genmab through its next phase. His leadership is especially important as Genmab works to balance its high-margin royalty base with a growing portfolio of proprietary medicines and a larger commercial organization.

The Numbers

The first number we will look into is the return on invested capital, also known as ROIC. We want to see a 10-year history, with all numbers exceeding 10% in each year. Genmab has achieved this, although the level of ROIC has been more volatile compared to many other companies. Despite this volatility, the consistency of returns above 10% is notable and reflects the strength of the underlying business model. Several structural characteristics explain both the relatively high level of ROIC and the fluctuations over time. First, Genmab’s partnership driven model plays a central role. The company earns a significant portion of its income from royalties and milestone payments, particularly from blockbuster drugs like DARZALEX. This type of revenue is highly profitable because Genmab does not bear the full cost of manufacturing, commercialization, or global distribution. As a result, operating margins can be very strong relative to the capital invested, which supports high ROIC. However, this also introduces volatility. Milestone payments can vary significantly from year to year, and royalty growth depends on the performance of partner-led products. When milestone income is high or when key drugs grow rapidly, ROIC can increase sharply, as seen in stronger years like 2020. When milestone activity is lower or growth moderates, ROIC naturally declines, even if the underlying business remains healthy. Second, Genmab is a research driven company, which means it invests heavily in developing new medicines. These investments increase the capital base through ongoing research and development spending, acquisitions, and expansion of capabilities. Unlike companies with stable capital structures, Genmab’s invested capital can grow meaningfully during periods of pipeline expansion or strategic acquisitions. For example, acquisitions such as ProfoundBio and Merus, as well as increased investment in proprietary programs, add to invested capital before the associated earnings are fully realized. This creates periods where ROIC temporarily declines, not because profitability is weak, but because the company is investing ahead of future growth. Third, the transition from a pure royalty model to a more integrated biotech company also affects ROIC. As Genmab takes on greater responsibility for development and commercialization, it increases its cost base and capital requirements. Co-development agreements, where Genmab shares development costs in exchange for a larger share of profits, reduce near-term returns but improve long-term value capture. Similarly, building commercial capabilities in markets such as the United States, Japan, and Europe requires upfront investment, which can weigh on ROIC in the short term. Fourth, the nature of the biotechnology industry itself contributes to volatility. Drug development is inherently uneven, with periods of high spending followed by potential step changes in revenue when new drugs are approved or reach commercial scale. This creates a financial profile where returns can fluctuate even if the long-term trajectory remains positive. Unlike more stable industries, where capital and earnings grow in a smoother pattern, biotech companies often experience cycles of investment and payoff. Looking ahead, ROIC is likely to remain above 10%, but it may continue to fluctuate and may not consistently reach the highest levels seen in peak years. The key drivers of strong returns remain in place. Genmab continues to benefit from high-margin royalty income, a growing portfolio of approved medicines, and a pipeline of late-stage candidates with significant commercial potential. At the same time, the company’s strategy of becoming a fully integrated biotech will likely keep the capital base higher than in the past. Investments in clinical development, acquisitions, and commercialization infrastructure will increase invested capital and may temporarily reduce ROIC during periods of expansion. Over time, if Genmab successfully brings more proprietary medicines to market, this strategy could lead to higher absolute earnings and potentially strong returns on capital, even if the percentage is somewhat lower than in the most capital-light years.

The next numbers are the book value + dividend. In my old format this was known as the equity growth rate. It was the most important of the four growth rates I used to use in my analyses, which is why I will continue to use it moving forward. As you are used to see the numbers in percentage, I have decided to share both the numbers and the percentage growth year over year. To put it simply, equity is the part of the company that belongs to its shareholders – like the portion of a house you truly own after paying off part of the mortgage. Growing equity over time means the company is becoming more valuable for its owners. So, when we track book value plus dividends, we’re essentially looking at how much value is being built for shareholders year after year.  Genmab has managed to grow its equity every single year, which is a very strong signal and reflects a business that consistently earns more than it spends. However, the growth rate has been quite uneven, which is not surprising given the nature of the business and the company’s recent strategy. The main reason equity keeps growing is that Genmab generates strong profits and keeps most of those profits within the company instead of paying them out to shareholders. Much of this comes from royalty income on successful drugs, where Genmab earns money without having to handle production or global sales. This creates strong earnings that can be reinvested into the business, which steadily increases the value owned by shareholders. Another important factor is that Genmab has historically not returned large amounts of cash through dividends or buybacks. This means that most of the money the company earns stays inside the business, directly adding to equity over time. This is very different from companies that actively return cash to shareholders, where equity can go down even if the business performs well. The reason the growth rate varies from year to year is mainly due to the timing of income and investments. Some years include large payments from partners or strong growth in key drugs, which leads to big increases in equity. Other years involve more spending on developing new medicines, expanding operations, or making acquisitions, which reduces how much equity grows in that specific year. The most recent year is a good example of this. The company made large acquisitions and expanded its business significantly, which increased the size of the company but also required taking on debt and using cash. Even though Genmab still made a profit, these investments meant that equity only grew slightly compared to previous years. In simple terms, the company is choosing to reinvest heavily into future growth instead of maximizing short-term increases in equity. It is also worth noting that a larger part of the company’s value now comes from what it has acquired and built over time, rather than just cash and past profits. This is a natural development as Genmab transitions into a more complete biotech company with its own products and capabilities. Looking ahead, equity is likely to continue growing over time, but probably not as steadily as before. The company still benefits from strong earnings, especially from royalties and an expanding product portfolio. However, Genmab is now investing more aggressively in new drugs, acquisitions, and building its own commercial presence. These investments can slow equity growth in the short term, but they are intended to create a stronger and more valuable company in the long run.

Finally, we will analyze the free cash flow. Free cash flow, in short, refers to the cash that a company generates after covering its operating expenses and capital expenditures. I use levered free cash flow margin because I believe that margins provide a better understanding of the numbers. Free cash flow yield refers to the amount of free cash flow per share that a company is expected to generate in relation to its market value per share. Genmab has historically generated strong free cash flow, but both the absolute level and the margins have been quite volatile. In recent years, however, free cash flow has reached very high levels, and margins have remained strong even if they have not returned to the very highest levels seen earlier in the period. Several structural characteristics explain both the volatility and the overall strength. One of the main drivers of Genmab’s free cash flow is its royalty-based income. A large part of the company’s revenue comes from royalties on successful drugs and milestone payments from partners. This type of income is highly cash generative because Genmab does not have to spend large amounts on manufacturing or global sales. As a result, when revenue is strong, a large portion of it turns into cash. This explains why margins can reach very high levels in certain years, such as 2017 and 2020, when milestone payments and strong product performance boosted cash generation significantly. At the same time, this revenue model also explains the volatility. Milestone payments are not recurring in the same way as product sales, and royalty growth depends on how well partner-led drugs perform. This means that free cash flow can fluctuate from year to year even if the underlying business remains strong. Another important factor is Genmab’s increasing investment in its own business. In recent years, the company has been investing heavily in building its own commercial capabilities, advancing late-stage drug candidates, and preparing for future product launches. These investments require significant spending, which reduces free cash flow margins compared to earlier years where the company operated in a more capital-light way. Management has explicitly stated that revenue growth is being used to fund these strategic investments while still maintaining strong profitability. This is why free cash flow margins, while still high, have not reached the extreme levels seen in earlier peak years. The most recent years also reflect a company in transition. Genmab is moving from a model where it mainly earns royalties to a model where it also develops and commercializes its own medicines. This shift increases both costs and complexity, as the company now needs to invest in clinical development, launch preparation, and commercial infrastructure. These investments reduce margins in the short term but are intended to create a larger and more durable business over time. In addition, acquisitions have played a role. The company has used cash and taken on debt to acquire new technologies and drug candidates, which affects how much cash is available in a given year. While these moves can reduce free cash flow in the short term, they are aimed at strengthening the pipeline and supporting long-term growth. Looking ahead, Genmab is expected to remain a strong generator of free cash flow, but volatility is likely to persist. The underlying drivers remain attractive, including high-margin royalty income, a growing number of approved medicines, and potential new product launches. However, the company has clearly stated that it will continue to reinvest heavily in research, development, and commercialization. This means that free cash flow margins may remain somewhat lower than the highest historical levels, as more cash is being used to build future growth. Over time, if Genmab successfully launches more of its own products, free cash flow could grow significantly in absolute terms, even if margins are more moderate than in the past. Genmab uses its free cash flow primarily in two ways. First, the company reinvests heavily into the business, particularly in advancing its late-stage pipeline, supporting clinical trials, and preparing for the launch of new medicines such as Rina-S and petosemtamab. These investments are intended to generate meaningful revenue in the future and are a central part of the company’s strategy. Second, Genmab is focused on strengthening its balance sheet after recent acquisitions. The company has taken on a significant amount of debt to fund the Merus acquisition and has stated that reducing this debt is a key priority over the coming years. Excess cash is therefore being directed toward lowering debt levels and maintaining financial flexibility. The free cash flow yield suggests that Genmab is trading at an attractive valuation. However, we will revisit valuation later in the analysis.

Debt

Another important aspect to consider is debt. It is crucial to evaluate whether a company has a manageable debt level that can be repaid within three years, which is determined by dividing total long-term debt by earnings. Analyzing Genmab’s financials, we find that the company has 5,28 years of earnings in debt. This is above the three-year threshold. However, the debt is mainly due to recent acquisitions. Up until 2025, Genmab had no debt, and management has clearly stated that paying down debt is now a top priority. There are several reasons why this debt is not a major concern. First, Genmab generates strong profits and cash flow, which gives the company the ability to reduce debt over time. Management has committed to bringing debt down to a more comfortable level by the end of 2027, which shows a clear plan rather than an open-ended situation. Second, a large portion of the debt has a fixed interest cost, meaning the company is not heavily exposed to rising interest rates. This makes future payments more predictable. Third, the debt was taken on to acquire new assets and strengthen the pipeline, which can support future growth. In other words, the company has chosen to invest in its long-term potential rather than take on debt to cover operational issues. Overall, while the debt level is currently above the preferred threshold, the combination of strong earnings, solid cash generation, and a clear plan to reduce debt suggests that it is manageable and not a major concern.

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Risks

The reliance on DARZALEX is a risk for Genmab because a large portion of the company’s revenue and earnings depends on a single product. In 2025, around two thirds of Genmab’s revenue came from royalties on DARZALEX, which means that the company’s financial performance is closely tied to the success of this one drug. While DARZALEX has been highly successful and continues to grow, this level of concentration creates vulnerability if anything changes. One of the most immediate risks is the company’s dependence on Johnson & Johnson, which is fully responsible for developing, manufacturing, and selling DARZALEX. This means Genmab has limited control over pricing, strategy, and commercial decisions. If Johnson & Johnson changes its priorities, slows investment, or faces competitive pressure, it can directly impact Genmab’s revenue without Genmab being able to influence the outcome. The relationship has already shown signs of tension through royalty disputes. Genmab argued that a newer version of DARZALEX should qualify for a new royalty period, but lost the arbitration cases. As a result, royalty payments may decline earlier than Genmab had hoped, which could negatively affect future earnings. Another important risk is the patent cliff. The protection around DARZALEX begins to expire toward the end of the decade, with key patents starting to run out from 2029. When this happens, lower-cost alternatives can enter the market, which typically leads to a rapid decline in sales and royalties. Even before this, pricing pressure could increase due to regulation or negotiations, especially in large markets like the United States. This creates a relatively clear timeline where one of Genmab’s most important income sources is expected to decline. Competition is also a growing risk. The market for treating multiple myeloma is highly competitive, with many approved treatments and new drugs being developed. If newer therapies prove to be more effective, safer, or easier to use, doctors may shift away from DARZALEX over time. Even if DARZALEX remains widely used, increased competition can slow its growth or put pressure on pricing, both of which would reduce royalty income for Genmab. Another challenge is the lack of a clear replacement for DARZALEX. Genmab had been developing a next-generation version of the drug, but its partner chose not to continue the collaboration, partly due to a more competitive market and a high bar for improvement. This leaves Genmab without a direct successor to its most important product and creates a gap that will need to be filled by other drugs in the pipeline. While the company has several promising candidates, drug development is uncertain, and there is no guarantee that any of them will reach the same level of success as DARZALEX. The reliance on a single product also creates timing risk. Genmab is currently investing heavily in new drugs and building its own commercial capabilities, but it takes time for new medicines to be approved and reach meaningful sales. If DARZALEX revenue starts to decline before new products are fully established, the company could face a period where growth slows or earnings come under pressure. This is often referred to as a transition period, where the old source of income fades before the new one fully replaces it.

The reliance on third party partners is a risk for Genmab because a large part of the company’s business depends on other companies to develop, produce, and sell its medicines. While this partnership model has been a key reason for Genmab’s success, it also means that the company does not have full control over important parts of its own value chain. This creates several risks that can affect both growth and earnings. One of the most important risks is that Genmab depends on its partners to make the right decisions. Partners such as Johnson & Johnson, AbbVie, Pfizer, Novartis, and others decide how much to invest in clinical trials, how quickly to move development forward, and how aggressively to market the drugs once they are approved. If a partner chooses to prioritize other projects, reduce spending, or change its strategy, it can delay or limit the success of a drug that Genmab depends on for revenue. This is particularly important because Genmab often has limited influence over these decisions. Another key risk is that partnerships can be terminated or changed. Most collaboration agreements allow partners to walk away with notice, which means Genmab could lose an important partner at any time. If that happens, the company may need to find a new partner or take on the full responsibility itself, which can lead to delays, higher costs, and increased uncertainty. Even if a partnership continues, disagreements between the parties can slow down development or lead to disputes that take time and resources to resolve. The company has already experienced this type of issue in its relationship with Johnson & Johnson, which shows that these risks are not just theoretical. Another challenge is that Genmab does not always have full visibility into what its partners are doing. For drugs that are developed and managed by partners, Genmab often relies on them to share updates about clinical trials, regulatory progress, and commercial performance. This means that important information may be delayed or incomplete, which can make it harder for Genmab to plan ahead or communicate clearly with investors. It also limits the company’s ability to react quickly if something goes wrong. Manufacturing and supply is another area of risk. Genmab relies on partners or external providers to produce its medicines. If there are delays, quality issues, or disruptions in production, it can affect the availability of drugs and slow down sales or clinical trials. In addition, switching to a new manufacturer is not simple and can take time, which adds another layer of risk. External factors such as political tensions, regulation, or disruptions in global supply chains can also impact these partners and, in turn, affect Genmab. For example, if a key supplier is affected by new regulations or trade restrictions, it could delay the development or launch of a drug. There is also a strategic risk in relying on partners. Some partners may develop competing products or technologies, which could reduce their incentive to prioritize Genmab’s drugs. Others may decide that a project is no longer attractive and stop investing in it, even if the underlying science is promising. This has already been seen in cases where partners have chosen to exit collaborations, leaving Genmab without support for certain programs.

The uncertainty in developing new therapies is a risk for Genmab because a large part of the company’s future growth depends on successfully bringing new medicines to market. Drug development is a long, expensive, and unpredictable process, and even promising treatments can fail at later stages. A drug may show strong early results but still fail in larger studies, either because it is not effective enough, causes unexpected side effects, or cannot demonstrate a clear benefit compared to existing treatments. This means that a significant amount of time and money can be invested into a drug that never generates any revenue. This risk is particularly important for Genmab because the company is in a transition phase where it needs new products to reduce its reliance on existing revenue sources such as DARZALEX. If key pipeline drugs do not succeed, it becomes much harder to replace future lost income. One of the biggest challenges is competition. The pharmaceutical industry is highly competitive, especially in cancer treatment, where many companies are developing new therapies at the same time. Even if Genmab’s drugs are effective, competing treatments may be more effective, safer, easier to use, or better positioned in treatment guidelines. New approaches such as cell therapies and other advanced immunotherapies are also evolving quickly, which can change how diseases are treated over time. This means that a drug that looks promising today may face a much tougher market by the time it is launched. Another challenge is that innovation itself carries risk. Genmab has built its business around advanced antibody technologies, which are designed to improve how treatments work. While these technologies offer significant potential, they also introduce uncertainty. New approaches can lead to unexpected issues during testing, including challenges in how the drug behaves in the body, difficulties in production, or safety concerns that only become visible in larger patient groups. This makes it harder to predict outcomes compared to more established treatment methods. Regulatory approval is another key uncertainty. Before a drug can be sold, it must be approved by health authorities, and this process can be lengthy and unpredictable. Regulators may require additional studies, delay approvals, or reject a drug altogether if the evidence is not strong enough. Even after approval, a drug must secure favorable pricing and reimbursement decisions, which can vary across countries and affect how widely it is used. This adds another layer of uncertainty between successful clinical results and actual revenue generation. There is also execution risk related to commercialization. Genmab is increasingly taking on responsibility for launching and selling its own drugs, which requires building sales teams, establishing distribution, and working with healthcare providers. This is a new area for the company, and it is competing against much larger pharmaceutical companies with more experience. Even if a drug is approved, there is no guarantee that it will achieve strong sales if the launch is not executed well or if access to patients is limited. Recent events also highlight how real this risk is. The discontinuation of certain pipeline programs shows that not all drug candidates will succeed, even when they are backed by strong science and significant investment. Future key assets such as petosemtamab and Rina-S still need to prove themselves in late-stage studies, and there is no certainty that they will meet expectations. A failure in one of these important programs could significantly impact the company’s growth outlook.

Reasons to invest

Commercialized medicines is a reason to invest in Genmab because the company is no longer only dependent on royalties from medicines sold by partners. Genmab is increasingly building a portfolio of its own commercial products, which gives the company more control over its future growth and allows it to capture a larger share of the value from its own science. This is important because Genmab’s long-term ambition is to become a fully integrated biotech company, meaning a company that can discover, develop, and commercialize medicines itself. The progress of EPKINLY and Tivdak shows that this transition is already underway. EPKINLY is the most important example of this progress. It is a bispecific antibody used in certain B-cell lymphomas and is currently the only bispecific antibody approved across multiple B-cell malignancies in the U.S., Europe, and Japan. This matters because it gives EPKINLY a differentiated position in a large and important cancer market. The medicine has already been approved in more than 65 countries, and sales reached $468 million in 2025, up 67% year over year. This shows that EPKINLY is gaining traction with physicians and patients, and management believes it has the potential to become a blockbuster medicine over time. A key reason EPKINLY is attractive is that it is moving into earlier lines of treatment. In cancer, earlier lines usually mean larger patient populations, because more patients are eligible for treatment before they have gone through several other therapies. EPKINLY was initially used in later-stage disease, but the approval in second-line follicular lymphoma in combination with R2 expands its opportunity. Management has also highlighted that upcoming data in first-line and second-line diffuse large B-cell lymphoma could significantly increase EPKINLY’s addressable patient population. If successful, this could move EPKINLY from a niche later-line therapy into a much broader treatment option. EPKINLY also appears well suited for wider use because of how it is given and where it can be used. Management has emphasized that more sites are now ordering the medicine, including community settings closer to where patients live. This is important because many advanced cancer treatments are concentrated in large academic hospitals, which can limit access. If EPKINLY can be used more broadly across different treatment centers, it could support stronger adoption over time. The combination of clinical data, dual indications, and growing use across care settings strengthens the case that EPKINLY could become a core therapy in B-cell lymphomas. Tivdak is another reason Genmab’s commercialized medicines matter. Tivdak is used in recurrent or metastatic cervical cancer and has become the first and only antibody drug conjugate approved for this setting in the U.S., Europe, and Japan. This is an area with high unmet medical need, as advanced cervical cancer remains difficult to treat and outcomes have historically been poor. Tivdak generated $164 million in sales in 2025, up 26% year over year, showing continued growth across both established and newer markets. Tivdak is also strategically important because it helps Genmab build its own commercial infrastructure. In 2025, Tivdak became available in Japan and Germany, and Genmab received approval in the U.K. as well. Germany was Genmab’s first independent European launch, which is an important milestone for the company. It shows that Genmab is learning how to bring medicines to market itself, not only through partners. This experience should be valuable if future medicines such as Rina-S and petosemtamab are approved. The growth of Genmab’s own medicines also improves the quality of the company’s revenue. In 2025, proprietary medicine sales reached $632 million, up 54% year over year. These sales represented a growing share of Genmab’s total revenue growth, which helps reduce the company’s reliance on Darzalex royalties over time. This is important because Darzalex remains a major revenue source today, but its royalty stream is expected to decline later in the decade. The stronger Genmab’s own commercial products become, the better positioned the company is to handle that transition.

The pipeline is a reason to invest in Genmab because the company has several late-stage drug candidates that could become important future growth drivers. This matters because Genmab still receives a large part of its revenue from Darzalex royalties, and those royalties are expected to decline toward the end of the decade. To reduce this dependence, Genmab needs new medicines that can create future revenue. The pipeline is therefore not just a scientific opportunity, but a key part of the company’s long-term transition into a broader and more independent biotech business. One of the most important pipeline assets is Rina-S, which Genmab acquired through ProfoundBio. Rina-S is an antibody drug conjugate being developed for certain gynecologic cancers, including ovarian cancer and endometrial cancer. In simple terms, this type of medicine is designed to deliver a powerful cancer-fighting treatment directly to cancer cells. What makes Rina-S especially interesting is that it may work across a broader group of patients than some existing treatments. Management has highlighted that Rina-S is designed to target folate receptor alpha and may be able to help patients beyond only those with the highest levels of this target. If this is confirmed in larger studies, it could meaningfully expand the number of patients who may benefit from the drug. Genmab has moved quickly with Rina-S. The company ended 2025 with three Phase 3 studies across platinum-resistant ovarian cancer, platinum-sensitive ovarian cancer, and endometrial cancer. This shows that Genmab is not treating Rina-S as a small pipeline experiment, but as a major future growth opportunity. The FDA has also granted Rina-S important designations, including Fast Track designation in certain ovarian cancer patients and Breakthrough Therapy designation in recurrent or progressive endometrial cancer. These designations do not guarantee success, but they show that regulators recognize the potential importance of the drug in areas where better treatment options are needed. Management believes Rina-S could eventually generate more than $2 billion in annual peak sales if the clinical data and launches are successful. Another important pipeline asset is petosemtamab, which Genmab added through the acquisition of Merus. Petosemtamab is a bispecific antibody being developed mainly for head and neck cancer. It is designed to target two disease-related signals at the same time, which may help improve the immune response against tumors. Early data has been encouraging, especially in combination with pembrolizumab in first-line recurrent or metastatic head and neck cancer. Management has highlighted response rates that compare favorably with existing treatment options, and the drug has received FDA Breakthrough Therapy designations in both first-line and later-line head and neck cancer. Genmab has two Phase 3 trials ongoing, and one or both are expected to read out in 2026. If successful, petosemtamab could become another major growth driver, with management describing it as a potential multibillion-dollar opportunity. The pipeline is also attractive because it gives Genmab several possible catalysts over the coming years. Rina-S has expected data in platinum-resistant ovarian cancer and petosemtamab has potential Phase 3 data in head and neck cancer. These readouts matter because positive data can increase confidence in future sales, support regulatory filings, and expand the company’s addressable markets. For a biotech company, these catalysts can be important value-creating events. The pipeline also reflects Genmab’s broader scientific strength. The company is not relying on one technology or one disease area. Its pipeline includes antibody drug conjugates, bispecific antibodies, and other next-generation antibody approaches. Management has described the pipeline as increasingly diversified, with programs across gynecologic cancers, head and neck cancer, lymphoma, and other tumor types. This diversification matters because drug development is risky, and not every program will succeed. A broader pipeline gives Genmab more shots on goal.

The royalty portfolio is a reason to invest in Genmab because it gives the company a strong and highly profitable revenue foundation while it builds its next generation of proprietary medicines. Unlike many biotech companies that depend almost entirely on future clinical trial success, Genmab already earns significant revenue from approved medicines that are sold by large pharmaceutical partners. This makes the business more mature and financially stronger than many smaller biotech companies, because Genmab can use royalty income to fund research, development, acquisitions, and commercial expansion without relying only on new share issuances or external financing. The most important royalty product is DARZALEX, which is developed and commercialized by Johnson & Johnson. DARZALEX has become a major global medicine in multiple myeloma and continues to grow strongly. Johnson & Johnson’s net sales of DARZALEX reached $14,4 billion in 2025, and Genmab expects 2026 net sales to reach between $15,6 billion and $16,4 billion. This gives Genmab a very large royalty stream, with DARZALEX royalties expected to be around $2.7 billion at the midpoint in 2026. Because Genmab does not have to manufacture or sell DARZALEX itself, this revenue is very profitable and helps support high margins and strong cash generation. The royalty portfolio is not only about DARZALEX, even though DARZALEX remains the largest contributor. Genmab also receives royalties from other approved medicines, including Kesimpta, TEPEZZA, RYBREVANT, TECVAYLI, TALVEY, TEPKINLY, and BIZENGRI. Kesimpta is especially important because it has been growing quickly. Novartis’ net sales of Kesimpta reached $4,4 billion in 2025, up 37% from the previous year, driven by increased demand and strong access. Genmab receives a royalty on Kesimpta sales, which creates another meaningful and growing source of revenue outside Darzalex. This helps diversify the royalty base and reduces some of the company’s dependence on a single product over time. Genmab’s royalty portfolio also demonstrates the strength of its antibody technologies. Several approved medicines were either created by Genmab or developed using Genmab’s technology platforms. This is important because it shows that the company’s science has not only produced experimental drugs, but real medicines that have reached patients and generated commercial success. RYBREVANT, TECVAYLI, and TALVEY were created through Genmab’s DuoBody collaboration with Johnson & Johnson. These products are still smaller contributors today, but they give Genmab additional potential upside as they grow and reach more patients. The royalty portfolio also gives Genmab financial flexibility. Because royalty income is highly cash generative, it helps fund the company’s own pipeline and commercial buildout. This is especially important now that Genmab is investing heavily in late-stage assets such as Rina-S and petosemtamab, while also expanding its commercial presence in the United States, Japan, and Europe. The royalty income allows Genmab to make these investments while remaining profitable, which is a major advantage in biotech. Many companies in the sector must spend heavily for years before they generate meaningful revenue, but Genmab can reinvest from a position of financial strength. Another attractive aspect is that the royalty portfolio has the potential to continue growing even as Darzalex eventually declines. Management has acknowledged that Darzalex royalties will not last forever, but they also believe the rest of the royalty portfolio has growth prospects that can help offset part of the decline over time. New indications can also extend the commercial reach of existing medicines. For example, subcutaneous Darzalex became the first and only approved treatment in both the U.S. and Europe for patients with high-risk smoldering multiple myeloma, supporting earlier intervention before the disease progresses to active multiple myeloma. If medicines are used earlier in treatment or in broader patient groups, it can support continued sales growth and royalty revenue. The royalty portfolio may also expand further through new medicines created with Genmab’s technology. Novo Nordisk has submitted a U.S. application for Mim8, also known as denecimig, which is based on Genmab’s DuoBody technology and is being developed for people with hemophilia A. If approved, it would become another medicine created using Genmab’s innovation. This highlights the long-term value of Genmab’s technology platforms, because they can generate revenue not only through Genmab’s own pipeline but also through products developed by partners.

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Valuation

Now it is time to calculate the share price. I perform three different calculations that I learned at a Phil Town seminar. If you want to make the calculations yourself for this or other stocks, you can do so through the tools page on my website, where you have access to all three calculators for free.

Remember that these calculations are based on the ordinary shares listed in Denmark and are denominated in Danish kroner. If you wish to purchase the U.S.-listed ADR, you will need to divide the price by ten and convert the currency from Danish kroner to U.S. dollars.

The first is called the Margin of Safety price, which is calculated based on earnings per share (EPS), estimated future EPS growth, and estimated future price-to-earnings ratio (P/E). The minimum acceptable rate of return is 15%. I chose to use an EPS of 97,68, which is from 2025. I have selected a projected future EPS growth rate of 15%. Finbox expects EPS to grow by 15% in the next five years. Additionally, I have selected a projected future P/E ratio of 30, which is twice the growth rate. This decision is based on Genmab's historically higher price-to-earnings (P/E) ratio. Finally, our minimum acceptable rate of return has already been established at 15%. After performing the calculations, we determined the sticker price (also known as fair value or intrinsic value) to be DKK 2.930,40. We want to have a margin of safety of 50%, so we will divide it by 2. This means that we want to buy Genmab at a price of DKK 1.465,20 (or lower, obviously) if we use the Margin of Safety price.

The second calculation is known as the Ten Cap price. The rate of return that a company owner (or stockholder) receives on the purchase price of the company essentially represents its return on investment. The minimum annual return should be at least 10%, which I calculate as follows: The operating cash flow last year was 7.537, and capital expenditures were 235. I attempted to analyze their annual report to calculate the percentage of capital expenditures allocated to maintenance. I couldn't find it, but as a rule of thumb, you can expect that 70% of the capital expenditures will be allocated to maintenance purposes. This means that we will use 165 in our calculations. The tax provision was 1.532. We have 61,6 outstanding shares. Hence, the calculation will be as follows: (7.537 – 165 + 1.532) / 61,6 x 10 = DKK 1.445,45 in Ten Cap price.

The final calculation is called the Payback Time price. It is a calculation based on the free cash flow per share. With Genmab's Free Cash Flow Per Share at DKK 118,54 and a growth rate of 15%, if you want to recoup your investment in 8 years, the Payback Time price is DKK 1.871,25.

Conclusion

I believe that Genmab is an intriguing company with strong management. The company has built its moat through antibody expertise, proprietary technology platforms, intellectual property, a broad partnership network, and growing commercial capabilities. The company has historically achieved a high ROIC, even though there has been some volatility over the years, which is a pattern that is likely to continue as the business evolves. Genmab has also delivered high free cash flow with solid margins, supported by its royalty income and scalable business model, and this is expected to remain a key strength going forward. The reliance on DARZALEX is a risk for Genmab because a large share of its revenue depends on a single product that it does not control, making earnings vulnerable to decisions by its partner, competition, and regulatory changes. As patents begin to expire toward the end of the decade, royalties are expected to decline, creating a risk that new products may not fully replace this income in time. The reliance on third party partners is also a risk because the company depends on others to develop, produce, and sell its medicines, which limits its control over key decisions that affect growth and earnings. If partners change priorities, delay projects, or exit collaborations, it can lead to slower development, lost revenue opportunities, and increased uncertainty. The uncertainty in developing new therapies is another important risk because future growth depends on successfully bringing new drugs to market, a process that is long, costly, and highly unpredictable. Even promising candidates can fail due to effectiveness, safety, competition, or regulatory challenges, which could make it difficult to replace declining revenue from existing products. At the same time, there are several reasons to be positive. Commercialized medicines are a reason to invest in Genmab because the company is increasingly generating revenue from its own products, giving it greater control over growth and allowing it to capture more value from its innovation. The strong momentum of medicines like EPKINLY and Tivdak shows that this transition is working and helps reduce reliance on partner driven royalties over time. The pipeline is also a reason to invest because it includes several late stage drug candidates, such as Rina S and petosemtamab, that have the potential to become major future growth drivers and reduce reliance on Darzalex royalties. With multiple upcoming data readouts and a diversified set of technologies, the pipeline provides both near term catalysts and long term growth opportunities. Finally, the royalty portfolio remains a key strength because it provides a strong and highly profitable revenue base from approved medicines, allowing the company to fund growth and innovation without relying on external financing. At the same time, a diversified set of royalty products beyond DARZALEX offers continued growth potential and supports the transition toward a more independent biotech business. I believe there are many things to like about Genmab, and buying shares at the Ten Cap price of DKK 1,445 could be an attractive long term investment.

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