Genmab is a biotechnology company specializing in antibody-based therapies for cancer and other serious diseases. With a strong focus on innovation, the company has built a portfolio of commercialized medicines, a promising late-stage pipeline, and proprietary antibody technology platforms. Its partnerships with major pharmaceutical companies, along with a disciplined approach to mergers and acquisitions, have positioned Genmab for long-term growth. The question remains: Should this biotech leader have a place in your portfolio?
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The Business
Genmab is a biotechnology company founded in 1999 in Copenhagen, Denmark, specializing in antibody-based therapies for cancer and other diseases. Over the past 25 years, the company has built a strong track record in antibody discovery, engineering, and commercialization. It has developed its own specialized technologies to create more effective antibody-based treatments, allowing for stronger, more precise, and multi-targeted therapies. This innovation places Genmab at the forefront of immunotherapy, a field that uses the body’s own immune system to fight illnesses. Genmab primarily operates through a partnership-driven model, collaborating with global pharmaceutical companies to co-develop and commercialize its drug candidates. Rather than focusing on direct manufacturing and sales, the company licenses its technologies and antibodies to partners in exchange for upfront payments, milestone payments, and royalties on sales. In 2024, 81 percent of Genmab’s revenue came from royalties, with Darzalex (daratumumab), developed in collaboration with Janssen Pharmaceuticals, accounting for 65 percent of total revenue. The company has six royalty-generating drugs marketed by pharmaceutical giants such as Johnson & Johnson (Janssen), Novartis, and Amgen, along with two proprietary therapies co-marketed with AbbVie and Pfizer. Genmab is also transitioning into a fully integrated biotech company, with two wholly owned drugs currently in late-stage clinical development. This marks an important shift from relying solely on partnerships to developing and commercializing its own therapies, giving the company greater control over its future growth. Genmab’s moat is built on its strong intellectual property portfolio, protecting its proprietary antibody technologies and therapies. Patents provide a significant barrier to competition, ensuring exclusivity in the market for years. The company’s proprietary technologies set it apart by enhancing how antibodies function. DuoBody technology allows antibodies to recognize and attack two different disease targets at once, making treatments more effective for conditions like cancer and autoimmune diseases. HexaBody enhances the ability of antibodies to eliminate harmful cells, increasing their therapeutic effectiveness. ADC technology works like a guided missile by attaching a powerful drug to an antibody, ensuring that the drug is delivered directly to diseased cells while avoiding healthy ones. HexElect takes precision one step further by ensuring that an antibody only activates when it detects two specific targets on the same cell, reducing potential side effects. These advancements give Genmab a competitive edge over traditional antibody treatments by making therapies more effective, targeted, and safer for patients. The company’s high-margin royalty model reduces risk while allowing for sustained revenue growth. By licensing its antibody therapies to large pharmaceutical companies, Genmab benefits from commercial success without the costs of manufacturing and large-scale sales efforts. This capital-light approach enables it to focus on research and development while leveraging the commercialization expertise of its partners. Strategic partnerships with leading pharmaceutical companies further strengthen Genmab’s market position. Long-standing collaborations with Johnson & Johnson, AbbVie, Pfizer, Novartis, BioNTech, and Amgen allow the company to expand its pipeline without bearing full development costs. Its co-development and licensing strategy ensures steady revenue while minimizing capital expenditures. With eight approved antibody medicines and multiple late-stage candidates, Genmab is well positioned for sustained success. Its 2030 vision is to transition into a fully integrated biotech powerhouse, gaining greater control over drug development and commercialization.
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 and has played a critical role in shaping its scientific and strategic direction. With over 25 years of experience in the therapeutic antibody field, he has been instrumental in advancing Genmab’s innovative pipeline and driving its transition from a royalty-based biotech to a company with a growing portfolio of proprietary products. Before founding Genmab, Jan van de Winkel served as Vice President and Scientific Director of Medarex Europe, a biotech 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 contributions to the field are widely recognized, with over 300 scientific publications and more than 150 patents and pending patent applications. In addition to his role at Genmab, he is the chairman of the board of directors of Hookipa Pharma and a member of the board of directors of LEO Pharma. Under his leadership, Genmab has strategically shifted toward co-commercialization agreements, where the company shares 50 percent of development costs in exchange for 50 percent of the profits. This model has allowed Genmab to capture a significantly larger share of the value from its innovations compared to traditional royalty-based deals. He has also emphasized the importance of long-term value creation, even when it requires making difficult decisions that may not yield immediate financial gains. In interviews, he has spoken about the necessity of taking bold steps to secure the company’s future rather than focusing solely on short-term performance. Jan van de Winkel’s leadership exemplifies the qualities of a strong founder-CEO, balancing scientific expertise with strategic execution. His deep commitment to growing Genmab, rather than prioritizing personal wealth, is an important factor in the company’s success. Given Genmab’s expansion into proprietary products and its ambition to become a fully integrated biotech company, I believe Jan van de Winkel is the right person to lead Genmab forward.
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 consistently delivered a ROIC above 10% over the past decade, reflecting the company’s quality and operational efficiency. Over most of this period, ROIC has remained relatively stable between 15% and 20%, with only a few deviations. In 2023, ROIC dipped below 15%, marking its second-lowest level in the past ten years. While this might raise concerns, the decline was driven by a significant increase in operating expenses related to the launch of Epkinly in the United States and Japan. Importantly, Genmab managed to improve its ROIC again in 2024, signaling a strong recovery and disciplined capital allocation.
The following numbers represent the book value + dividend. In my previous format, this was referred to as the equity growth rate. It was the most important of the four growth rates I used in my analyses, which is why I will continue to use it in the future. As you are accustomed to seeing numbers in percentage form, I have decided to provide both the actual numbers and the year-over-year percentage growth. Genmab is a textbook example of how one would like to see equity grow over a decade. Not only has equity increased every year, but it has also grown by more than 10% annually. It is rare to see such consistency in a company's performance, making this achievement particularly impressive. Genmab's ability to grow its equity every year is a result of a well-rounded strategy that focuses on R&D, operational efficiency, strong financial management, strategic acquisitions, and a solid market position. As these factors are expected to remain in place, I believe Genmab is well-positioned to continue growing its equity in the coming years.
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. It is not surprising that Genmab has managed to deliver positive free cash flow every year over the past decade. While there have been years where free cash flow declined, it is very encouraging that free cash flow reached an all-time high in 2024. The levered free cash flow margin has also remained consistently high. Although it has not exceeded 60% since 2020, maintaining a margin above 35% is still impressive. The levered free cash flow yield decreased in 2024, but this is not a cause for concern as it was primarily due to the acquisition of ProfoundBio. Genmab has a clear capital allocation strategy for its free cash flow. The first priority is to accelerate the development of its high-impact, late-stage programs - EPKINLY, Rina-S, and Acasunlimab - through investments in Phase III clinical trials. The company is also committed to maximizing the success of its commercialized medicines, as these investments are expected to generate meaningful revenue by the end of the decade. The second priority is pursuing targeted business development and mergers & acquisitions to strengthen its pipeline. The third priority is returning capital to shareholders through share repurchases, with plans to buy back 1,9 million shares. Genmab believes this approach strikes the right balance between fueling revenue growth and enhancing shareholder value, and I tend to agree. The free cash flow yield is currently at its highest level in the past decade, suggesting that the shares are trading at a very attractive valuation. However, we will revisit valuation later in the analysis.
Debt
Another important aspect to consider is debt. It is crucial to assess whether a business has a manageable level of debt that can be repaid within three years, which is determined by dividing total long-term debt by earnings. Upon analyzing Genmab's financials, it is evident that the company has no debt. Therefore, debt is not a concern when evaluating an investment in Genmab.
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Risks
Genmab’s reliance on Darzalex presents a notable risk due to its significant contribution to the company’s revenue and ongoing disputes with Johnson & Johnson regarding royalty payments. As of 2024, Darzalex accounts for 65% of Genmab’s total revenue, making the company heavily dependent on this single product for its financial performance. While Darzalex remains a highly successful therapy for multiple myeloma, this level of concentration introduces multiple risks. One of the most pressing concerns is the royalty dispute with Johnson & Johnson, which has already led to unfavorable outcomes for Genmab. The core issue stems from Johnson & Johnson's classification of Darzalex’s formulations - the IV-administered version and the subcutaneous Darzalex Faspro - as separate products. Genmab argued that both versions should be treated as the same therapy, entitling it to a new 13-year royalty term on the subcutaneous formulation, but it lost both arbitration cases. As a result, Johnson & Johnson is now legally permitted to reduce its royalty payments, which could negatively impact Genmab’s earnings in the coming years. Another major risk is the lack of a clear successor to Darzalex. To mitigate its reliance on Darzalex, Genmab had been developing HexaBody-CD38, a next-generation therapy that showed deeper responses than Darzalex in treating relapsed/refractory multiple myeloma. However, Johnson & Johnson opted out of the partnership, citing an increasingly competitive multiple myeloma market, a high bar for differentiation, and evolving treatment paradigms that make it riskier to introduce another CD38-targeting drug. Despite promising clinical data, Johnson & Johnson did not see enough commercial potential to justify continued investment. The decision by Johnson & Johnson to walk away from HexaBody-CD38 creates two challenges for Genmab. First, Genmab now lacks a direct replacement for Darzalex, leaving a gap in its pipeline where a successor therapy was expected. Second, due to contractual restrictions, Genmab cannot develop HexaBody-CD38 for indications where Darzalex is already approved or in late-stage trials, significantly limiting its commercial potential. Because of these constraints, Genmab has stated that it will not seek new partners for the drug, reducing the likelihood of HexaBody-CD38 becoming a meaningful revenue driver.
The uncertainty in developing new therapies is a significant risk for Genmab because drug development is a long, expensive, and unpredictable process. Even with promising early results, there is no guarantee that a new therapy will succeed. Many drug candidates fail in later stages of development because they are not as effective as expected, have unexpected safety issues, or are outperformed by competing treatments. One of the biggest challenges is competition. The pharmaceutical industry is highly competitive, with many companies racing to develop better treatments. If a competitor creates a more effective or safer drug, it can reduce demand for Genmab’s therapies. This is especially true in cancer treatment, where new approaches such as CAR-T cell therapy and other advanced immunotherapies are gaining momentum. Even if Genmab’s drugs work well, newer treatments could make them less relevant over time. Another challenge is technological change. While Genmab has developed innovative antibody platforms like DuoBody, HexaBody, and ADC technology, advancing technology also brings risks. If newer technologies prove to be more effective, Genmab may need to adapt quickly to stay competitive. Additionally, using new technologies can lead to unforeseen issues, such as difficulties in manufacturing or unexpected side effects in later testing. Because Genmab relies on developing new therapies to replace older ones, any setback in drug development can affect its long-term growth. If too many of its drug candidates fail or do not perform well in the market, it could struggle to maintain its revenue as older therapies face competition.
Laws and regulations pose a significant risk for Genmab because its industry is one of the most heavily regulated sectors in the world, and policy changes can directly impact the company's ability to develop, price, and sell its therapies. The United States, Genmab's largest market, is particularly complex, with frequent regulatory changes influenced by political and economic factors. One of the main risks is pricing pressure. The U.S. government and regulatory bodies are increasingly pushing for lower drug prices, which could reduce the profitability of some of Genmab’s therapies. Governments worldwide are also taking steps to control healthcare costs. Countries with nationalized healthcare systems, such as those in Europe and parts of Asia, impose strict pricing controls, which may limit Genmab’s ability to set competitive prices for its treatments. Another major challenge is the impact of regulatory scrutiny on mergers and acquisitions. Like many pharmaceutical companies, Genmab relies on acquisitions and partnerships to secure new drug candidates and replace older products when their patents expire. However, regulatory agencies are tightening antitrust enforcement, making it more difficult for biotech and pharmaceutical firms to expand through acquisitions. If Genmab is unable to acquire or develop new high-margin therapies, it could struggle to sustain long-term growth as key drugs face increasing competition. Beyond pricing and acquisitions, complex global regulations add another layer of risk. Genmab must comply with strict laws governing drug approval, marketing, privacy, and data protection across multiple regions. Regulatory bodies in Europe, Asia, and the U.S. regularly update their pharmaceutical frameworks, which could create unexpected hurdles in clinical trials, drug approvals, or commercialization strategies. Any delays in approval processes or restrictions on how Genmab can market its therapies could slow product launches and impact revenue.
Reasons to invest
Genmab’s commercialized medicines are a compelling reason to invest in the company, as they provide a strong foundation for revenue growth, market expansion, and long-term sustainability. The company has successfully transitioned from relying solely on royalty revenues to actively co-developing and co-commercializing its own therapies, allowing it to capture a larger share of the profits. Genmab's commercial success is largely driven by EPKINLY and TIVDAK, two innovative cancer treatments that are already performing well in the market and have significant growth potential. EPKINLY (epcoritamab) is a cancer treatment that helps the immune system attack B-cell cancers, such as diffuse large B-cell lymphoma (DLBCL) and follicular lymphoma (FL). It was developed in partnership with AbbVie and has exceeded expectations since its launch, generating $281 million in sales in 2024, primarily in the U.S. and Japan. The biggest opportunity for growth lies in expanding EPKINLY's use to earlier stages of treatment, meaning patients could receive it sooner rather than waiting until other options fail. Three major clinical trial results are expected by the end of 2026, which could lead to first-line approval in DLBCL, the most common type of aggressive lymphoma. If successful, this could significantly expand the number of eligible patients, with peak sales potential projected to exceed $3 billion. TIVDAK (tisotumab vedotin), developed with Pfizer, is another promising cancer drug used to treat advanced cervical cancer, particularly for patients whose disease has worsened after chemotherapy. TIVDAK has already become the standard treatment for second-line cervical cancer, generating $131 million in sales in 2024. With its recent full FDA approval, TIVDAK is expected to see broader adoption, and its expansion into new markets like Japan and Europe in 2025 presents another growth opportunity. Both EPKINLY and TIVDAK are helping Genmab transition from a company that primarily earns royalties from drug partnerships to one that co-commercializes and sells its own therapies, significantly increasing its revenue potential. As these drugs expand into new indications and markets, they could become major revenue drivers for Genmab in the years ahead.
Genmab’s pipeline is a key reason to invest in the company because it represents the next phase of growth beyond its current commercialized medicines. The company is strategically prioritizing three late-stage drug candidates - Epcoritamab (EPKINLY), Rina-S, and Acasunlimab - which have the potential to drive significant revenue growth by the end of the decade. With seven ongoing Phase III trials and a broader portfolio of 12 products in 30 clinical trials, Genmab is well-positioned to expand its market presence and sustain long-term success. One of the most promising pipeline assets is Rina-S, a treatment for ovarian and endometrial cancer. It is currently in the final phase of testing through two large clinical trials. If successful, Rina-S could provide a new treatment option for a much larger group of ovarian cancer patients compared to existing therapies. Current treatments for platinum-resistant ovarian cancer, a form of the disease that stops responding to standard chemotherapy, are mostly effective only for a small group of patients with high levels of a protein called folate receptor alpha. However, Rina-S is designed to work in a broader patient population—around 85% of those with this type of ovarian cancer. This could allow Genmab to capture a larger share of the ovarian cancer market and position Rina-S as a valuable treatment option. The first approval for Rina-S is expected in 2027, and if successful, it could generate more than $2 billion in peak sales. Since Genmab has already successfully commercialized Tivdak, another drug for gynecologic cancers, it has the expertise needed to bring Rina-S to market effectively. Acasunlimab, another late-stage drug in Genmab’s pipeline, is being developed as a treatment for non-small cell lung cancer (NSCLC), the most common type of lung cancer. Currently, chemotherapy with docetaxel is the standard treatment for patients whose cancer has progressed after initial therapy. However, despite multiple efforts, newer treatments have struggled to outperform docetaxel in late-stage clinical trials. Acasunlimab could change this by offering better response rates and longer-lasting effects than existing options. If successful, Acasunlimab could generate up to $1 billion in peak sales. Since Genmab fully owns this drug, it will capture all future revenue from its commercialization rather than sharing profits with a partner. Genmab’s pipeline strategy is based on disciplined investment and prioritization. In 2024, the company reallocated R&D funding to focus on these high-impact late-stage programs while discontinuing early-stage candidates that did not meet its criteria. This approach ensures that resources are directed toward drug candidates with the highest probability of success and the greatest market potential. Genmab has also demonstrated its ability to rapidly advance promising drugs through clinical development, as seen with Epcoritamab, which progressed from its first human trial to full approval in just five years.
Genmab’s mergers and acquisitions strategy is a key reason to invest in the company, as it provides a pathway to expand its pipeline, accelerate drug development, and sustain long-term growth. The company has demonstrated a disciplined and strategic approach to acquisitions, focusing on late-stage drug candidates that align with its expertise in antibody-based therapies. A prime example of this strategy is Genmab’s acquisition of ProfoundBio, which significantly strengthened its portfolio. This acquisition not only gave Genmab full rights to Rina-S, a promising cancer therapy now in two Phase III trials, but also added new antibody-drug conjugate (ADC) platforms to its pipeline. Genmab’s ability to quickly integrate ProfoundBio and advance Rina-S into late-stage trials within a year highlights its efficiency in executing and capitalizing on acquisitions. This rapid progress suggests that Genmab can effectively identify high-potential assets and accelerate their development, creating significant value for shareholders. Looking ahead, Genmab is actively seeking further M&A opportunities to complement its internal research efforts. The company is primarily targeting Phase II or Phase III-ready drug candidates, particularly in oncology, where it has deep expertise. By focusing on mid-to-late-stage assets, Genmab aims to reduce development risk while capturing more value from its acquisitions. While the company is also considering opportunities in inflammation and immunology, oncology remains its primary focus due to its ability to evaluate and advance cancer therapies more efficiently than many competitors. Genmab’s approach to M&A is not just about adding new drugs to its pipeline - it is about selecting assets that can be accelerated through its development and commercialization expertise. The company’s strong track record in antibody-based medicines allows it to quickly assess promising technologies and execute deals efficiently. This was evident with the ProfoundBio acquisition, where Genmab moved faster than larger competitors to secure the deal. In 2024, Genmab reaffirmed its commitment to disciplined capital allocation, ensuring that any M&A activity aligns with its long-term value creation strategy. The company is currently evaluating multiple opportunities but remains selective, prioritizing assets with strong differentiation and significant commercial potential.
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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 121,36, which is from 2024. I have selected a projected future EPS growth rate of 12%. Finbox expects EPS to grow by 11,9% in the next five years. Additionally, I have selected a projected future P/E ratio of 24, 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 2.236,09. 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 1.118,04 (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 7.771, and capital expenditures were 187. 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 131 in our calculations. The tax provision was 1.320. We have 63,524 outstanding shares. Hence, the calculation will be as follows: (7.771 – 131 + 1.320) / 63,524 x 10 = DKK 1.410,49 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 119,39 and a growth rate of 12%, if you want to recoup your investment in 8 years, the Payback Time price is DKK 1.644,68.
Conclusion
I believe that Genmab is an intriguing company with strong management and a solid competitive position. The company benefits from a moat through its strong intellectual property portfolio, protecting its proprietary antibody technologies. Genmab consistently delivers a high ROIC, typically between 15% and 20%, reflecting its strong operational efficiency. In 2024, the company achieved its highest free cash flow ever, though its levered free cash flow margin declined primarily due to the acquisition of ProfoundBio rather than any fundamental weakness. However, Genmab’s reliance on Darzalex presents a significant risk, as it currently accounts for 65% of total revenue, making the company highly dependent on a single product. This risk is compounded by an ongoing royalty dispute with Johnson & Johnson, which has resulted in lower payments, and the lack of a clear successor to Darzalex following Johnson & Johnson’s decision to opt out of the HexaBody-CD38 partnership. Beyond Darzalex, Genmab faces broader risks in drug development, as many therapies fail in late-stage trials due to safety concerns, efficacy issues, or competitive pressures. The rapid pace of innovation in oncology and immunotherapy could also reduce the long-term relevance of its treatments. Additionally, changing regulations on drug pricing, approvals, and M&A oversight could limit Genmab’s ability to expand through acquisitions, set competitive prices, or bring new therapies to market, potentially affecting its profitability. Despite these risks, Genmab’s commercialized medicines, particularly EPKINLY and TIVDAK, provide a strong foundation for long-term success. By co-developing and co-commercializing these therapies, the company captures a larger share of profits, strengthening its financial position. Genmab’s late-stage pipeline, including Epcoritamab, Rina-S, and Acasunlimab, is another compelling reason to invest, as these therapies could drive significant revenue growth by the end of the decade. Additionally, Genmab’s disciplined M&A strategy has proven effective, with the ProfoundBio acquisition demonstrating its ability to identify and integrate high-potential assets quickly. As the company continues to seek Phase II and III-ready candidates, this strategy could further enhance its pipeline and long-term prospects. While I believe Genmab is a great company, there is uncertainty until it proves that new therapies can offset the future decline of Darzalex. For long-term investors willing to endure potential short-term stagnation in the stock price, buying Genmab below the Ten Cap price of DKK 1.400 could be a strong long-term investment opportunity.
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