Full Press Release Details
Arzerra is a trademark of Novartis Pharma AG. Kesimpta and Sensoready are trademarks of Novartis AG or its affiliates. DARZALEX and DARZALEX FASPRO are trademarks of Johnson & Johnson. OmniAb is a trademark of Photograph credits: Tuala Hjarn , 3FX, Inc., Andrei Jackamets and Connie Zhou for Gensler 154 2020 Annual Report / Forward Looking Statement Table of Contents Management's Review Financial Statements Contact Information Genmab A/S Kalvebod Brygge 43 1560 Copenhagen V Denmark T. +45 70 20 27 28 Genmab US, Inc. 777 Scudders Mill Road Plainsboro, NJ 08536 USA T. +1 609 430 2481 Genmab B.V. and Genmab Holding B.V.
The company is headquartered in Copenhagen, Denmark with locations in Utrecht, the Netherlands, Princeton, New Jersey, U.S. and Tokyo, Japan. For more information, please visit Genmab.com. Genmab A/S and/or its subsidiaries own the following trademarks: Genmab ; the Y-shaped Genmab logo ; Genmab in combination with the Y-shaped Genmab logo ; HuMax ; DuoBody ; DuoBody in combination with the DuoBody logo ; HexaBody ; HexaBody in combination with the HexaBody logo ; DuoHexaBody ; HexElect ; and UniBody .
To create novel therapies, Genmab utilizes its next-generation antibody technologies, which are the result of its collaborative company culture and a deep passion for innovation. Genmab's proprietary pipeline consists of modified antibody candidates, including bispecific T-cell engagers and next generation immune checkpoint modulators, effector function enhanced antibodies and antibody-drug conjugates.
Open Monoclonal Technology, Inc. UltiMAb is a trademark of Medarex, Inc. Opdivo is a trademark of Bristol-Myers Squibb Company. Velcade and NINLARO are trademarks of Millennium Pharmaceuticals Inc. Revlimid is a trademark of Celgene Corporation. Venclexta is a trademark of AbbVie, Inc. Tecentriq is a trademark of Genentech, Inc. TEPEZZA is a trademark of Horizon Therapeutics Ireland DAC. 2020, Genmab A/S.
For a further discussion of these risks, please refer to the section "Risk Management" in this annual report and the risk factors included in Genmab's most recent Annual Report on Form 20-F and other filings with the U.S. Securities and Exchange Commission (SEC). Genmab does not undertake any obligation to update or revise forward looking statements in this annual report nor to confirm such statements to reflect subsequent events or circumstances after the date made or in relation to actual results, unless required by law.
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.
Hexamerization The ordered clustering of six antibodies. Immunomodulatory agent A type of drug used to treat certain types of cancers, such as multiple myeloma. Examples include lenalidomide and pomalidomide. Proteasome inhibitor (PI) A type of drug used to treat certain types of cancer, such as multiple myeloma. Examples include bortezomib and carfilzomib. 153 2020 Annual Report / Glossary Table of Contents Management's Review Financial Statements Forward Looking Statement This annual report contains forward looking statements.
European Medicines Agency (EMA) European regulator y agency that facilitates development and access to medicines, evaluates applications for marketing authori-zation and monitors the safety of medicines. Progression free survival (PFS) Progression free sur vival. The length of time a patient lives without his/her disease worsening. BREEAM (Building Research Establishment Environmental Assessment Method) A sustainability assessment method for infrastructure and buildings.
Priority Review U.S. FDA designation used for drugs that, if approved, would be significant improvements in the safety or effectiveness of the treatment, diagnosis, or prevention of serious conditions when compared to standard applications. Bispecific antibody An antibody in which the two binding regions are not identical, with each region directed against two different antigens or against two different sites on the same antigen.
Epitope The specific surface portion of an antigen to which an antibody binds. Upon binding of the antibody to the epitope an immune response is elicited. U.S. Food and Drug Administration (U.S. FDA) U.S. regulator y agency responsible for ensuring the safety, efficacy and security of human and veterinar y drugs, biological products and medical devices.
Biologics License Application (BLA) A submission to apply for marketing approval from the U.S. FDA, which contains specific information on the manufacturing processes, chemistr y, pharmacology, clinical pharmacology and the medical effects of a biologic product. Pre-clinical Term used to refer to products that are at the stage of being investigated in the laborator y or in animals to determine the safety and efficacy of the product before it is tested in humans.
Transgenic mouse A mouse carr ying a transgene from a foreign species, typically a human, which transgene has been introduced into the replicating cells of the mouse, so the transgene is passed on to future generations/offspring of the trans-genic mouse. Apoptosis A form of programmed cell death. Dual-listed company A company whose shares are traded on two stock markets.
Complement dependent cytotoxicity (CDC) An antibody effector function that eliminates target cells Target A molecule of potential interest against which an antibody is raised/created. Antigen Immunogen. A target molecule that is specifi-cally bound by an antibody. Cytotoxic Toxic to living cells. Monotherapy Treatment of a medical condition by use of a single drug.
Marketing Authorization Application (MAA) A submission to apply for marketing approval for a drug from the EMA. Antibody-drug conjugate (ADC) Antibody with potent cytotoxic agents (toxins) coupled to it. Subcutaneous (SubQ) Applied under the skin. Monoclonal Derived from a single cell. Monoclonal anti-bodies derived from such single cell will be identical.
Clinical Term used to refer to drugs that are at the stage of being investigated in humans to determine the safety and efficacy of the drug before it can be submitted for approval by regulator y authorities. Initial Public Offering (IPO) An initial public offering of a company's stock Real-Time Oncology Review (RTOR) Pilot Program Allows the U.S. FDA to review data prior to the completed formal submission of a sBLA.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 152 2020 Annual Report / Independent Auditor's Report Table of Contents Management's Review Financial Statements Glossary American Depository Shares (ADSs) A U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange.
We also: Rasmus Friis J rgensen State Authorised Public Accountant mne28705 Henrik Trangeled Kristensen State Authorised Public Accountant mne23333 Identify and assess the risks of material misstatement of the Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. Hellerup, February 23, 2021 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab CVR no 3377 1231 As part of an audit in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional skepticism throughout the audit.
Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstate-ment, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark will always detect a material misstatement when it exists.
From the matters communicated with those charged with gover-nance, we determine those matters that were of most significance in the audit of the Financial Statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclo-sure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reason-ably be expected to outweigh the public interest benefits of such communication.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the Consolidated Financial Statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our inde-pendence, and where applicable, related safeguards.
Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the Financial Statements, including the disclosures, and whether the Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
Conclude on the appropriateness of Management's use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and the Parent Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Financial Statements or, if such disclosures are inadequate, to modify our opinion.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's and the Parent Company's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.
We also assessed the methodology, data and assumptions used in the discounted cash flow model and cost-plus margin approach by using valuation specialists to assess the fair value determined by Management for these performance obligations. Table of Contents Management's Review Financial Statements Independent Auditor's Report In preparing the Financial Statements, Management is respon-sible for assessing the Group's and the Parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless Management either intends to liquidate the Group or the Parent Company or to cease operations, or has no realistic alternative but to do so.
Reference is made to note 2.1. How our audit addressed the key audit matter We tested certain internal controls over the process to record revenue, including controls related to the identification of the performance obligations, allocation of transaction price and if the performance obligations were satisfied. We examined the collaboration agreement and evaluated and tested Management's identification of the performance obligations in the agreement, the allocation of transaction price between these performance obligations and whether the performance obligation was satisfied upon transfer of the licenses.
For the co-development activities related to the product concepts a cost-plus margin approach was used, which requires Management to make an estimate including selecting the costs and margin to apply. We focused on the AbbVie collaboration agreement because identifying performance obligations and allocating the transaction price between these performance obligations based on a best accounting estimate of relative stand-alone selling price and determining whether the performance obligations have been satisfied requires significant judgement by Management.
In relation to the AbbVie collaboration agreement it requires that Management ascertains that the delivery of the individual licenses and the co-development activities related to the product concepts are each a distinct performance obligation and to calculate a stand alone selling price for these performance obligations. For the individual licenses Management used a discounted cash flow model, which requires Management to make an estimate including selecting the discount rate, development timeline, regulatory risks, estimated market demand and future revenue potential.
The agreement includes four performance obligations: delivery of three licenses and co-development activities for the product concepts. During 2020, Genmab received an upfront payment of DKK 4,911 million and allocated DKK 4,398 million to the delivery of the licenses and DKK 513 million to the co-development activities for the product concepts. Genmab recognized revenue of DKK 4,398 million from the delivery of the licenses when the performance obligation was satisfied at a point in time for these.
Based on the work we have performed, in our view, Management's Review is in accordance with the Consolidated Financial Statements and the Parent Company Financial Statements and has been prepared in accordance with the requirements of the Danish Financial Statements Act. We did not identify any material misstate-ment in Management's Review. Management's Responsibilities for the Financial Statements Management is responsible for the preparation of consolidated financial statements and parent company financial statements that give a true and fair view in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 151 2020 Annual Report / Independent Auditor's Report Key audit matter Revenue recognition on AbbVie collaboration agreement On June 10, 2020, Genmab entered into a collaboration agreement with AbbVie Inc. to jointly develop and commercialize epcoritamab (DuoBody-CD3xCD20), DuoHexaBody-CD37 and DuoBody-CD3x5T4 and a discovery research collaboration for future differentiated antibody therapeutics for cancer.
In connection with our audit of the Financial Statements, our responsibility is to read Management's Review and, in doing so, consider whether Management's Review is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. Moreover, we considered whether Management's Review includes the disclosures required by the Danish Financial Statements Act.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Statement on Management's Review Management is responsible for Management's Review. Our opinion on the Financial Statements does not cover Management's Review, and we do not express any form of assurance conclusion thereon.
We have been reappointed annually by share-holder resolution for a total period of uninterrupted engagement of 20 years including the financial year 2020. 150 2020 Annual Report / Independent Auditor's Report Table of Contents Management's Review Financial Statements Independent Auditor's Report Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements for 2020.
Collectively referred to as the "Financial Statements". To the best of our knowledge and belief, prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014 were not provided. Appointment Following the listing of the shares of Genmab A/S on Nasdaq Copenhagen, we were first appointed auditors of Genmab A/S on March 22, 2001.
What we have audited The Consolidated Financial Statements and Parent Company Financial Statements of Genmab A/S for the financial year January 1 to December 31, 2020 comprise the statements of comprehen-sive income, the balance sheets, the statements of cash flows, the statements of changes in equity and the notes, including summary of significant accounting policies for the Group as well as for the Parent Company.
Independence We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and the additional requirements applicable in Denmark. We have also fulfilled our other ethical responsibilities in accordance with the IESBA Code. Our opinion is consistent with our Auditor's Long-form Report to the Audit and Finance Committee and the Board of Directors.
Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those standards and require-ments are further described in the Auditor's responsibilities for the audit of the Financial Statements section of our report. Auditor's Report We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We recommend that the Annual Report be adopted at the Annual General Meeting. Copenhagen, February 23, 2021 Executive Management Jan van de Winkel (President & CEO) Anthony Pagano (Executive Vice President & CFO) Judith Klimovsky (Executive Vice President & CDO) Anthony Mancini (Executive Vice President & COO) Board of Directors Deirdre P. Connelly (Chair) Pernille Erenbjerg (Deputy Chair) Rolf Hoffmann Jonathan Peacock Paolo Paoletti Anders Gersel Pedersen Mijke Zachariasse (Employee elected) Rima Bawarshi Nassar (Employee elected) Peter Storm Kristensen (Employee elected) 149 2020 Annual Report / Directors' and Management's Statement on the Annual Report Table of Contents Management's Review Financial Statements Independent To the shareholders of Genmab A/S Our Opinion In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the Group's and the Parent Company's financial position at December 31, 2020 and of the results of the Group's and the Parent Company's operations and cash flows for the financial year January 1 to December 31, 2020 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, International Financial Reporting Standards as adopted by the EU and further requirements in the Danish Financial Statements Act.
Annual Report In our opinion, Management's Review includes a true and fair account of the development in the operations and financial circumstances of the Group and the Parent Company, of the results for the year and of the financial position of the Group and the Parent Company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Parent Company.
The Annual Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with IFRS as endorsed by the EU and further requirements in the Danish Financial Statements Act. In our opinion, the Consolidated Financial Statements and the Parent Company Financial Statements give a true and fair view of the financial position at December 31, 2020 of the Group and the Parent Company and of the results of the Group and Parent Company operations and cash flows for 2020.
Please refer to note 5.6 in the consolidated financial statements for additional information regarding fees to auditors of the Group. 148 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Directors' and Management's Statement on the The Board of Directors and Executive Management have today considered and adopted the Annual Report of Genmab A/S for the financial year January 1 to December 31, 2020.
These services primarily include tax and VAT compliance, agreed-upon procedures, opinions relating to grants, educational training and accounting advice. The increase in fees from 2018 to 2019 was driven by additional services relating to Genmab's IPO on the Nasdaq in the U.S. Total change in operating assets and liabilities 969 (1,340) (668) Please refer to note 5.7 in the consolidated financial statements for additional information regarding adjustments to the cash flow statement of the Group.
Please refer to note 5.4 in the consolidated financial statements for additional information regarding commitments of the Group. 147 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 18 Fees to Auditors Appointed at the Annual General Meeting 18 Fees to Auditors Appointed at the Annual General Meeting 19 Adjustments to Cash Flow Statements 2020 2019 2018 2020 2019 2018 (DKK million) (DKK million) Note PricewaterhouseCoopers Audit services Audit-related services Tax and VAT services Other services Adjustments for non-cash transactions: Depreciation, amortization and impairment Share-based compensation expenses 4.9 1.0 0.3 - 1.7 2.3 0.5 2.4 0.8 0.1 0.4 0.1 5, 6, 7 3 137 200 99 147 55 91 Total adjustments for non-cash transactions 337 246 146 Change in operating assets and liabilities: Receivables Deferred revenue Other payables Total 6.2 6.9 1.4 320 513 136 (1,640) - 300 (762) - 94 Fees for other services than statutory audit of the financial statements provided by PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab amounted to DKK 1.3 million in 2020 (DKK 5.2 million in 2019 and DKK 0.6 million in 2018).
The terms generally allow us the option to cancel, reschedule and adjust our requirements based on our business needs prior to the delivery of goods or performance of services. It is not possible to predict the maximum potential amount of future payments under these agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each partic-ular agreement.
These milestone payments generally become due and payable only upon the achievement of certain develop-ment, clinical, regulatory or commercial milestones. The events triggering such payments or obligations have not yet occurred. 2020 2019 (DKK million) Cost per January 1 Additions 1,008 220 560 448 Cost per December 31 1,228 1,008 Value adjustments January 1 Profit/(loss) in subsidiaries, net of tax Exchange rate adjustment (355) 793 (44) (206) (155) 6 Value adjustments per December 31 394 (355) Investments in subsidiaries per December 31 1,622 653 In addition to the above obligations, we enter into a variety of agree-ments and financial commitments in the normal course of business.
Genmab US, Inc. Genmab K.K. Utrecht, the Netherlands Utrecht, the Netherlands New Jersey, USA Tokyo, Japan 100% 100% 100% 100% 100% 100% 100% 100% We also have certain contingent commitments under our license and collaboration agreements that may become due for future payments. As of December 31, 2020, these contingent commit-ments amounted to approximately DKK 11,591 million (USD 1,915 million) in potential future development, regulatory and commercial milestone payments to third parties under license and collaboration agreements for our pre-clinical and clinical-stage development programs as compared to DKK 6,322 million (USD 947 million) as of December 31, 2019.
Ownership and votes 2020 Ownership and votes 2019 Other Purchase Obligations The parent company has entered into a number of agreements primarily related to research and development activities carried out by Genmab. In the parent company, the contractual obligations amounted to DKK 970 million (2019: DKK 438 million). Name Domicile Genmab B.V. Genmab Holding B.V.
Balances with subsidiaries: Current receivables Current payables 143 (358) 42 (305) 40 (180) Genmab A/S has placed at each subsidiary's disposal a credit facility (denominated in local currency) that the subsidiary may use to draw from in order to secure the necessary funding of its activities. Please refer to note 5.2 to the consolidated financial statements for additional information regarding transactions with related parties of the Group. 146 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 17 Commitments 16 Investments in Subsidiaries Genmab A/S holds investments either directly or indirectly in the following subsidiaries: 17 Commitments Guarantees and Collaterals There were no bank guarantees as of December 31, 2020 or 2019.
They perform certain research and development, general and administrative, and management activities on behalf of the parent company. Genmab B.V. owns the HexaBody technology and the parent company performs certain research and develop-ment activities related to the HexaBody technology on behalf of Genmab B.V. All intercompany transactions have been eliminated in the consolidated financial statements of the Genmab Group.
Eatwell Judith Klimovsky 0.7 0.4 0.4 - - - - - - 1.1 - - 1.3 0.8 0.6 3.1 1.2 1.0 Total 1.5 - - 1.1 2.7 5.3 Remuneration of the Board of Directors for the parent is the same as disclosed in note 5.1 in the consolidation financial statements. Please refer to note 5.1 in the consolidated financial statements for additional information regarding the remuneration of the Board of Directors and Executive Management. 15 Related Party Disclosures Genmab A/S' related parties are the parent company's Board of Directors, Executive Management, and close members of the family of these persons. 2020 2019 2018 (DKK million) Transactions with subsidiaries: Income statement: Service fee income Service fee costs Financial income Financial expense 86 (1,652) - (3) 26 (937) 9 - 15 (546) 1 - Transactions with Subsidiaries Genmab B.V., Genmab Holding B.V., Genmab US, Inc. and Genmab K.K. are 100% (directly or indirectly) owned subsidiaries of Genmab A/S and are included in the consolidated financial state-ments.
Eatwell Judith Klimovsky 0.7 0.4 0.4 - - - - - - 1.3 - 0.2 1.5 0.8 1.0 3.5 1.2 1.6 Total 1.5 - - 1.5 3.3 6.3 145 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 15 Related Party Disclosures 2018 Defined Contribution Plans Share-Based Compensation Expenses Annual Cash Bonus (DKK million) Base Salary Other Benefits Total Jan van de Winkel David A.
Eatwell* Anthony Pagano* Anthony Mancini** Judith Klimovsky 0.7 - 0.3 0.3 0.4 - - - - - - - - - - 0.8 - - - 0.3 2.0 (0.2) 0.5 0.3 1.3 3.5 (0.2) 0.8 0.6 2.0 Total 1.7 - - 1.1 3.9 6.7 * David A. Eatwell stepped down as CFO on February 29, 2020, and Anthony Pagano was appointed Chief Financial Officer and member of the Executive Management on March 1, 2020. ** Appointed Chief Operating Officer and member of the Executive Management in March 2020. 2019 Defined Contribution Plans Share-Based Compensation Expenses Annual Cash Bonus (DKK million) Base Salary Other Benefits Total Jan van de Winkel David A.
Please refer to note 3.8 in the consolidated financial statements for additional information regarding other payables of the Group. 10 Deferred Revenue 12 Marketable Securities Please refer to note 4.4 to the consolidated financial statements for additional information on marketable securities of the Group. 2020 2019 (DKK million) Deferred revenue at January 1 Customer payment received Revenue recognized during the year - 4,911 (4,398) - - - Total at December 31 513 - Non-current deferred revenue Current deferred revenue 487 26 - - Total at December 31 513 - Please refer to note 3.7 in the consolidated financial statements for additional information regarding deferred revenue of the Group. 143 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 13 Financial Income and Expenses 13 Financial Income and Expenses 2020 2019 2018 (DKK million) Financial income: Interest and other financial income Interest from subsidiaries Realized and unrealized gains on marketable securities (fair value through the income statement), net Realized and unrealized gains on other investments, net Realized and unrealized gains on fair value hedges, net Realized and unrealized exchange rate gains, net 184 - 120 9 63 1 - 70 - - 9 - - 100 - - 2 177 Total financial income 254 238 243 Financial expenses: Interest and other financial expenses Interest to subsidiaries Realized and unrealized losses on marketable securities (fair value through the income statement), net Realized and unrealized exchange rate losses, net (2) (3) (1) - - - (91) (1,423) - - (11) - Total financial expenses (1,519) (1) (11) Net financial items (1,265) 237 232 Interest and other financial income on financial assets measured at amortized cost 7 22 8 Interest and other financial expenses on financial liabilities measured at amortized cost (1) - - Please refer to note 4.5 in the consolidated financial statements for additional information regarding financial income and expenses of the Group. 144 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 14 Remuneration of the Board of Directors and Executive Management 14 Remuneration of the Board of Directors and Executive Management The total remuneration of the Board of Directors and Executive Management is as follows: 2020 2019 2018 (DKK million) Wages and salaries Share-based compensation expenses 10 8 10 8 9 8 Total 18 18 17 The remuneration of each of the Executive Management is described below: 2020 Defined Contribution Plans Share-Based Compensation Expenses Annual Cash Bonus (DKK million) Base Salary Other Benefits Total Jan van de Winkel David A.
December 31, 2020 December 31, 2019 December 31, 2018 (DKK million) Depreciation charge of right-of-use assets Properties Equipment 13 - 11 - - - Total depreciation charge of right-of-use assets 13 11 - Interest expense Expense relating to short-term leases 1 - 1 - - - 142 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 12 Marketable Securities 9 Receivables 11 Other Payables 2020 2019 2020 2019 (DKK million) (DKK million) Receivables related to collaboration agreements Receivables from subsidiaries Interest receivables Other receivables Prepayments 2,176 143 55 18 136 2,849 42 34 11 46 Liabilities related to collaboration agreements Staff cost liabilities Other liabilities Payable to subsidiaries Accounts payable 15 56 721 358 70 8 20 487 305 33 Total 2,528 2,982 Total at December 31 1,220 853 Non-current receivables Current receivables 6 2,522 6 2,976 Non-current other payables Current other payables 1 1,219 1 852 Total 2,528 2,982 Total at December 31 1,220 853 Please refer to note 3.5 in the consolidated financial statements for additional information regarding receivables of the Group.
Total lease liabilities 23 35 There were no additions to the right-of-use assets in 2020. Please refer to note 3.3 in the consolidated financial statements for additional information regarding leases of the Group. Amounts Recognized in the Statements of Comprehensive Income The statement of comprehensive income shows the following amounts relating to leases: 8 Other Investments Please refer to note 3.4 to the consolidated financial statements for additional information on other investments of the Group.
The total future minimum payments over the term of the lease are approximately DKK 342 million and estimated capital expenditures to fit out the space are approximately DKK 40 million. Total right-of-use assets 24 34 Lease liabilities Current Non-current 12 11 12 23 Future minimum payments under our leases with commencement dates after December 31, 2020 are not included in the table above.
The leases are non-cancellable for various periods up to 2038. Interest expense is included in net financial items and expenses relating to short-term leases are included in operating expenses in the statement of comprehensive income. Future minimum payments under our leases as of December 31, 2020, December 31, 2019, and December 31, 2018, are as follows: (DKK million) 2020 2019 2018 Amounts Recognized in the Balance Sheets The balance sheet shows the following amounts relating to leases: Payment due Less than 1 year 1 to 3 years More than 3 years but less than 5 years More than 5 years 12 12 - - 12 24 - - 11 25 11 - December 31, 2020 December 31, 2019 (DKK million) Right-of-use assets Properties Equipment Total 24 36 47 24 - 34 - During 2020, Genmab entered into a lease agreement with respect to the new headquarters in Denmark with a commencement date in March 2023 and is non-cancellable until March 2038.
Cost at December 31 820 Accumulated amortization and impairment per January 1 Amortization for the year Impairment for the year Disposals for the year Exchange rate adjustment (397) (97) (22) - - Accumulated amortization and impairment per December 31 (516) Carrying amount at December 31 304 2019 Cost per January 1 Additions for the year Disposals for the year Exchange rate adjustment 745 75 - - Cost at December 31 820 Accumulated amortization and impairment per January 1 Amortization for the year Impairment for the year Disposals for the year Exchange rate adjustment (302) (95) - - - Accumulated amortization and impairment per December 31 (397) Carrying amount at December 31 423 140 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 6 Property, Plant and Equipment 6 Property, Plant and Equipment Equipment, furniture and fixtures Total property, plant and equipment Leasehold improvements (DKK million) 2020 Cost at January 1 Additions for the year Disposals for the year 4 - - 23 3 (3) 27 3 (3) Cost at December 31 4 23 27 Accumulated depreciation and impairment at January 1 Depreciation for the year Impairment for the year Disposals for the year (1) (1) - - (14) (4) - 3 (15) (5) - 3 Accumulated depreciation and impairment at December 31 (2) (15) (17) Carrying amount at December 31 2 8 10 2019 Cost at January 1 Additions for the year Disposals for the year 4 - - 20 5 (2) 24 5 (2) Cost at December 31 4 23 27 Accumulated depreciation and impairment at January 1 Depreciation for the year Impairment for the year Disposals for the year (1) - - - (12) (4) - 2 (13) (4) - 2 Accumulated depreciation and impairment at December 31 (1) (14) (15) Carrying amount at December 31 3 9 12 2020 2019 2018 (DKK million) Depreciation and impairments are included in the income statement as follows: Research and development expenses General and administrative expenses 3 2 3 1 2 1 Total 5 4 3 Please refer to note 3.2 in the consolidated financial statements for additional information regarding property, plant and equipment of the Group. 141 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 7 Leases 7 Leases The parent company has entered into lease agreements with respect to office space and office equipment.
Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 5 Intangible Assets 5 Intangible Assets 2020 2019 2018 Licenses, Rights, and Patents (DKK million) (DKK million) Amortization and impairments are included in the income statement as follows: Research and development expenses 2020 Cost per January 1 Additions for the year Disposals for the year Exchange rate adjustment 820 - - - 119 95 52 Total 119 95 52 Please refer to note 3.1 in the consolidated financial statements for additional information regarding intangible assets of the Group.
Total 9,985 5,392 3,041 Please refer to note 2.1 in the consolidated financial statements for additional information regarding revenue of the Group. 138 2020 Annual Report / Financial Statements / Parent Company Contents 2020 Annual Report / Financial Statements / Parent Company Statements of Changes in Equity / 4 Corporate and Deferred Tax 4C orporate and Deferred Tax Taxation - Income Statement & Shareholders' Equity (DKK million) 2020 2019 2018 Current tax on result 1,190 444 161 Adjustment to deferred tax (113) 275 255 Adjustment to valuation allowance - - (252) Total tax for the period in the income statement 1,077 719 164 A reconciliation of Genmab's effective tax rate relative to the Danish statutory tax rate is as follows: (DKK million) 2020 2019 2018 Net result before tax 5,835 2,885 1,636 Tax at the Danish corporation tax rate of 22% for all periods 1,284 635 360 Tax effect of: Recognition of previously unrecognized tax losses and deductible temporary differences - - (240) Non-deductible expenses/non-taxable income and other permanent differences, net (201) 72 44 All other (6) 12 - Total tax effect (207) 84 (196) Total tax for the period in the income statement 1,077 719 164 Total tax for the period in shareholders' equity (44) (24) (89) Effective Tax Rate 18.5% 24.9% 10.0% Taxation - Balance Sheet Significant components of the deferred tax asset are as follows: (DKK million) 2020 2019 Share-based instruments 43 64 Deferred revenue 113 - Other temporary differences 21 1 Total 177 65 Valuation allowance - - Total deferred tax assets 177 65 Please refer to note 2.4 in the consolidated financial statements for additional information regarding corporate and deferred tax of the Group.
The parent company's share of other comprehensive income arising from the investment is recognized in other comprehensive income of the parent company. Share-based Compensation Expenses In the financial statements for the parent company, expenses and exercise proceeds related to employees in the subsidiaries are allocated to the relevant subsidiary where the employee has entered an employment contract. 137 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Statements of Changes in Equity / 2 Revenue 2 Revenue 3 Staff Costs 2020 2019 2018 2020 2019 2018 (DKK million) (DKK million) Revenue: Royalties Reimbursement revenue Milestone revenue License revenue Wages and salaries Share-based compensation Defined contribution plans Other social security costs 182 35 15 21 140 34 11 13 105 23 7 1 4,741 517 351 4,376 3,155 368 1,869 - 1,741 265 687 348 Total 253 198 136 Total 9,985 5,392 3,041 Staff costs are included in the income statement as follows: Research and development expenses General and administrative expenses Revenue split by collaboration partner: Janssen AbbVie Roche Seagen BioNTech Novartis Other collaboration partners 191 62 148 50 98 38 4,693 4,185 305 230 212 201 159 4,983 - 7 226 115 23 38 2,390 - - 162 83 338 68 Total 253 198 136 Average number of FTE 180 136 96 Number of FTE at year-end 210 154 113 Please refer to note 2.3 in the consolidated financial statements for additional information regarding staff costs of the Group.
Under the equity method, the investment in a subsidiary is recognized on initial recognition at cost, and the carrying amount is increased or decreased to recognize the parent company's share of the profit or loss of the investment after the date of acquisition. The parent company's share of profit or loss is recognized in the parent company's profit or loss.
Genmab A/S did not have to change its accounting policies as a result of the adoption of these standards. Please refer to note 1.2 in the consolidated financial statements for a description of new accounting policies and disclosures of the Group. Supplementary Accounting Policies for the Parent Company Investments in Subsidiaries The equity method is used for measuring the investments in subsid-iaries.
Please refer to note 1.1 in the consolidated financial statements for a description of the accounting policies of the Group. Please refer to note 1.3 in the consolidated financial statements for a description of management's judgements and estimates under IFRS. A number of new or amended standards became applicable for the current reporting period.
Balance at December 31, 2018 61 8,059 92 (198) 8,014 Net result Other comprehensive income - - - - - 6 2,166 - 2,166 6 Total comprehensive income - - 6 2,166 2,172 Exercise of warrants Shares issued for cash Expenses related to capital increases Share-based compensation expenses Net settlement of RSUs Tax on items recognized directly in equity 1 3 - - - - 64 3,870 (238) - - - - - - - - - - - - 147 (9) 24 65 3,873 (238) 147 (9) 24 Balance at December 31, 2019 65 11,755 98 2,130 14,048 Net result Other comprehensive income, net - - - - - (44) 4,758 - 4,758 (44) Total comprehensive income - - (44) 4,758 4,714 Transactions with owners: Exercise of warrants Share-based compensation expenses Net settlement of RSUs Tax on items recognized directly in equity 1 - - - 139 - - - - - - - - 200 (25) 44 140 200 (25) 44 Balance at December 31, 2020 66 11,894 54 7,107 19,121 136 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Notes to the Financial Statements of the Parent Company 1 Accounting Policies The financial statements of the parent company have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and in accordance with IFRS as endorsed by the EU and further requirements in the Danish Financial Statements Act (Class D).
Under the terms of the original agreement, for each of the additional programs 131 2020 Annual Report / Financial Statements / Group Table of Contents Management's Review Financial Statements Table of Contents Financial Statements of the Parent Company Notes 137 138 138 139 140 141 142 142 143 133 134 135 136 Statements of Comprehensive Income Balance Sheets Statements of Cash Flows Statements of Changes in Equity 1 Accounting Policies 2 Revenue 3 Staff Costs 4 Corporate and Deferred Tax 5 Intangible Assets 6 Property, Plant and Equipment 7 Leases 8 Other Investments 9 Receivables 143 143 143 144 145 10 Deferred Revenue 11 Other Payables 12 Marketable Securities 13 Financial Income and Expenses 14 Remuneration of the Board of Directors and Executive Management 15 Related Party Disclosures 16 Investments in Subsidiaries 17 Commitments 18 Fees to Auditors Appointed at the Annual General Meeting 19 Adjustments to Cash Flow Statements 146 147 147 148 148 132 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Financial Statements of the Parent Company Income Statement (DKK million) Note 2020 2019 2018 Revenue 2 9,985 5,392 3,041 Statements of Comprehensive Income Research and development expenses General and administrative expenses 3, 5, 6 3, 6 (3,041) (637) (2,235) (354) (1,298) (220) Operating expenses (3,678) (2,589) (1,518) Operating result Profit / (Loss) in subsidiaries, net of tax Financial income Financial expenses 6,307 793 254 (1,519) 2,803 (155) 238 (1) 1,523 (119) 243 (11) 16 13 13 Net result before tax Corporate tax 5,835 (1,077) 2,885 (719) 1,636 (164) 4 Net result 4,758 2,166 1,472 Statement of Comprehensive Income Net result 4,758 2,166 1,472 Other comprehensive income: Amounts which may be re-classified to the income statement: Adjustment of foreign currency fluctuations on subsidiaries (44) 6 10 Total comprehensive income 4,714 2,172 1,482 133 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Financial Statements of the Parent Company (DKK million) Note December 31, 2020 December 31, 2019 Assets Intangible assets Property, plant and equipment Right-of-use assets Investments in subsidiaries Receivables Deferred tax assets Other investments 5 6 7 16 9 4 8 304 10 24 1,622 6 177 14 423 12 34 653 6 65 149 Balance Sheets Total non-current assets 2,157 1,342 Corporate tax receivable Receivables Receivables from subsidiaries Marketable securities Cash and cash equivalents 4 9 9 12 250 2,379 143 8,819 7,133 - 2,934 42 7,419 3,274 Total current assets 18,724 13,669 Total assets 20,881 15,011 Shareholders' Equity and Liabilities Share capital Share premium Other reserves Retained earnings 66 11,894 54 7,107 65 11,755 98 2,130 Total shareholders' equity 19,121 14,048 Provisions Lease liabilities Deferred revenue Other payables 4 11 487 1 2 23 - 1 7 10 11 Total non-current liabilities 503 26 Corporate tax payable Payable to subsidiaries Lease liabilities Deferred revenue Other payables 4 11 7 10 11 - 358 12 26 861 73 305 12 - 547 Total current liabilities 1,257 937 Total liabilities 1,760 963 Total shareholders' equity and liabilities 20,881 15,011 134 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Financial Statements of the Parent Company 2020 2019 2018 (DKK million) Note Cash flows from operating activities: Net result before tax Reversal of financial items, net Reversal of profit /(loss) in subsidiaries, net of tax Adjustment for non-cash transactions Change in operating assets and liabilities 5,835 1,265 (793) 337 969 2,885 (237) 155 246 (1,340) 1,636 (232) 119 146 (668) Statements of 13 19 19 Cash Flows Cash provided by operating activities before financial items 7,613 1,709 1,001 Interest received Interest elements of lease payments Interest paid Corporate taxes (paid)/received 170 (1) (11) (1,476) 111 (1) (13) (476) 44 - - 46 7 Net cash provided by operating activities 6,295 1,330 1,091 Cash flows from investing activities: Investment in intangible assets Investment in tangible assets Transactions with subsidiaries Marketable securities bought Marketable securities sold 5 6 - (3) (47) (12,414) 10,370 (23) (5) (329) (5,812) 3,940 (398) (6) (69) (3,521) 2,221 12 Net cash (used in) investing activities (2,094) (2,229) (1,773) Cash flows from financing activities: Warrants exercised Shares issued for cash Costs related to issuance of shares Principal elements of lease payments Purchase of treasury shares Payment of withholding taxes on behalf of employees on net settled RSUs 140 - - (12) - (25) 65 3,873 (238) (12) - (9) 75 - - - (146) - 7 Net cash provided by (used in) financing activities 103 3,679 (71) Changes in cash and cash equivalents Cash and cash equivalents at the beginning of the period Exchange rate adjustments 4,304 3,274 (445) 2,780 478 16 (753) 1,220 11 Cash and cash equivalents at the end of the period 7,133 3,274 478 Cash and cash equivalents include: Bank deposits Short-term marketable securities 4,927 2,206 2,606 668 478 - Cash and cash equivalents at the end of the period 7,133 3,274 478 135 2020 Annual Report / Financial Statements / Parent Company Table of Contents Management's Review Financial Statements Financial Statements of the Parent Company Translation reserves Retained earnings Shareholders' equity (DKK million) Share capital Share premium Balance at December 31, 2017 61 7,984 82 (1,855) 6,272 Statements Changes in Distribution of the Year's Result of Equity Change in accounting policy: Adoption of IFRS 15 - - - 151 151 Adjusted total equity at January 1, 2018 61 7,984 82 (1,704) 6,423 Net result Other comprehensive income - - - - - 10 1,472 - 1,472 10 Total comprehensive income - - 10 1,472 1,482 Exercise of warrants Purchase of treasury shares Share-based compensation expenses Tax on items recognized directly in equity - - - - 75 - - - - - - - - (146) 91 89 75 (146) 91 89 The Board of Directors proposes that the parent company's 2020 net income of DKK 4,758 million (2019: net income of DKK 2,166 and 2018: net income of DKK 1,472 million) be carried forward to next year by transfer to retained earnings.
The companies will collabo-rate on research to identify an initial product candidate and CureVac will contribute a portion of the overall costs for the development of this product candidate, up to the time of an Investigational New Under the terms of a December 2013 amendment, Janssen was entitled to work on up to 10 additional programs. Genmab received an initial payment of USD 2 million from Janssen.
CureVac During December 2019, Genmab entered into a research collab-oration and license agreement with CureVac AG. The strategic partnership will focus on the research and development of differ-entiated mRNA-based antibody products by combining CureVac's mRNA technology and know-how with Genmab's proprietary antibody technologies and expertise. Under the terms of the agreement Genmab will provide CureVac with a USD 10 million upfront payment.
Janssen (DuoBody ) In July 2012, Genmab entered into a collaboration with Janssen to create and develop bispecific antibodies using our DuoBody platform. Under this original agreement, Janssen had the right to use the DuoBody technology to create panels of bispecific antibodies (up to 10 DuoBody programs) to multiple disease target combinations. Genmab received an upfront payment of USD 3.5 million from Janssen and will potentially be entitled to milestone and license payments of up to approximately USD 175 million, as well as royalties for each commercialized DuoBody product.
Genmab received an exclusive license to three proprietary targets from Immatics, with an option to license up to two additional targets at predetermined economics. Under the terms of the agreement, Genmab paid Immatics an upfront fee of USD 54 million and Immatics is eligible to receive up to USD 550 million in development, regulatory and commercial milestone payments for each product, as well as tiered royalties on net sales. 5.9 Subsequent Events No events have occurred subsequent to the balance sheet date that could significantly affect the financial statements as of December 31, 2020.
As of December 31, 2020, seven DuoBody product candi-dates created under this collaboration were in the clinic. One of these, amivantamab, is the first product candidate created using the DuoBody technology platform to be submitted for regula-tory approval. Immatics In July 2018, Genmab entered into a research collaboration and exclusive license agreement with Immatics to discover and develop next-generation bispecific immunotherapies to target multiple cancer indications.
The agreement also includes provisions which will allow the parties to opt out of joint development at key points. Genmab and BioNTech have selected two product candidates for clinical development, DuoBody-CD40x4 1BB (GEN1042) and DuoBody-PD-L1x4 1BB (GEN1046), both of which are now in clinical trials. Janssen had exercised 14 licenses under this collaboration, not all of which are active, and no further options remain for use by Janssen.
Genmab paid an upfront fee of USD 10 million to BioNTech. If the companies jointly select any product candidates for clinical devel-opment, development costs and product ownership will be shared equally going forward. If one of the companies does not wish to move a product candidate forward, the other company is entitled to continue developing the product on predetermined licensing terms.
BioNTech In May 2015, Genmab entered an agreement with BioNTech to jointly research, develop and commercialize bispecific antibody products using Genmab's DuoBody technology platform. Under the terms of the agreement, BioNTech will provide proprietary antibodies against key immunomodulatory targets, while Genmab provides propri-etary antibodies and access to its DuoBody technology platform.
In addition, CureVac is eligible to receive tiered royalties in the range from mid-single digits up to low double digits per product. CureVac would retain an option to participate in development and/or commercialization of one of the potential additional programs under predefined terms and conditions. Further, Genmab made a EUR 20 million equity investment in CureVac.
The agreement also includes three additional options for Genmab to obtain commercial licenses to CureVac's mRNA technology at pre-defined terms, exercisable within a five-year period. If Genmab exercises any of these options, it would fund all research and would develop and commercialize any resulting product candidates with CureVac eligible to receive between USD 275 million and USD 368 million in development, regulatory and commercial milestone payments for each product, dependent on the specific product concept.
In addition, Genmab will be entitled to royalties on sales of any commercialized products. All research work is funded by Janssen. Drug Application. Genmab would thereafter be fully responsible for the development and commercialization of the potential product, in exchange for USD 280 million in development, regulatory and commercial milestones and tiered royalties in the range from mid-single digits up to low-double digits to CureVac.
Genmab and AbbVie split 50:50 the development costs related to epcoritamab, DuoHexaBody-CD37 and DuoBody-CD3x5T4 while Genmab will be responsible for 100% of the costs for the discovery research programs up to opt-in. that Janssen successfully initiates, develops and commercializes, Genmab will potentially be entitled to receive average milestone and license payments of approximately USD 191 million.
Except for these royalty-bearing sales, the parties share in pre-tax profits from the sale of products on a 50:50 basis. Included in these potential milestones are up to USD 1.15 billion in payments related to clinical development and commer-cial success across the three existing bispecific antibody programs. In addition, and also included in these potential milestones, if all four next-generation antibody product candidates developed as a result of the discovery research collaboration are successful, Genmab is eligible to receive up to USD 2.0 billion in option exercise 130 2020 Annual Report / Financial Statements / Group Table of Contents Management's Review Financial Statements Section 5 Other Disclosures / 5.9 Subsequent Events and success-based milestones.
In August 2020, Genmab announced that Novartis planned to transition Arzerra to an oncology access program for CLL patients in the U.S. Genmab recognized USD 30 million lump sum from Novartis as payment for lost potential royalties. Ofatumumab is no longer in development for CLL. Under the terms of the agreement, Genmab received a USD 750 million upfront payment from AbbVie with the potential for Genmab to receive up to USD 3.15 billion in additional development, regu-latory and sales milestone payments for all programs, as well as tiered royalties between 22% and 26% on net sales for epcoritamab outside the U.S. and Japan.
Genmab is entitled to a 10% royalty payment of net sales for non-cancer treatments. In 2020 subcutaneous ofatumumab was approved by the U.S. FDA, as Kesimpta , for the treatment of RMS in adults. Ofatumumab was also previously approved as Arzerra for certain CLL indications. In 2019, the marketing authorization for Arzerra was withdrawn in the EU and several other territories.
Novartis (Ofatumumab) Genmab and GlaxoSmithKline (GSK) entered a co-development and collaboration agreement for ofatumumab in 2006. The full rights to ofatumumab were transferred from GSK to Novartis in 2015. Novartis is now fully responsible for the development and commer-cialization of ofatumumab in all potential indications, including autoimmune diseases.
In any other markets, Seagen will be responsible for commercializing tisotumab vedotin and Genmab will receive royalties based on a percentage of aggregate net sales ranging from the mid-teens to the mid-twenties. The companies will continue the practice of joint decision-making on the worldwide development and commercialization strategy for tisotumab vedotin.
In October 2020, Genmab and Seagen entered into a joint commercialization agreement. Genmab will co-promote tisotumab vedotin in the U.S., and we will lead commercial oper-ational activities and book sales in Japan, while Seagen will lead operational commercial activities in the U.S., Europe and China with a 50:50 cost and profit split in those markets.
Seagen was granted rights to exercise a co-development and co-commercialization option at the end of Phase I clinical development for tisotumab vedotin. In August 2017, Seagen exercised its option to co-develop and co-commercialize tisotumab vedotin with Genmab. Under the agreement, Seagen and Genmab will each be responsible for leading tisotumab vedotin commercialization activities in certain territories.
Genmab will conduct Phase 1 studies for these programs and AbbVie retains the right to opt-in to program development. Seagen (Tisotumab vedotin) In September 2010, Genmab and Seagen entered into an ADC collaboration, and a commercial license and collaboration agreement was executed in October 2011. Under the agreement, Genmab was granted rights to utilize Seagen's ADC technology with its human monoclonal TF antibody.
Genmab retains the right to co-commercialize these products, along with AbbVie, outside of the U.S. and Japan. For the discovery research collaboration, which combines proprietary antibodies from both companies along with Genmab's DuoBody technology and AbbVie's payload and ADC technology, the companies will select and develop up to four additional differentiated next-generation antibody-based product candidates, potentially across both solid tumors and hemato-logical malignancies.
Genmab will be the principal for net sales in the U.S. and Japan and receive tiered royalties on remaining global sales. For DuoHexaBody-CD37, DuoBody-CD3x5T4 and any product candidates developed as a result of the companies' discovery research collaboration, Genmab and AbbVie will share responsibilities for global development and commercialization in the U.S. and Japan.
AbbVie On June 10, 2020, Genmab entered into a broad oncology collabo-ration agreement with AbbVie to jointly develop and commercialize epcoritamab, DuoHexaBody-CD37, and DuoBody-CD3x5T4 and a discovery research collaboration for future differentiated antibody therapeutics for cancer. For epcoritamab, the companies will share commercial responsibilities in the U.S. and Japan, with AbbVie responsible for further global commercialization.
Teprotumumab was created by Genmab under the collaboration with Roche and devel-opment and commercialization of the product, approved in 2020 by the U.S. FDA, as TEPEZZA, for the treatment of thyroid eye disease, is now being conducted by Horizon Therapeutics under a license from Roche. Under the terms of Genmab's agreement with Roche, Genmab will receive mid-single digit royalties on sales of TEPEZZA .
Roche (Teprotumumab) In May 2001, Genmab entered a collaboration with Roche to develop human antibodies to disease targets identified by Roche. In 2002, this alliance was expanded, and Roche made an equity investment in Genmab. Under the agreement, Genmab will receive milestones as well as royalty payments on successful products and, in certain circumstances, Genmab could obtain rights to develop products based on disease targets identified by Roche.
The royalties Janssen pays to Halozyme represent a mid-single digit percentage rate of subcutaneous daratumumab sales. Janssen has started reducing its royalty payments to Genmab by what it claims to be Genmab's share of Janssen's royalty payments to Halozyme beginning in the second quarter of 2020 and has continued to do so. The arbitration is also to settle whether Janssen's obligation to pay royalties on sales of licensed product extends, in each applicable country, until the expiration or invali-dation of the last-to-expire relevant Genmab-owned patent or the last-to-expire relevant Janssen-owned patent covering the product, as further defined and described in the license agreement.
Under the license agreement, Genmab is, among other things, entitled to royalties from Janssen on sales of daratumumab (marketed as DARZALEX for intravenous administration and for subcutaneous administration as DARZALEX FASPRO in the U.S. and DARZALEX SC in Europe). The arbitration first is to settle whether Genmab is required to share in Janssen's royalty payments to Halozyme Therapeutics, Inc. for the Halozyme enzyme technology used in the subcutaneous formulation of daratumumab.
Genmab is also eligible to receive certain additional payments in connection with development, regulatory and sales milestones. Total change in operating assets and liabilities 987 (1,218) (634) 129 2020 Annual Report / Financial Statements / Group Table of Contents Management's Review Financial Statements Section 5 Other Disclosures / 5.8 Collaborations and Technology Licenses In September 2020, Genmab commenced binding arbitration of two matters arising under its license agreement with Janssen relating to daratumumab.
Pursuant to the terms of the agreement, Janssen's obligation to pay royalties under this agreement will expire on a country-by-country basis on the later of the date that is 13 years after the first sale of daratumumab in such country or upon the expiration of the last-to-expire relevant product patent (as defined in the agreement) covering daratu-mumab in such country.
Under this agreement, Janssen is fully responsible for developing and commercializing daratumumab and all costs associated therewith. Genmab receives tiered royalty payments between 12% and 20% based on Janssen's annual net product sales. The royalties payable by Janssen are limited in time and subject to reduction on a country-by-country basis for customary reduction events, including upon patent expiration or invalidation in the relevant country and upon the first commercial sale of a biosimilar product in the relevant country (for as long as the biosim-ilar product remains for sale in that country).
Genmab seeks collaborations that will allow Genmab to retain significant future participation in product sales through either profit-sharing or royalties paid on net sales. Below is an overview of certain of Genmab's collaborations that have had a significant impact or are expected in the near term have a signifi-cant impact on financial results. 2020 2019 2018 (DKK million) Note Adjustments for non-cash transactions: Depreciation, amortization and impairment Share-based compensation expenses Other 3.1, 3.2, 3.3 2.3, 4.6 259 200 - 139 147 5 88 91 - Total adjustments for non-cash transactions 459 291 179 Change in operating assets and liabilities: Receivables Deferred revenue Other payables 306 513 168 (1,658) - 440 (768) - 134 Janssen (Daratumumab/DARZALEX ) In 2012, Genmab entered into a global license, development, and commercialization agreement with Janssen for daratumumab (marketed as DARZALEX for the treatment of multiple myeloma indications).
Please refer to note 4.6 for additional information regarding change of control clauses related to share-based instruments granted to the Executive Management and employees. 128 2020 Annual Report / Financial Statements / Group Table of Contents Management's Review Financial Statements Section 5 Other Disclosures / 5.8 Collaborations and Technology Licenses 5.7 Adjustments to Cash Flow Statements 5.8 Collaborations and Technology Licenses Collaborations Genmab enters into collaborations with biotechnology and pharmaceutical companies to advance the development and commercialization of our product candidates and to supplement our internal pipeline.
Collaboration, Development and License Agreements Genmab has entered into collaboration, development and license agreements with external parties, which may be subject to rene-gotiation in case of a change of control event as specified in the individual agreements. However, any changes in the agreements are not expected to have significant influence on our financial position.
These services primarily include tax and VAT compliance, agreed-upon procedures, opinions relating to grants, educational training and accounting advice. The increase in fees from 2018 to 2019 was driven by addi-tional services relating to Genmab's IPO on the Nasdaq in the U.S. Change of Control In the event of a change of control, change of control clauses are included in some of our collaboration, development and license agreements as well as in service agreements for certain employees.