Genmab's royalty income is paying for a debt-funded bet on its own drugs

The technology

Genmab is a Copenhagen antibody company with three sources of income. The first is royalties on seven approved medicines, led by DARZALEX (daratumumab), which Johnson & Johnson sells under a Genmab license. The others include Kesimpta, TEPEZZA, RYBREVANT, TECVAYLI, TALVEY and BIZENGRI. The second is EPKINLY and TEPKINLY (epcoritamab), a subcutaneous bispecific antibody that binds CD3 on T cells and CD20 on B cells, built on Genmab's DuoBody platform and co-developed with AbbVie. The third is Tivdak, an antibody-drug conjugate for cervical cancer that Genmab develops with Pfizer.

The pipeline Genmab owns centers on two newer assets. Rina-S (rinatabart sesutecan) is an antibody-drug conjugate aimed at folate receptor alpha, with five phase 3 trials active or announced in ovarian and endometrial cancer. Petosemtamab, an EGFR and LGR5 bispecific that arrived with the December 2025 Merus acquisition, is in two phase 3 trials in head and neck cancer.

The odds

Epcoritamab is furthest along. In June, EPCORE DLBCL-4 reported that epcoritamab with lenalidomide cut the risk of progression or death by 60% against R-GemOx in relapsed or refractory DLBCL. In October, EPCORE DLBCL-2 showed a 51% reduction for epcoritamab plus R-CHOP in newly diagnosed disease. Both are toplines, with the full data still to be presented. In January, EPCORE DLBCL-1 improved progression-free survival but overall survival did not reach statistical significance.

Industry data show that 42.9% of phase 3 solid tumor programs reach a filing and 92.9% of filings are approved, the relevant base rate for Rina-S and petosemtamab; for blood cancers such as DLBCL the figures are 60.0% and 90.0%. Rina-S and petosemtamab both carry FDA breakthrough designations, but the interim report does not describe phase 3 results for either, and it gives no readout date. RAINFOL-02, the Rina-S trial in platinum-resistant ovarian cancer, completed enrollment in March 2026.

The money

Revenue was $2,051 million in the first half, up 25%, and Genmab now guides to $4,325 million to $4,525 million for 2026. DARZALEX royalties were $1,306 million, about 64% of first-half revenue by our arithmetic. Net sales of DARZALEX reported by J&J were $4,239 million in the third quarter, close to the second quarter's $4,207 million.

The balance sheet carries the cost of Merus. Cash was $1,503 million on June 30 against borrowings of $5,135 million, of which $294 million is current. First-half interest expense on the debt was $174 million, and operating cash flow fell to $54 million from $349 million, as spending on petosemtamab and Rina-S rose. In June Genmab cut the Term B loan margin from 3.00% to 2.00%, and it repaid $125 million of principal in the half.

The risks

Concentration is the first. DARZALEX royalties depend on a partner's sales and on a royalty rate that ranges between 12% and 20% and is reduced by Halozyme payments and by territories without patents. In the first half, sales grew 21% and royalties 20%.

Debt is the second. Interest and financing costs turned a $119 million net financial gain into a $186 million net cost year on year, and the Term A loans carry financial covenants, with which Genmab said it complied at June 30.

Execution is the third. Rina-S and petosemtamab are unapproved, spending is rising, and the overall survival miss in DLBCL-1 shows that progression-free survival gains do not always carry through. Governance also drew attention: the board withdrew its remuneration proposal at the March meeting and won approval at an October meeting after consulting shareholders.

Our read

Genmab has a profitable royalty base that funds a costly shift to owning its late-stage drugs. The epcoritamab data are now strong in two settings, with detail still to come, and the unapproved assets are where the larger uncertainty sits. The reported figures give a debt of about $3.6 billion after cash, which is our subtraction, and DARZALEX royalties that are growing slightly more slowly than the underlying sales. What changes the picture next is regulatory feedback on the two lymphoma trials, the first Rina-S phase 3 data, and the fourth-quarter DARZALEX figure.