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INDEX TO FINANCIAL STATEMENTS
Financial Statements Table of Contents

Table of Contents

As filed with the Securities and Exchange Commission on July 9, 2019.

Registration No. 333-231777


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



AMENDMENT NO. 1
TO

FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



Genmab A/S
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

The Kingdom of Denmark
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer
Identification Number)

Kalvebod Brygge 43
1560 Copenhagen V
Denmark
+45 70 20 27 28
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)



Genmab US, Inc.
902 Carnegie Center, Suite 301
Princeton, New Jersey 08540
(609) 430-2481
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:
Harald Halbhuber
Shearman & Sterling LLP
599 Lexington Avenue
New York, NY 10022
Telephone: (212) 848-4000
  Peter Handrinos
Nathan Ajiashvili
Latham & Watkins LLP
200 Clarendon Street
Boston, Massachusetts 02116
Telephone: (617) 948-6000



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

           If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

           Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

    Emerging Growth Company    ý

           If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
To Be Registered

  Amount to be
Registered(1)

  Proposed Maximum
Aggregate Offering
Price Per ADS(2)

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(4)

 

Ordinary shares, DKK 1 nominal value per share(3)

  3,197,000   $18.11   $578,976,700   $70,172

 

(1)
Includes the 417,000 additional ordinary shares represented by 4,170,000 American Depositary Shares, or ADSs, that the underwriters have the option to purchase.
(2)
Estimated solely for the purposes of calculating the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended. The Proposed Maximum Aggregate Offering Price Per ADS and the Proposed Maximum Aggregate Offering Price are based on the closing price of our ordinary shares on Nasdaq Copenhagen on July 5, 2019, of DKK 1,200.50, an exchange rate of DKK 6.6283 per $1.00 as published by Danmarks Nationalbank on July 5, 2019, and an ADS to ordinary share ratio of 10 to 1.
(3)
ADSs issuable upon deposit of the ordinary shares registered hereby will be registered pursuant to a separate registration statement on Form F-6. Each ADS represents one-tenth of one ordinary share.
(4)
The issuer previously paid $60,600 in connection with the original filing of this Registration Statement.

           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus dated July 9, 2019

P R O S P E C T U S

27,800,000 American Depositary Shares

LOGO

Genmab A/S

Representing 2,780,000 Ordinary Shares



        This is the initial public offering of American Depositary Shares, or ADSs, of Genmab A/S. We are selling 27,800,000 ADSs, representing 2,780,000 of our ordinary shares. Each ADS represents the right to receive one-tenth of one ordinary share. We have applied to list our ADSs on the Nasdaq Global Select Market under the symbol "GMAB."

        Currently, our ordinary shares are listed on Nasdaq Copenhagen A/S, or Nasdaq Copenhagen, under the symbol "GEN" and our ADSs are traded on the over-the-counter market in the United States under the symbol "GMXAY." The closing price of our ordinary shares on Nasdaq Copenhagen on July 5, 2019 was DKK 1,200.50 per ordinary share, which equals a price of $18.11 per ADS, based on an exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019 and an ADS-to-share ratio of 10 to 1.

        We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings. See "Prospectus Summary—Implications of Being an Emerging Growth Company and a Foreign Private Issuer" for additional information.

        Investing in the ADSs involves risks that are described in the "Risk Factors" section beginning on page 17 of this prospectus.



 
  Per ADS
  Total

Public offering price

  $   $

Underwriting commission(1)

  $   $

Proceeds, before expenses, to us

  $   $
    (1)
    We refer you to "Underwriting" for additional information regarding underwriting compensation.

        The underwriters may also exercise their option to purchase up to an additional 4,170,000 ADSs from us, at the public offering price, less the underwriting commission, for 30 days after the date of this prospectus.

        None of the Securities and Exchange Commission, any state securities commission, the Danish Financial Supervisory Authority, nor any other foreign securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

        The ADSs will be ready for delivery on or about                , 2019.



Joint Book-Running Managers

 
   
   
BofA Merrill Lynch   Morgan Stanley   Jefferies

Joint Lead Managers

 
   
Guggenheim Securities   RBC Capital Markets

Co-Managers

 
   
   
Danske Markets   H.C. Wainwright & Co.   Kempen



The date of this prospectus is                        , 2019.


Table of Contents


Table of Contents

 
  Page  

PRESENTATION OF FINANCIAL INFORMATION

    iii  

PRESENTATION OF SHARE INFORMATION

    iii  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    17  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    70  

MARKET, INDUSTRY AND OTHER DATA

    72  

USE OF PROCEEDS

    73  

DIVIDEND POLICY

    75  

CAPITALIZATION

    77  

DILUTION

    78  

SELECTED CONSOLIDATED FINANCIAL DATA

    80  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    81  

BUSINESS

    107  

MANAGEMENT

    195  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    211  

PRINCIPAL SHAREHOLDERS

    212  

DESCRIPTION OF SHARE CAPITAL AND CERTAIN CORPORATE MATTERS

    214  

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

    230  

SHARES AND AMERICAN DEPOSITARY SHARES ELIGIBLE FOR FUTURE SALE

    241  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

    243  

MATERIAL DANISH INCOME TAX CONSIDERATIONS

    249  

UNDERWRITING

    253  

EXPENSES OF THIS OFFERING

    262  

LEGAL MATTERS

    263  

EXPERTS

    264  

ENFORCEMENT OF CIVIL LIABILITIES

    265  

WHERE YOU CAN FIND MORE INFORMATION

    266  

INDEX TO FINANCIAL STATEMENTS

    F-1  

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        Unless otherwise indicated, information contained in this prospectus concerning our industry, our business and the markets for our products and product candidates, including our general expectations, market position, market opportunity and market share, is based on information from our own management estimates and research, as well as from industry and general publications, research, surveys and studies conducted by third parties. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable. In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "Special Note Regarding Forward-Looking Statements."

        This prospectus includes trademarks, tradenames and service marks, certain of which belong to us and others that are the property of other organizations. Solely for convenience, trademarks, tradenames and service marks referred to in this prospectus appear without the ®, ™ and SM symbols, but the absence of those symbols is not intended to indicate, in any way, that we will not assert our rights or that the applicable owner will not assert its rights to these trademarks, tradenames and service marks to the fullest extent under applicable law. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

        Neither we nor the underwriters have authorized anyone to provide you with information that is different from that contained in this prospectus or in any free writing prospectus we may authorize to be delivered or made available to you. Neither we nor the underwriters take any responsibility for, or provide any assurance as to the reliability of, any other information that others may give you. We and the underwriters are offering to sell ADSs and seeking offers to purchase ADSs only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date on the front of this prospectus, regardless of the time of delivery of this prospectus or any sale of ADSs.

        For investors outside the United States: Neither we nor any of the underwriters have taken any action to permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus.

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PRESENTATION OF FINANCIAL INFORMATION

        We maintain our books and records in Danish kroner and report under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB. None of the consolidated financial statements in this prospectus were prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. Except with respect to U.S. dollar amounts presented as contractual terms, amounts denominated in U.S. dollars when received or paid, including milestone payments and royalties received from Janssen Biotech, Inc. under our daratumumab collaboration, or as otherwise indicated, all amounts that are presented in U.S. dollars herein have been translated from DKK solely for convenience at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate as of March 31, 2019, as reported by Danmarks Nationalbank. We use the symbol "$" to refer to the U.S. dollar, "DKK" to refer to the Danish krone and the symbol "€" to refer to the Euro herein. Neither we nor the underwriters represent that any amounts presented herein could be or could have been converted into U.S. dollars or Danish kroner at any particular rate indicated or at any other rate.


PRESENTATION OF SHARE INFORMATION

        All references to "shares" in this prospectus refer to ordinary shares of Genmab A/S with a nominal value of DKK 1 per share.

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PROSPECTUS SUMMARY

        This summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before deciding to invest in the ADSs, you should read this entire prospectus carefully, including the sections of this prospectus entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements contained elsewhere in this prospectus. Unless the context otherwise requires, references in this prospectus to the "Company," "Genmab," "we," "us" and "our" refer to Genmab A/S and its subsidiaries.

Our Company

        We are an international biotechnology company specializing in antibody therapeutics for the treatment of cancer and other diseases. Our core purpose is to improve the lives of patients by creating and developing innovative antibody products. Our vision is to transform cancer treatment by launching our own proprietary product by 2025 and advancing our pipeline of differentiated and well-tolerated antibodies. We are building and expanding our late-stage development and commercial capabilities to allow us to bring our proprietary products to market in the future. Today, we have a well-diversified portfolio of products, product candidates and technologies. Our portfolio includes two marketed partnered products, daratumumab, marketed as DARZALEX® for the treatment of certain indications of multiple myeloma, or MM, and ofatumumab, marketed as Arzerra® for the treatment of certain indications of chronic lymphocytic leukemia, or CLL, in addition to a broad pipeline of differentiated product candidates. Our pipeline includes five proprietary product candidates in clinical development and approximately 20 proprietary and partnered pre-clinical programs, including two proprietary product candidates for which we have submitted or intend to submit an application for an investigational new drug, or IND, to the U.S. Food and Drug Administration, or FDA, and/or a clinical trial application, or a CTA, to the European Medicines Agency, or EMA, in 2019. In addition to our proprietary clinical product candidates and our partners' ongoing label expansion studies for daratumumab and ofatumumab, our partners have ten additional product candidates in clinical development through collaboration agreements with us. Our portfolio also includes four proprietary antibody technologies that play a key role in building our product pipeline, enhancing our partnerships and generating revenue. We selectively enter into strategic alliances with other biotechnology and pharmaceutical companies that build our network in the biotechnology space and give us access to complementary novel technologies or products that move us closer to achieving our vision and fulfilling our core purpose.

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Our Portfolio

        The following chart summarizes the disease indications and most advanced development status of our marketed products, each of the proprietary product candidates in our clinical pipeline and the most advanced product candidates in our pre-clinical pipeline.

GRAPHIC


(1)
Pursuant to our development, manufacturing and commercialization agreement with Janssen Biotech, Inc., or Janssen, we receive tiered royalty payments of 12% to 20% based on Janssen's annual net product sales of daratumumab. See "Business—Our Products and Product Candidates—Daratumumab (DARZALEX)—Collaboration with Janssen" for more information about our agreement with Janssen.
(2)
DARZALEX has received marketing approval in combination with certain treatment regimens for frontline and relapsed/refractory, or R/R, MM, and as a monotherapy for heavily pre-treated MM, in a number of countries, including the United States and the European Union. See "Business—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma—Existing Marketing Approvals and Pending Regulatory Applications" for more information about existing marketing approvals for DARZALEX.
(3)
In addition to existing approvals for frontline MM in certain jurisdictions, Janssen is conducting studies of daratumumab for additional frontline MM indications, which differ from existing frontline approvals based on the combination treatment regimen, transplant-eligibility of patients and/or jurisdiction(s) of the study. See "Business—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma—Key Ongoing Trials for Additional MM Indications" for more information about these ongoing trials.

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(4)
In addition to certain clinical studies specifically assessing the safety and efficacy of a subcutaneous, or subQ, formulation of daratumumab for the treatment of certain MM indications, a subQ formulation of daratumumab is being used in a number of other studies of daratumumab for the treatment of frontline MM, R/R MM and other disease indications.
(5)
Pursuant to our agreement with Novartis, we are entitled to royalties of 20% of worldwide net sales of ofatumumab for the treatment of cancer and 10% of worldwide net sales of ofatumumab for non-cancer treatments. See "Business—Our Products and Product Candidates—Ofatumumab—Collaboration with Novartis" for more information about our agreement with Novartis.
(6)
Ofatumumab, marketed as Arzerra, has been approved for certain CLL indications in the United States, the European Union and a number of other countries. Due to low and decreasing global demand for Arzerra primarily related to increased competition in the CLL treatment space, on January 22, 2018, Novartis announced that it intends to transition Arzerra in non-U.S. markets from commercial availability to limited availability through managed access programs or alternative solutions for approved CLL indications where applicable and allowed by local regulators. In 2019, marketing authorizations for Arzerra were withdrawn in the European Union and certain other territories. We expect Arzerra to remain commercially available for approved CLL indications in the United States and Japan.

Marketed Products and Proposed Label Expansion

        Our lead product, daratumumab, marketed as DARZALEX for the treatment of certain multiple myeloma indications, is a human IgG1k monoclonal antibody, or mAb, that binds with high affinity to the CD38 molecule, which is highly expressed on the surface of MM cells. When first approved by the FDA in 2015, it was the first human CD38-targeting mAb to reach the market and the first mAb to receive FDA approval to treat multiple myeloma. DARZALEX is commercialized by Janssen Biotech, Inc., or Janssen, under an exclusive development, manufacturing and commercialization agreement we entered into in 2012. Pursuant to this agreement, we receive tiered royalty payments of 12% to 20% based on Janssen's annual net product sales and are eligible for certain additional payments in connection with development, regulatory and sales milestones. Janssen is fully responsible for developing and commercializing daratumumab and all costs associated therewith. Janssen has obtained regulatory approvals for DARZALEX for certain multiple myeloma indications in a number of countries, including the United States, the European Union and Japan. In addition, applications for label expansion in the United States, the European Union and Japan and for initial approval in China are currently pending with applicable regulators. Following the U.S. commercial launch of DARZALEX in 2015, DARZALEX achieved blockbuster sales status by reaching $1.2 billion of annual net sales in 2017, with Janssen's net sales of DARZALEX increasing to $2.0 billion in 2018. We recorded $90.0 million in milestone payments for daratumumab and DKK 1,708.1 million ($262.0 million) in royalties related to DARZALEX sales in 2018.

        The chart below illustrates daratumumab's significant impact and versatility as a combination treatment for certain indications of frontline multiple myeloma and relapsed/refractory multiple myeloma in four pivotal Phase III studies. Each study was a head-to-head study comparing daratumumab, or D, in combination with a standard MM treatment regimen versus the standard treatment alone.

    For frontline treatment of transplant-ineligible MM patients, the ALCYONE and MAIA studies compared daratumumab in combination with (i) bortezomib, melphalan and prednisone, or VMP, versus VMP alone in the ALCYONE study and (ii) lenalidomide and dexamethasone, or Rd, versus Rd alone in the MAIA study. The ALCYONE study supported the U.S. and EU regulatory approvals of DARZALEX in combination with VMP for frontline treatment of transplant-ineligible MM patients. The MAIA study supported the U.S. regulatory approval in June 2019 of DARZALEX in combination with Rd for frontline treatment of transplant-ineligible MM patients and Janssen's marketing authorization application, or MAA, to the EMA in March 2019 for the same indication.

    In the relapsed/refractory setting, the POLLUX and CASTOR studies compared daratumumab in combination with (i) Rd, versus Rd alone in the POLLUX study and (ii) bortezomib and dexamethasone, or Vd, versus Vd alone in the CASTOR study. The POLLUX and CASTOR

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      studies supported the U.S., EU and Japanese regulatory approvals of DARZALEX in combination with Rd and Vd, respectively, for the treatment of relapsed/refractory MM.

        Data for each of these studies was presented at the American Society for Hematology's Annual Meeting, or ASH, in December 2018. Safety data and other details regarding each of these studies is outlined in "Business—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma".

GRAPHIC


(1)
Includes CR + sCR in daratumumab arm versus control arm. CR = complete response, which refers to patients who achieve negative immunofixation on the serum and urine and disappearance of any soft tissue plasmacytomas and achieve less than or equal to 5% plasma cells in the bone marrow; sCR = stringent complete response, which is tested using more sensitive methods to detect monoclonal plasma cells, and is defined as patients who achieve CR and exhibit a normal free light chain ratio in the serum and absence of clonal cells in the bone marrow determined by either immunofluorescence or immunohistochemistry; in each case as defined by the International Myeloma Working Group, or IMWG.
(2)
MRD = minimal residual disease, which refers to the persistence of small numbers of myeloma cells that remain after therapy and contribute to relapse and disease progression; MRD negativity is defined as the absence of aberrant clonal plasma cells on bone marrow aspirate, ruled out by an assay with a minimum sensitivity of one in 105 nucleated cells or higher; MRD-neg rate refers to the proportion of patients with negative MRD test results, tested at 10-5 sensitivity, or one in 105 cells, from the time of suspected CR or sCR, in the case of the MAIA, POLLUX and CASTOR studies and confirmed CR/sCR in the case of the ALCYONE study, and tested periodically for a certain period after dosing. See study descriptions in "Business—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma."
(3)
Risk reduction in disease progression or death versus control arm. PFS = progression free survival.

        Beyond the current labeled indications, Janssen is conducting a comprehensive clinical development program for daratumumab. This program includes multiple Phase III studies for the treatment of smoldering MM, or SMM, frontline MM, and relapsed/refractory, or R/R, MM, as well as key clinical studies for a subcutaneous, or subQ, formulation. In October 2018, we reported that Janssen's pivotal Phase III MAIA study of daratumumab in combination with Rd for frontline treatment of transplant-ineligible MM patients reached its primary endpoint of improving progression free survival, or PFS, at a pre-specified interim analysis, with a 44% reduction in the risk of progression or death in patients treated with daratumumab in combination with Rd compared to treatment with Rd alone and with a safety profile consistent with known safety profiles for daratumumab and Rd. In October 2018, we also reported topline results that the first part of Janssen's pivotal Phase III CASSIOPEIA study of daratumumab in combination with bortezomib, thalidomide and dexamethasone, or VTd, for frontline treatment of transplant-eligible MM patients met the primary endpoint of number of patients that achieved sCR. Topline results for the first part of the CASSIOPEIA study showed that 28.9% of patients treated with daratumumab in combination with VTd achieved sCR, compared to 20.3% of patients who received VTd alone, with an odds ratio of 1.60 and with a safety profile consistent with known safety profiles for daratumumab and VTd. In June 2019, Janssen presented additional data for certain secondary endpoints of the CASSIOPEIA study at the American Society for

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Clinical Oncology annual meeting, or ASCO, reporting 18-month PFS rates of 92.7% in the daratumumab plus VTd arm, compared to 84.6% in the VTd arm, and post-induction MRD-negative rates of 34.6% in the daratumumab plus VTd arm, compared to 23.1% in the VTd arm. In March 2019, Janssen submitted a supplemental Biologics License Application, or sBLA, to the FDA and an MAA to the EMA based on the CASSIOPEIA study. In May 2019, the FDA granted priority review for the sBLA submission, setting a target date of September 26, 2019 to take a decision on daratumumab in this indication. In addition, in February 2019, we reported that Janssen's Phase III COLUMBA study comparing the subQ formulation of daratumumab to the intravenous, or IV, formulation in patients with R/R MM met both co-primary endpoints of overall response rate, or ORR, and maximum trough concentration, or Ctrough, of daratumumab on day 1 of the third treatment cycle. Topline results showed ORR of 41.1% and Ctrough of 499 mg/mL for patients treated with subQ daratumumab compared with 37.1% and 463 mg/mL, respectively, in patients treated with IV daratumumab, in each case with a confidence interval of 95% and with no new safety signals compared with known daratumumab safety profiles. In June 2019, Janssen presented data at ASCO regarding certain additional endpoints of this study, reporting that the subQ and IV administration groups demonstrated similar results in the PFS, very good partial response, or VGPR, or better and CR or better categories. We expect Janssen to submit regulatory applications based on the COLUMBA study in 2019 and to release efficacy data for the Phase II GRIFFIN study for daratumumab in combination with bortezomib, lenalidomide and dexamethasone, or VRd, for frontline treatment of transplant-eligible MM patients. In addition to the ongoing studies of daratumumab for the treatment of MM, Janssen is conducting a number of studies to assess the use of daratumumab in the treatment of other malignant and pre-malignant diseases in which CD38 is expressed, including amyloidosis, acute lymphocytic leukemia and NKT-cell lymphoma. Building on our successful daratumumab collaboration, we entered into a new license and option agreement with Janssen in June 2019 to collaborate exclusively on a next-generation CD38 antibody product, HexaBody-CD38, incorporating our proprietary HexaBody® technology.

        Ofatumumab is a human IgG1k mAb that targets an epitope on the CD20 molecule, which is found on the surface of B-cells, the type of cell which is believed to trigger the inflammatory process that leads to multiple sclerosis, or MS. Novartis Pharma AG, or Novartis, is currently investigating a subQ formulation of ofatumumab for the treatment of relapsing MS, or RMS, in the Phase III ASCLEPIOS I and II clinical studies with over 1,800 patients in total, and has reported that it expects to complete these studies during 2019. Subject to study completion and achievement of positive results, Novartis has indicated that it plans to evaluate the potential for a regulatory filing soon thereafter. We believe that ofatumumab may potentially offer a number of competitive advantages in the MS treatment market compared to current B-cell therapies. In particular, if its efficacy and safety can be demonstrated in clinical trials, the low-dose subQ administration of ofatumumab currently in clinical testing could allow for more convenient and less disruptive dosing options for MS patients compared to IV-administered therapies. In addition, the Phase II MIRROR study assessing dose-response effects of ofatumumab on efficacy and safety outcomes in patients with RMS, published in May 2018, showed that treatment with ofatumumab resulted in rapid dose-dependent B-cell depletion, which correlated with efficacy outcomes observed in the study, with no new or unexpected safety findings. Ofatumumab has already been approved for the treatment of certain CLL indications in the United States and certain other countries and is currently commercialized by Novartis for such CLL indications under the name Arzerra. Due to low and decreasing global demand for Arzerra primarily related to increased competition from new entrants to the CLL treatment space over the past few years, Novartis announced in January 2018 that it intends to transition Arzerra from commercial availability to limited availability in non-U.S. markets through managed access programs or alternative solutions for approved CLL indications where applicable and allowed by local regulations. We expect Arzerra to remain commercially available for approved CLL indications in the United States and Japan. Pursuant to our agreement with Novartis, we are entitled to royalties of 20% of worldwide net sales of ofatumumab for

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the treatment of cancer and 10% of worldwide net sales of ofatumumab for non-cancer treatments. Novartis is fully responsible for all costs associated with developing and commercializing ofatumumab.

Our Proprietary Product Candidates

        We also have a strong pipeline of novel antibody-based product candidates for the treatment of solid tumors and hematological cancers, which are designed to address unmet medical needs and improve treatment outcomes for cancer patients. Our goal in building our pipeline is to retain at least 50% of product rights in selected programs for indications and in geographic areas where we believe we will be able to maximize their value; we consider such products to be "our own" proprietary products. We currently have five proprietary product candidates in clinical development:

    Tisotumab vedotin:  an antibody-drug conjugate, or ADC, created to target tissue factor, or TF, a protein involved in tumor signaling and angiogenesis. Tisotumab vedotin is in clinical development for the treatment of cervical cancer and certain other solid tumors. In March 2019, we presented data from a 55-patient expansion cohort of the innovaTV 201 Phase I/II trial at the Society for Gynecologic Oncology, or SGO, Annual Meeting, which indicated that treatment with tisotumab vedotin resulted in encouraging activity in patients with relapsed, recurrent and/or metastatic cervical cancer. Data assessed by an independent review committee showed a confirmed ORR of 22%, with 35% of patients having a confirmed or unconfirmed complete or partial response, or PR. Median duration of response, or DoR, was 6.0 months and median PFS was 4.1 months. We are also evaluating tisotumab vedotin in five additional clinical studies, including the potentially registrational innovaTV 204 Phase II trial for the treatment of patients with recurrent or metastatic cervical cancer, Phase II trials for the treatment of patients with ovarian cancer and solid tumors and two Phase I/II trials for the treatment of patients with cervical cancer. Patient enrollment for the innovaTV 204 study was completed in March 2019. We are developing tisotumab vedotin in collaboration with Seattle Genetics under an agreement in which the companies share all future costs and profits for the product on a 50:50 basis.

    Enapotamab vedotin (HuMax®-AXL-ADC):  an ADC created to target AXL, a unique tyrosine kinase receptor that is implicated in tumor cell proliferation, migration and invasion. Over-expression has been described in solid cancers, including lung, esophageal, ovarian, breast, cervical, thyroid, endometrial and pancreatic cancers. AXL is emerging as a marker in tumors with resistance to therapy (e.g., tyrosine kinase inhibitors, chemotherapy). In addition, over-expression of AXL is observed in advanced tumors with epithelial-mesenchymal transition, or EMT-like features. In May 2018, we launched a Phase I/II clinical trial of enapotamab vedotin for the treatment of multiple types of solid tumors, with several expansion cohorts currently ongoing. We expect to report initial efficacy analysis from the expansion cohort phase of this study in 2019. We have full development and commercialization rights for enapotamab vedotin.

    HexaBody-DR5/DR5:  an antibody therapeutic candidate created with our proprietary HexaBody® technology that is composed of two non-competing HexaBody antibody molecules that are designed to target two distinct epitopes on death receptor 5, or DR5, a cell surface receptor that mediates a process called programmed cell death. In May 2018, we dosed the first patient in our Phase I/II clinical trial of HexaBody-DR5/DR5 for the treatment of solid tumors. We expect to report initial clinical data from this study in 2019. We have full development and commercialization rights for HexaBody-DR5/DR5.

    DuoBody-CD3xCD20:  a bispecific antibody created using our proprietary DuoBody® technology that is designed to target CD3, which is expressed on all T-cell subtypes and CD20, a well-validated therapeutic target expressed in a majority of B-cell malignancies. In July 2018, we dosed the first patient in our Phase I/II clinical trial of a subQ formulation of DuoBody-CD3xCD20 for the treatment of B-cell malignancies. We expect to report initial clinical data

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      from this study in 2019. We have full development and commercialization rights for DuoBody-CD3xCD20.

    DuoBody-PD-L1x4-1BB:  a bispecific antibody created using our proprietary DuoBody technology that is designed to target PD-L1 and 4-1BB to block the inhibitory PD-1/PD-L1 axis and simultaneously activate essential co-stimulatory activity via 4-1BB using an inert DuoBody antibody format. PD-L1 is a validated target that is expressed on tumor cells. 4-1BB is a trans-membrane receptor belonging to the tumor necrosis factor, or TNF, receptor super-family, and is expressed predominantly on activated T-cells. We submitted a CTA to regulatory authorities in Spain in January 2019 to test DuoBody-PD-L1x4-1BB in a Phase I/II clinical study, with the first patient dosed in this study in May 2019. We are developing DuoBody-PD-L1x4-1BB in collaboration with BioNTech SE, or BioNTech, under an agreement in which the companies share all future costs and profits for the product on a 50:50 basis.

Our Partnered Product Candidates

        In addition to our proprietary product candidates and our two partnered marketed products in ongoing label expansion studies, our partners have ten additional product candidates in clinical development through collaboration agreements with us. These include several antibodies being developed by Janssen using our proprietary DuoBody technology, which are being tested to treat NSCLC, R/R acute myeloid leukemia, solid tumors and certain MM indications. Additional products are being developed in partnership with Hoffman-La Roche Inc. and F. Hoffman-La Roche, or jointly Roche, through a sublicense with Horizon Pharma plc, or Horizon Pharma, Bristol-Myers Squibb, or BMS, ADC Therapeutics Sarl, or ADC Therapeutics, H. Lundbeck A/S, or Lundbeck, and Amgen Inc., or Amgen. Other than daratumumab and ofatumumab, our most advanced partnered clinical product candidate is teprotumumab, which is currently in Phase III clinical development by Horizon Pharma for the treatment of Graves' orbitopathy. In February 2019, Horizon Pharma reported positive topline results in this study and announced that it expects to submit a BLA for teprotumumab to the FDA in 2019.

Our Proprietary Technology Platforms

        In addition to our proprietary and partnered products and product candidates, our portfolio includes four proprietary antibody technology platforms, which include (i) our DuoBody platform, which can be used for the creation and development of bispecific antibodies; (ii) our HexaBody platform, which can be used to increase the potential potency of antibodies through hexamerization; (iii) our DuoHexaBody® platform, which enhances the potential potency of bispecific antibodies through hexamerization; and (iv) our HexElect® platform, which combines two HexaBody molecules to maximize potential potency while minimizing potential toxicity by more selective binding to desired target cells. Antibody products created with these technologies may be used in a wide variety of indications including cancer and autoimmune, central nervous system and infectious diseases. We believe these technologies may be the next step towards the development of effective treatments in the already successful field of antibody therapeutics. We have a number of commercial partners for the DuoBody technology, including Janssen, BioNTech, Novo Nordisk A/S, or Novo Nordisk, and Gilead Sciences, Inc., or Gilead Sciences, and we entered into a HexaBody collaboration with Janssen in June 2019. We actively seek partners interested in developing potential antibody therapeutics using our technologies.

Our Core Purpose and Vision

        Our core purpose is to improve the lives of patients by creating and developing innovative antibody products. Our vision is to transform cancer treatment by launching our own proprietary product by 2025 and advancing our pipeline of differentiated and well-tolerated antibodies.

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Our Strengths

        We believe that our strengths that will enable us to achieve our vision and fulfill our core purpose include:

    DARZALEX, a blockbuster antibody in multiple myeloma, with opportunity for significant upside through potential label expansion. DARZALEX is a proven commercial success in its approved MM indications, achieving blockbuster status by reaching $1.2 billion of net sales in 2017, with net sales by Janssen increasing to $2.0 billion in 2018, resulting in royalties to us of DKK 1,708.1 million ($262.0 million) in 2018. In addition to daratumumab's approved indications, Janssen is currently investigating daratumumab for additional indications in MM and beyond, including key studies in frontline MM and a subQ formulation of daratumumab. If successful, these proposed label expansions could result in milestone payments and additional royalties to us.

    Royalty potential from ongoing pivotal Phase III trials of ofatumumab in MS.  Ofatumumab, previously approved for certain CLL indications, is in pivotal Phase III testing by Novartis for the treatment of RMS, with the Phase III ASCLEPIOS I and II studies expected to be completed in 2019. Subject to successful completion of these studies and Novartis' ability to obtain approval for and successfully commercialize ofatumumab for the treatment of RMS, we may receive a meaningful royalty stream. We believe that ofatumumab may potentially offer a number of competitive advantages in the MS treatment market compared to other B-cell therapies, including more convenient and less disruptive dosing options through a low-dose subQ formulation.

    Broad and differentiated proprietary pipeline.  We believe that our clinical and pre-clinical pipeline of proprietary product candidates positions us well to achieve our vision. Our five product candidates at various stages of clinical development offer multiple opportunities to transform cancer treatment by launching our own proprietary product by 2025. In addition, we have multiple differentiated antibody product candidates in pre-clinical development that we believe may have the potential to transform cancer treatment, including two product candidates for which we have submitted or expect to submit INDs and/or CTAs in 2019.

    Strong product generation capabilities.  Our research and development team has a proven track record of creating and developing product candidates and progressing them through clinical development. We created daratumumab and ofatumumab and conducted early clinical studies before partnering with Janssen and GlaxoSmithKline, or GSK, respectively, to continue late-stage development and commercialization. In addition, since 1999, we or our partners have submitted 33 INDs or CTAs for product candidates created by us or using our proprietary technologies, 21 of which are currently in development by us or our partners.

    Novel proprietary, next-generation antibody technologies.  Our proprietary antibody technology platforms provide the foundation for our research, a resource for the development of new product candidates, an income stream from technology licensing and an opportunity to contribute to the development of new antibody therapies through our licensing partners.

    Strategic alliances.  We have an active portfolio of strategic collaborations with a large number of pharmaceutical and biotechnology companies, including clinical and pre-clinical product candidates currently being developed by our partners, as well as a number of technology collaborations. In the past, these collaborations have provided us with a capital-efficient model to finance development costs and advance our product candidates through clinical development while also funding the further growth of our pipeline through milestone payments and royalties. Today, we focus on strategic alliances that build our network in the biotechnology space and give us access to complementary novel technologies or products that move us closer to achieving our vision and fulfilling our core purpose.

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    World-class team.  We have a world-class team of highly skilled and educated scientific, development and other industry professionals with extensive experience in the pharmaceutical and biotechnology fields. Our employees are our most important asset and we strive to attract and retain the most qualified people to fulfill our core purpose. We are currently recruiting a team of seasoned professionals to build and expand our commercialization capabilities.

Our Business Strategy

        Key elements of our strategy to achieve our vision and fulfill our core purpose include:

    Collaborate with Janssen to advance daratumumab.  

    Collaborate with Novartis to advance ofatumumab.  

    Actively advance and expand our proprietary product pipeline.  

    Strengthen our product portfolio with strategic collaborations.  

    Leverage our proprietary technology platforms.  

    Build our translational research capabilities.  

    Build our commercial capabilities to market select products.  

Risks Associated with Our Business

        Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk Factors" section of this prospectus immediately following this prospectus summary. These risks include the following:

    Our financial results and near-term prospects are substantially dependent on DARZALEX. If our partner Janssen is unable to effectively maintain and grow sales of DARZALEX for its approved indications and to continue to expand its indications, our prospects for increased revenues and profitability will be adversely affected.

    Our future prospects for ofatumumab are dependent on our partner Novartis' ability to successfully expand ofatumumab's indications and to effectively commercialize it for its current indications and any new indications that may be approved, as well as on other external factors that could impact ofatumumab's future success.

    Biopharmaceutical product development involves a substantial degree of uncertainty. Our current product candidates are in various stages of development, and it is possible that none of our product candidates will become viable commercial products, on a timely basis or at all.

    We have no history of commercializing our marketed products. Building our commercialization capabilities will require significant investment of time and money. There can be no assurance that we will successfully set up our commercialization capabilities in any of the proposed jurisdictions or at all, or that we will successfully commercialize any of our product candidates in the future.

    Tisotumab vedotin may not obtain regulatory approval, on our expected timeline or at all, and, if it is approved, we may be unable to effectively commercialize it. We do not have sole control over the development and commercialization of tisotumab vedotin.

    Partnerships are an important part of our strategy and we may not be able to continue our current partnerships or establish additional partnerships.

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    We rely on our partners' willingness and ability to devote resources to the development and commercialization of our products and product candidates and to otherwise support our business as contemplated in our partnership agreements, which may be terminated.

    Our product candidates will need to undergo clinical trials that are time consuming and expensive, the outcomes of which are unpredictable, and for which there is a high risk of failure. If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA, the EMA and any other comparable regulatory authority, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of these product candidates.

    We are subject to extensive and costly government regulation, and are required to obtain and maintain governmental approvals to commercialize our products.

    Reports of adverse or undesirable events or safety concerns involving daratumumab, ofatumumab or our proprietary or partnered product candidates could delay or prevent us or our partners from obtaining or maintaining regulatory approvals, or could negatively impact sales and prospects of our products and product candidates.

    We face intense competition and rapid technological change, which may result in others discovering, developing or commercializing competing products before or more successfully than we do, or earlier than we anticipate.

    We expect to incur higher research and development costs and general and administrative expenses in future periods as we advance our proprietary product candidates through clinical development and expand our commercial capabilities.

    Our ability to compete may decline if we or our partners are unable to or do not adequately protect intellectual property rights or if our intellectual property rights are inadequate for our products, product candidates or future products or product candidates.

    Patent applications may be denied. Issued patents covering our products and product candidates could be found invalid or unenforceable if challenged in court. Patents issued to our partners may not entitle us to royalties on the products that they protect.

    Our collaboration and intellectual property agreements with our partners or other third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or otherwise affect our rights and obligations under the relevant agreement.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company," as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

    a requirement to include only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and

    an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act.

        We may choose to take advantage of some but not all of these reduced burdens, and therefore the information that we provide holders of shares and ADSs may be different than the information you might receive from other public companies in which you hold equity. In addition, Section 107 of the

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JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in accordance with IFRS as issued by the IASB, so we are unable to make use of the extended transition period. However, in the event that we convert to accounting principles generally accepted in the United States (which we do not currently intend to do) while we remain an emerging growth company, we have irrevocably elected to opt out of such extended transition period.

        We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of the following:

    the last day of the first fiscal year in which our annual revenues were at least $1.07 billion;

    the last day of the fiscal year following the fifth anniversary of this offering;

    the date on which we have issued more than $1 billion of non-convertible debt securities over a three-year period; and

    the last day of the fiscal year during which we meet the following conditions: (i) the worldwide market value of our common equity securities held by non-affiliates as of our most recently completed second fiscal quarter is at least $700 million, (ii) we have been subject to U.S. public company reporting requirements for at least 12 months and (iii) we have filed at least one annual report as a U.S. public company.

        Upon the effectiveness of the registration statement of which this prospectus forms a part, we will report under the Securities Exchange Act of 1934, as amended, or the Exchange Act, as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

    the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

    the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

    the rules under the Exchange Act requiring the filing with the Securities and Exchange Commission, or SEC, of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

        In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

        Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules for U.S. public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Even if we no longer qualify as an emerging growth company, so long as we remain a foreign private issuer, we will continue to be exempt from such compensation disclosures.

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Corporate Information

        We were incorporated on June 11, 1998 as a private limited liability company (Anpartsselskab, or ApS) under Danish law as a shelf company and are registered with the Danish Business Authority (Erhvervsstyrelsen) in Copenhagen, Denmark under registration number (CVR) no. 21023884. Our name was changed to Genmab ApS on November 17, 1998 and we commenced operations in February 1999. On May 31, 1999, we were converted into a public limited liability company (Aktieselskab, or A/S) and changed our name to Genmab A/S. Our shares have been listed for trading on Nasdaq Copenhagen since October 2000.

        Our headquarters and registered office is located at Kalvebod Brygge 43, 1560 Copenhagen V, Denmark and our telephone number is +45 70 20 27 28. Our research laboratories and pre-clinical development facilities are located in Utrecht, The Netherlands and we conduct certain operations out of our U.S. office in Princeton, New Jersey. Our website address is www.genmab.com. The information on, or information that can be accessed through, our website is not part of and is not incorporated by reference into this prospectus. We have included our website address as an inactive textual reference only.

Recent Developments

Topline Results for Phase II GRIFFIN study

        On July 8, 2019, we reported topline results that Janssen's Phase II GRIFFIN study of daratumumab in combination with lenalidomide, bortezomib, and dexamethasone, or VRd, for frontline treatment of transplant-eligible MM patients met its primary endpoint of percentage of patients who achieved sCR by the end of consolidation treatment. Topline data demonstrated a higher percentage of sCR in patients who received VRd in combination with daratumumab, or D-VRd, than in patients who received VRd alone, with a safety profile consistent with known safety profiles for daratumumab and VRd. Specifically, the topline data showed that 42.4% of patients treated with D-VRd achieved sCR, compared to 32.0% of patients who received VRd alone, with an odds ratio of 1.57 (95% CI: 0.87 - 2.82, p=0.1359, exceeding the statistical significance at the pre-set 2-sided alpha level of 0.2).

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The Offering

American Depositary Shares (ADSs) offered by us

  27,800,000 ADSs, representing 2,780,000 shares

ADSs to be outstanding immediately after this offering

 

37,929,720 ADSs, representing 3,792,972 shares

Shares to be outstanding immediately after this offering

 

64,303,868 shares

Option to purchase additional ADSs

 

In addition, we have granted the underwriters an option, exercisable within 30 days from the date of this prospectus, to purchase up to 4,170,000 additional ADSs by subscription for 417,000 shares.

American Depositary Shares

 

Each ADS represents one-tenth of one share and as such, any sale of ADSs will be reflected in the amount of the new shares which we will issue and for which the underwriters will subscribe. As an ADS holder, you will not be treated as one of our shareholders, you will not have shareholder rights and you may not be able to exercise your right to vote the shares underlying your ADSs. You will have the contractual rights of an ADS holder, as provided in the deposit agreement among us, the depositary and holders and beneficial owners of ADSs from time to time. ADS holders may only exercise voting rights with respect to the shares underlying the ADSs in accordance with the provisions of the deposit agreement, which provides that ADS holders may vote the shares underlying their ADSs either by withdrawing the shares or by instructing the depositary to vote the shares or other deposited securities underlying such ADSs.

 

To better understand the terms of the ADSs, see the sections of this prospectus entitled "Description of American Depositary Shares" and "Risk Factors—Risks Related to this Offering." We also encourage you to read the form of amended and restated deposit agreement, which is included as an exhibit to the registration statement of which this prospectus forms a part.

Depositary

 

Deutsche Bank Trust Company Americas

Use of proceeds

 

We estimate that the net proceeds from this offering will be approximately $472.6 million, or approximately $543.9 million if the underwriters exercise their option to purchase additional ADSs in full, after deducting the underwriting commission and estimated offering expenses payable by us, based on an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the U.S. dollar/DKK exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1.

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We intend to use the net proceeds of this offering to continue the development of our proprietary product candidates, to continue our pre-commercial activities, to continue building our commercial capabilities and to advance our earlier stage product candidates.

 

See "Use of Proceeds" for a more complete description of the intended use of proceeds from this offering.

Dividend policy

 

We do not currently pay out cash dividends on our shares and have not paid out any dividends within the last three financial years. See "Dividend Policy."

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of factors that you should consider carefully before deciding to invest in the ADSs.

Listing

 

We have applied to have the ADSs listed on the Nasdaq Global Select Market under the symbol "GMAB."

        The number of shares to be outstanding after this offering is based on 61,523,868 shares outstanding as of March 31, 2019 and excludes up to 1,419,895 shares that may be issued upon the exercise of warrants outstanding as of March 31, 2019 at a weighted average exercise price of DKK 523.74 per share. In addition, our board of directors is authorized to issue (i) up to 500,000 warrants under our warrant program through March 28, 2022, of which 153,663 warrants remain available for issue and a total of 3,879 warrants remain available for reissue as of March 31, 2019, and (ii) up to 500,000 warrants under our warrant program through March 28, 2024, of which 491,965 warrants remain available for issue and none are available for reissue as of March 31, 2019. Unless otherwise indicated, the number of shares described assumes no exercise of the underwriters' option to purchase up to 4,170,000 additional ADSs, assumes no exercise of the outstanding warrants referred to above and does not account for shares available for issuance under our outstanding equity incentive programs. Exercise of restricted share units, or RSUs, issued under these programs will not affect our share capital as we will deliver any shares under this program through the delivery of already issued shares.

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Summary Consolidated Financial Data

        The following tables present summary consolidated financial data for our business. We derived the summary consolidated income statement data for the years ended December 31, 2018 and 2017 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the summary consolidated income statement data for the three months ended March 31, 2019 and 2018 and the summary consolidated balance sheet data as of March 31, 2019 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The as adjusted data included in the summary consolidated balance sheet data is unaudited. We maintain our books and records and report our financial results in DKK and prepare our audited consolidated financial statements in accordance with IFRS as issued by the IASB. You should read this data together with our consolidated financial statements and related notes included elsewhere in this prospectus and the information under the captions "Capitalization," "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results, and our results for any interim period are not necessarily indicative of the results to be expected for a full year.

Consolidated Income Statement Data

 
  Year Ended December 31,   Three Months Ended March 31,  
 
  2018   2018   2017   2019   2019   2018  
 
  $(1)
  DKK
  DKK
  $(1)
  DKK
  DKK
 

Revenue

    455,278     3,025,137     2,365,436     88,946     591,009     681,012  

Operating expenses

                                     

Research and development expenses

    (215,387 )   (1,431,159 )   (874,278 )   (82,184 )   (546,080 )   (312,551 )

General and administrative expenses

    (32,161 )   (213,695 )   (146,987 )   (10,664 )   (70,853 )   (44,416 )

Total operating expenses

    (247,548 )   (1,644,854 )   (1,021,265 )   (92,848 )   (616,933 )   (356,967 )

Operating result

    207,730     1,380,283     1,344,171     (3,902 )   (25,924 )   324,045  

Financial income

    36,567     242,975     71,699     18,351     121,936     14,695  

Financial expenses

    (1,698 )   (11,287 )   (352,150 )   (299 )   (1,990 )   (83,175 )

Net result before tax

    242,599     1,611,971     1,063,720     14,150     94,022     255,565  

Corporate tax

    (21,045 )   (139,830 )   39,831     (3,283 )   (21,813 )   (56,991 )

Net result

    221,554     1,472,141     1,103,551     10,867     72,209     198,574  

Basic net result per share(2)

    3.62     24.03     18.14     0.18     1.18     3.25  

Diluted net result per share(2)

    3.57     23.73     17.77     0.18     1.17     3.20  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2019 as reported by Danmarks Nationalbank.
(2)
See note 2.5 to our audited consolidated financial statements included elsewhere in this prospectus for further details regarding the calculation of basic and diluted net result per share.

        The following table presents summary unaudited consolidated balance sheet data as of March 31, 2019 on an actual basis, and on an as adjusted basis to give effect to the issuance and sale of 27,800,000 ADSs, representing 2,780,000 shares, in this offering at an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the U.S. dollar/DKK exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1, after deducting the underwriting commission and estimated offering expenses payable by us.

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Consolidated Balance Sheet Data

 
  As of March 31, 2019  
 
  Actual   As Adjusted  
 
  $(1)   DKK   $(1)   DKK  

Total assets

    1,314,559     8,734,717     1,787,114     11,874,658  

Accumulated deficit

    (14,149 )   (94,013 )   (14,149 )   (94,013 )

Total shareholders' equity

    1,223,123     8,127,162     1,695,678     11,267,103  

Total liabilities

    91,436     607,555     91,436     607,555  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2019 as reported by Danmarks Nationalbank.

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RISK FACTORS

        Investing in the ADSs involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations," before deciding whether to invest in the ADSs. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of the ADSs could decline, and you may lose all or part of your investment.

Risks Related to Our Business

Our financial results and near-term prospects are substantially dependent on DARZALEX. If our partner Janssen is unable to effectively maintain and grow sales of DARZALEX for its approved indications and to continue to expand its indications, our prospects for increased revenues and profitability will be adversely affected.

        In 2018, royalties and milestone payments from Janssen related to daratumumab, marketed as DARZALEX for certain indications of multiple myeloma, or MM, accounted for 75.8% of our revenue, as compared to 90% in 2017, and we anticipate that DARZALEX will continue to account for a substantial portion of our revenue in the near-term. In the three months ended March 31, 2019, royalties from Janssen accounted for 84.9% of our revenue. No milestone payments were recorded in the three months ended March 31, 2019. Only one of our other products, ofatumumab, marketed as Arzerra for certain indications of chronic lymphocytic leukemia, or CLL, has received marketing approval in any jurisdiction. Arzerra royalties accounted for 1.1% and 1.0% of our revenue for the year ended December 31, 2018 and the three months ended March 31, 2019, respectively, as compared to 2.0% for the year ended December 31, 2017, and are not expected to account for a significant portion of our revenue in the near-term. Under our collaboration agreement regarding daratumumab, Janssen is fully responsible for developing and commercializing daratumumab and all costs associated therewith. Consequently, our revenue and resulting operating profit, if any, and near-term prospects are substantially dependent on the success of this collaboration and on Janssen's continued ability to effectively maintain and grow sales of daratumumab for its approved indications and to continue to expand its indications. Janssen has obtained marketing approval for DARZALEX for certain indications of frontline MM and relapsed/refractory, or R/R, MM in the United States and the European Union and in certain other countries. In addition, applications for label expansion in the United States, the European Union and Japan and for initial approval in China are currently pending with applicable regulators. There can be no assurance that Janssen will be successful in obtaining approvals for DARZALEX in these additional indications or jurisdictions or in maintaining existing regulatory approvals. While DARZALEX product sales have grown over time, and our future plans assume that sales of DARZALEX will continue to increase, there can be no assurance that, even with the recent expansion to the prescribing label for DARZALEX in the United States and the European Union, DARZALEX sales will continue to grow or that Janssen will be able to maintain sales of DARZALEX at or near current levels. In particular, DARZALEX is subject to intense competition in the MM therapy market. There are numerous other products approved by the FDA for the same indications as DARZALEX and the competition from these and other therapies is intensifying. We are also aware of numerous additional investigational agents and technologies that are currently being studied for the treatment of MM, any of which may compete with DARZALEX in the future. In particular, Sanofi presented data from its Phase III study of isatuximab, a mAb targeting CD38, at ASCO in June 2019, reporting that isatuximab in combination with pomalidomide and dexamethasone, or Pom-d, improved PFS in patients with R/R MM compared to treatment with Pom-d alone. If Sanofi is able to obtain regulatory approval for isatuximab in this indication, it may directly compete with daratumumab in the MM treatment space. If Janssen is unable to successfully compete with these other agents and technologies, DARZALEX sales could decline materially.

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        Janssen is also currently conducting clinical trials of daratumumab for the treatment of smoldering MM, or SMM, and additional indications of frontline MM and R/R MM, as well as certain other malignant and pre-malignant diseases in which CD38 is expressed, including amyloidosis, acute lymphocytic leukemia and NKT-cell lymphoma, which are in different stages of clinical development. Although we are able to participate in the development strategy for daratumumab through regular meetings of the joint development and steering committee, we cannot control the amount and timing of resources that Janssen dedicates to the development of daratumumab and our prospects for future milestone payments and royalties related to daratumumab depend on Janssen's decision to continue to conduct clinical trials of daratumumab for expanded indications and to seek new regulatory approvals for daratumumab, and on the success of such studies and applications.

        There can be no assurance that Janssen will complete the ongoing and planned studies of daratumumab, successfully or at all, or that Janssen will obtain and maintain the regulatory approvals necessary to market daratumumab for any additional indications. In particular, despite the recent FDA label expansion of daratumumab based on the MAIA study, there can be no assurance that additional marketing authorizations will be granted based on the MAIA study, that marketing approval will be granted for the additional indications based on the CASSIOPEIA and COLUMBA studies, that any of the other studies will be completed on the expected timeline or at all, or, if completed, that the final results of such studies will be positive. Negative or inconclusive results in these or other trials would negatively impact, or preclude altogether, Janssen's ability to obtain regulatory approvals for daratumumab in the proposed indications, which would limit the commercial potential of daratumumab. For example, in May 2018, the CALLISTO Phase Ib/II study of daratumumab in combination with atezolizumab for the treatment of patients with previously treated non-small-cell lung cancer, or NSCLC, was terminated following a planned review by a data monitoring committee. The data monitoring committee had determined that there was no observed benefit in the combination treatment arm versus atezolizumab alone and observed a numerical increase in mortality-related events, which were subsequently determined to be primarily due to disease progression, in this arm of the study. Based on these findings, a Phase I study of daratumumab and Janssen's proprietary anti-PD-1 antibody for the treatment of patients with MM was also discontinued. Even if the results of Janssen's ongoing studies are positive, there can be no assurance that Janssen will apply for regulatory approval of the related indications and, if Janssen applies, that such applications will be successful, each of which would limit the commercial potential of daratumumab. Additionally, even if Janssen receives the required regulatory approvals to market daratumumab for any additional indications or in additional jurisdictions, Janssen may not be able to effectively commercialize daratumumab as a result of unfavorable pricing or reimbursement limitations, competition or other factors, or may choose not to prioritize daratumumab in its marketing efforts.

        In addition, 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 biosimilar product remains for sale in that country). 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 daratumumab in such country. Our issued U.S., European and Japanese patents covering the composition of matter for daratumumab do not begin to expire until March 2026.

        Future prospects for daratumumab are also subject to the risks outlined below with respect to our other product candidates, including risks related to clinical studies, adverse events, regulatory requirements and approvals, intellectual property matters, competition, manufacturing, pricing, reimbursement and marketing. In addition, future prospects for daratumumab are also subject to the risk that we will be unable to successfully manage our relationship with Janssen as outlined below.

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Our future prospects for ofatumumab are dependent on our partner Novartis' ability to successfully expand ofatumumab's indications and to effectively commercialize it for its current indications and any new indications that may be approved, as well as on other external factors that could impact ofatumumab's future success.

        Ofatumumab has been approved for the treatment of certain CLL indications in the United States and certain other countries and is currently commercialized by Novartis for such CLL indications under the name Arzerra. On January 22, 2018, Novartis announced that it intends to transition Arzerra in non-U.S. markets from commercial availability to limited availability through managed access programs or alternative solutions, where applicable and allowed by local regulations, due to increased availability of treatments for CLL resulting in a low number of patients using Arzerra outside of the United States. In 2019, marketing authorizations for Arzerra were withdrawn in the European Union and certain other territories. We expect Arzerra to remain commercially available for approved CLL indications in the United States and Japan. Under our collaboration agreement, Novartis is fully responsible for development and commercialization of ofatumumab and all costs associated therewith. Consequently, the commercial success of ofatumumab is dependent on the success of this collaboration and the activities of Novartis. Global net sales of Arzerra have been decreasing since 2013, primarily related to increasing competition from new entrants to the CLL treatment market, with 2018 global net sales of Arzerra by Novartis of $26 million, as compared to $36 million in 2017, resulting in royalties to us of DKK 33.3 million in 2018, as compared to DKK 47.5 million in 2017. In the three months ended March 31, 2019, global net sales of Arzerra were $4.4 million, resulting in royalties to us of DKK 5.8 million. We expect competitive pressures in the CLL treatment space to remain or intensify, which may cause sales to further decline, particularly as Novartis continues to transition Arzerra to compassionate use in most jurisdictions. For these and other reasons, we believe that our prospects for revenue from ofatumumab are largely dependent on Novartis' ability to expand the labeled indications of use for ofatumumab and to successfully commercialize it for such indications. We cannot control the amount and timing of resources that Novartis dedicates to the development and commercialization of ofatumumab and our ability to obtain milestone payments and royalties related to ofatumumab depends on Novartis' decision to continue to study ofatumumab for new indications, to seek regulatory approvals for such indications and to effectively commercialize ofatumumab for new and existing indications, and on the success of such efforts.

        Novartis is currently investigating a subQ formulation of ofatumumab in two Phase III clinical studies, ASCLEPIOS I and II, in relapsing multiple sclerosis, or relapsing MS. Although Novartis reported that it completed recruitment for these studies in May 2018 and expects to complete the studies during 2019, there can be no assurance of the exact time of completion, as the studies are event-driven. As expected in a Phase III program, negative or inconclusive results in these or other trials would negatively impact, or preclude altogether, Novartis' ability to obtain regulatory approvals for ofatumumab for the treatment of relapsing MS, or RMS, or for other indications Novartis may pursue in the future, which would limit the commercial potential of ofatumumab. For example, in May 2018, Novartis reported negative topline results showing that a Phase III study of ofatumumab in combination with bendamustine did not meet the primary endpoint of improved PFS in patients with indolent B-cell non-Hodgkin lymphoma, or NHL, who were unresponsive to rituximab or a rituximab-containing regimen, compared to those given bendamustine alone. Equivocal results from the ASCLEPIOS I and II studies could delay, if not altogether eliminate, Novartis' plans for ofatumumab and would negatively impact our prospects for potential income from ofatumumab. Even if the results of the ASCLEPIOS I and II studies are positive, there can be no assurance that Novartis will apply for regulatory approval of ofatumumab for the treatment of RMS or, if Novartis applies, that such application will be successful. In addition, Novartis may not be able to effectively commercialize ofatumumab for RMS, if approved, as a result of unfavorable pricing or reimbursement limitations, competition or other factors, or may choose not to prioritize ofatumumab in its marketing efforts.

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Biopharmaceutical product development involves a substantial degree of uncertainty. Our current product candidates are in various stages of development, and it is possible that none of our product candidates will become viable commercial products, on a timely basis or at all.

        Our clinical stage product candidates include five proprietary product candidates, ongoing clinical studies for daratumumab and ofatumumab by Janssen and Novartis, respectively, and ten additional product candidates being developed in collaboration with our partners. We also have approximately 20 proprietary and partnered product candidates in pre-clinical development. Other than daratumumab and ofatumumab, which are currently in Phase III clinical studies for certain additional indications, tisotumab vedotin, which is currently in Phase II development, and teprotumumab, which is currently in Phase III development by one of our partners, our current product candidates are in relatively early stages of development. All of our product candidates will require significant further development, financial resources and personnel to obtain regulatory approval and develop into commercially viable products, if at all.

        Due to the uncertain, time-consuming and costly clinical development and regulatory approval process, we or our partners may not successfully develop any of our product candidates, or we or our partners may choose to discontinue the development of product candidates for a variety of reasons, including due to safety, risk versus benefit profile, exclusivity, competitive landscape, commercialization potential, production limitations or prioritization of our or our partners' resources. It is possible that none of our current product candidates will ever obtain regulatory approval and, even if approved, such product candidates may never be effectively commercialized. In addition, our research programs may initially show promise in identifying potential product candidates, yet fail to yield product candidates suitable for clinical development or commercialization. Likewise, we and our partners have to make decisions about which clinical stage and pre-clinical product candidates to develop and advance, and we may not have the resources to invest in all of our current product candidates, or clinical data and other development considerations may not support the advancement of one or more product candidates. Decision-making about which product candidates to prioritize involves inherent uncertainty, and our and our partners' development program decision-making and resource prioritization decisions may not improve our results of operations or future growth prospects or enhance the value of the ADSs and our underlying shares.

        Additionally, our most advanced proprietary product candidate, tisotumab vedotin, is currently in Phase II development, and we have not advanced any product candidates through late-stage clinical development ourselves. If we are unable to develop late-stage development capabilities, we will be required to continue to contract with third parties to complete the development of our proprietary product candidates, which we may not be able to do on a timely basis, on terms favorable to us or at all, and the development of our proprietary product candidates could be delayed or terminated. Our failure to effectively advance our development programs could have a material adverse effect on our business, financial condition, results of operations and future growth prospects, and cause the market price of our ADSs to decline.

We have no history of commercializing our marketed products. Building our commercialization capabilities will require significant investment of time and money. There can be no assurance that we will successfully set up our commercialization capabilities in any of the proposed jurisdictions or at all, or that we will successfully commercialize any of our product candidates in the future.

        We are currently in the early stages of building and expanding our commercial capabilities to allow us to market our own products in the future for the indications and in the geographies we determine would be most effective to create value for our shareholders. Our goal is to become a commercial-stage company with oncology products in the United States, Europe and Japan, with an initial focus on achieving commercial launch readiness in Western Europe and Japan to support the potential launch of tisotumab vedotin for the treatment of cervical cancer in these jurisdictions, subject to obtaining

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regulatory approval and, where applicable, reimbursement approval. Our sales and marketing operations are currently in the early stages of development and setting up full commercialization capabilities in these jurisdictions will require substantial investment of time and money and will divert significant management focus and resources. We will be competing with larger pharmaceutical and biotechnology companies with established commercialization and marketing capabilities. In addition, we may be unable to develop productive relationships with local medical experts, patients and other key stakeholders or may face barriers due to cultural or regulatory differences. We will also compete for staffing with transnational and local pharmaceutical and biotechnology firms and local medical, healthcare and research organizations. Accordingly, there can be no assurance that our efforts to set up commercialization capabilities will be successful in any of the proposed jurisdictions or at all.

        Even if tisotumab vedotin or one of our other proprietary product candidates obtains regulatory approval, we may determine that commercializing such product candidate ourselves would not be the most effective way to create value for our shareholders. In addition, if we choose to commercialize any of our product candidates, our marketing efforts may be unsuccessful as a result of unfavorable pricing or reimbursement limitations, delays, competition or other factors. Failure to successfully market one or more of our approved products, or delays in our commercialization efforts, may diminish the commercial prospects for such products and may result in financial losses or damage to our reputation, each of which may have a negative impact on the market price of our ADSs and our financial condition, results of operations and future growth prospects.

Tisotumab vedotin may not obtain regulatory approval, on our expected timeline or at all, and, if it is approved, we may be unable to effectively commercialize it. We do not have sole control over the development and commercialization of tisotumab vedotin.

        Tisotumab vedotin is currently our most advanced proprietary product candidate, and our initial commercialization efforts are focused on setting up our commercialization capabilities in Western Europe and Japan to market tisotumab vedotin for the treatment of cervical cancer. However, there can be no assurance that tisotumab vedotin will obtain regulatory approval in our targeted jurisdictions, on our expected timeline or at all. We and Seattle Genetics are currently conducting a potentially registrational Phase II clinical trial of tisotumab vedotin for the treatment of patients with recurrent and/or metastatic cervical cancer and completed enrollment for this study in March 2019. There can be no assurance that this study will be completed, on the proposed timeline or at all, or that the results will be supportive of regulatory filings. Even if we achieve results in this study that support regulatory filings, we may be required to conduct one or more additional clinical trials in order to obtain marketing approval for tisotumab vedotin. Such trials would be time consuming and costly and may not be completed successfully, if at all. If we are not able to complete the ongoing Phase II study and any other studies that may be required and achieve results that support regulatory filings, we will be unable to obtain regulatory approval for tisotumab vedotin in the proposed indications. Even if we file a Biologics License Application, or BLA, or other regulatory application, there is no guarantee that we will obtain marketing approval or, if we obtain marketing approval, that we and Seattle Genetics will be able to successfully commercialize tisotumab vedotin. If we are unable to commercialize tisotumab vedotin for cervical cancer or in the proposed jurisdictions, we may lose a portion of our investment and may incur additional costs to refocus our efforts on other products or indications, which could have a negative impact on our business, financial condition, results of operations and future growth prospects.

        We are developing tisotumab vedotin in collaboration with Seattle Genetics under an agreement in which the companies share all future costs and profits for the product on a 50:50 basis. If we and Seattle Genetics are unable to agree on the development and commercialization strategies for tisotumab vedotin, such efforts may be delayed or we may be required to take full responsibility for ongoing development and commercialization efforts, including the costs of such efforts. Under our

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agreement, Seattle Genetics will be responsible for tisotumab vedotin commercialization activities in the United States, Canada and Mexico, while we will be responsible for commercialization activities in all other territories. We are currently in discussions with Seattle Genetics regarding the detailed terms on which we will work together to commercialize tisotumab vedotin under this agreement. The results of these discussions may impact the pace and timing of our commercial expansion into the United States or other jurisdictions. In addition, either party may opt out of co-development and profit-sharing in return for receiving milestone payments and royalties from the continuing party.

        Furthermore, tisotumab vedotin is developed using Seattle Genetics' proprietary ADC technology in combination with our proprietary HuMax-TF antibody. Any failures or setbacks in Seattle Genetics' ADC development program, including adverse effects resulting from the use of ADC technology in commercial settings or human clinical trials and/or the imposition of clinical holds on any trials for product candidates using this technology, could have a detrimental impact on the continued development of tisotumab vedotin, which could adversely affect our business, financial condition, results of operations and future growth prospects.

Any failures or setbacks in our DuoBody platform or our other proprietary technologies could negatively affect our business and financial condition.

        Many of our proprietary and partnered product candidates are created with, and dependent upon, our proprietary technologies, including our proprietary DuoBody-CD3xCD20, DuoBody-CD40x4-1BB and DuoBody-PD-L1x4-1BB product candidates, which were created with our DuoBody technology, as well as several additional product candidates in clinical development by Janssen through our DuoBody collaboration, our proprietary HexaBody-DR5/DR5 product candidate, which was created with our HexaBody technology, and our proprietary DuoHexaBody-CD37 product candidate, which was created with our DuoHexaBody technology. Our DuoBody technology is also the basis of our collaborations with certain other partners, including Novo Nordisk, BioNTech and Gilead Sciences and our HexaBody technology is the basis of our new CD38 collaboration with Janssen. To date, no products based on any of these technologies have been approved for commercial sale in any jurisdiction. Any failures or setbacks with respect to our proprietary technologies, including adverse effects resulting from the use of these technologies in human clinical trials and/or the imposition of clinical holds on trials of any product candidates using our proprietary technologies, could have a detrimental impact on our clinical pipeline, as well as our ability to maintain and/or enter into new corporate collaborations regarding our technologies or otherwise, which would negatively affect our business and financial condition.

Several of our products and product candidates are used or proposed to be used in combination with other therapeutic products, which exposes us to risks related to those products.

        Part of our clinical development strategy for certain of our product candidates, including daratumumab and ofatumumab, is to seek to identify patients or patient subsets within a disease category whose treatment may benefit from our products in combination with other therapeutic products. For example, daratumumab has been approved in certain jurisdictions in combination with (i) lenalidomide and dexamethasone, or Rd, for the frontline treatment of transplant-ineligible MM patients and for the treatment of MM patients who have received at least one prior line of therapy; (ii) bortezomib and dexamethasone, or Vd, for the treatment of MM patients who have received at least one prior line of therapy; (iii) pomalidomide and dexamethasone, or Pom-d, for the treatment of MM patients who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor, or PI; and (iv) bortezomib, melphalan and prednisone, or VMP, for frontline treatment of transplant-ineligible MM patients. Ofatumumab has been approved in certain jurisdictions in combination with (i) fludarabine and cyclophosphamide, and (ii) chlorambucil and bendamustine for the treatment of certain CLL indications. In addition, daratumumab is currently in Phase III clinical trials in combination with (i) bortezomib, lenalidomide and dexamethasone, or VRd, Rd and VMP for

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frontline treatment of transplant-ineligible MM patients; (ii) bortezomib, thalidomide and dexamethasone, or VTd, VRd and lenalidomide for frontline treatment of transplant-eligible MM patients; and (iii) carfilzomib and dexamethasone, or Kd, Pom-d and Vd for the treatment of R/R MM, and in combination with cyclophosphamide, bortezomib and dexamethasone, or CyBord, for the treatment of amyloidosis. We and our partners are also testing other product candidates as combination treatments.

        Approval of a product for the treatment of a disease indication in combination with other therapeutic products exposes us and our partners to certain risks related to those other therapeutic products, including the risks that such products will become less competitive or obsolete or will be found to have safety concerns, which could potentially result in removal of such products from the market. For example, in May 2012, the FDA issued a safety announcement relating to the risk of second primary malignancies in patients with newly diagnosed MM that had received lenalidomide, marketed as Revlimid, and on July 18, 2013, Celgene, in consultation with the FDA, discontinued treatment with Revlimid in a Phase III trial for the treatment of previously untreated elderly patients with CLL due to an imbalance observed in the number of deaths in patients treated with Revlimid versus patients treated with chlorambucil. Furthermore, seeking to heighten immune or other therapeutic responses through combination treatments carries an inherent risk that the combination may cause unexpected side effects or safety issues not observed in treatment with the individual products alone. For example, in May 2019, Regeneron Pharmaceuticals Inc. reported that the combination of its bispecific mAb with a PD-1 inhibitor led to enhanced cytokine release syndrome in patients in a Phase I trial and was a potential cause of two patient fatalities in the study. In addition, in May 2018, the CALLISTO Phase Ib/II study of daratumumab in combination with atezolizumab in patients with previously treated NSCLC was terminated following a planned review by a data monitoring committee. The data monitoring committee had determined that there was no observed benefit in the combination treatment arm versus atezolizumab alone and observed a numerical increase in mortality-related events, which were subsequently determined to be primarily due to disease progression, in the combination treatment arm of the study.

Partnerships are an important part of our strategy and we may not be able to continue our current partnerships or establish additional partnerships.

        We have entered into a number of different partnerships for development, co-development, commercialization and co-commercialization of our products and product candidates, as well as for the in- and out-licensing of third-party technologies and our proprietary technologies. Our ability to continue our current partnerships and to enter into additional partnerships will depend in large part on whether we are able to successfully demonstrate our ability to select and develop product candidates and that our antibody technology and other platform technologies are attractive formats for developing antibody therapeutic products. Existing or potential partners may pursue alternative technologies, including those of our competitors, or enter into other transactions that could make collaboration with us less attractive to them. For example, if an existing partner purchases or is purchased by one of our competitors, that company could be less willing to continue its collaboration with us. Moreover, disputes may arise with respect to the ownership of rights to any technology or products developed with any current or future partner or with respect to the interpretation of related agreements. Lengthy negotiations with potential new partners or disagreements between us and our partners may lead to delays in or termination of the research, development or commercialization of products and product candidates or affect the financial and non-financial rights and obligations under the related agreements. If we are not able to establish additional partnerships on terms that are favorable to us or if a significant number of our existing partnerships are terminated and we cannot replace them, we may be required to increase our internal product development and commercialization efforts. This would likely limit the number of product candidates that we would be able to develop and commercialize, significantly increase our need for capital and/or place additional strain on management's time, any of

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which could materially harm our business, financial condition and results of operations. Furthermore, as discussed above, we cannot assure you that we would be able to establish the necessary internal product development and commercialization capabilities to develop and commercialize our product candidates ourselves in a timely matter or at all, or that any product development or commercialization activities we carry out would be successful.

We rely on our partners' willingness and ability to devote resources to the development and commercialization of our products and product candidates and to otherwise support our business as contemplated in our partnership agreements, which may be terminated.

        We rely on our partners to support our business, including to assist with, or to conduct, clinical and regulatory development, manufacturing and/or commercialization of certain of our products and product candidates or to provide access to antigens, technologies, skills and information that we do not possess. For example, we have granted Janssen worldwide exclusive rights to develop and commercialize daratumumab, have granted Novartis worldwide exclusive rights to co-develop and commercialize ofatumumab, and have also entered into partnerships with Seattle Genetics and BioNTech for certain of our proprietary product candidates. In addition, we have granted Janssen, Novo Nordisk and Gilead Sciences certain rights to develop product candidates using our DuoBody technology platform. We have also created product candidates which have been out-licensed to Janssen, Roche, BMS, ADC Therapeutics, Lundbeck and Amgen, and have entered into a research collaboration and exclusive license agreement with Immatics Biotechnologies GmbH, or Immatics, to discover and develop potential next-generation bispecific immunotherapies to target multiple cancer indications and an exclusive license and option agreement with Janssen to develop a next-generation CD38 product using our HexaBody technology platform. If we do not realize the contemplated benefits from our collaborations, our business, financial condition and results of operations may be materially harmed.

        In particular, the termination of our key partnerships could significantly delay the development and commercialization of our products and product candidates and impact our financial results and future prospects. Our licensing partners generally have the right to terminate our partnerships with notice at any time. For example, Janssen has the right to terminate our collaboration agreement concerning daratumumab with 150 days' written notice to us, Novartis has the right to terminate the co-development and collaboration agreement concerning ofatumumab at any time by providing nine months' prior written notice to us, and Seattle Genetics has the right to opt out of co-development and profit-sharing of tisotumab vedotin in return for receiving milestone payments and royalties from us. In particular, any disruption to our collaboration with Janssen or changes in Janssen's product development or business strategy for daratumumab could result in a material decline in our revenue. In addition, any failure by Janssen to perform its obligations under our agreements for any reason, including its obligations to make milestone payments or pay royalties, could have a material adverse effect on our financial performance. Our near-term prospects for product development and commercialization could also be significantly impacted by any disruption in, or termination of, our collaborations with Novartis and Seattle Genetics for ofatumumab and tisotumab vedotin, respectively.

        We also rely on our partners to periodically provide us with information about the status, progress and results of clinical trials and regulatory processes that they are conducting, sponsoring or pursuing with respect to our partnered products. We generally do not have direct access to the underlying data or direct communications with the relevant regulators.

        In addition, our reliance on our partners subjects us to a number of additional risks, including the following:

    our partners have significant discretion regarding whether and on what timeline to pursue planned activities;

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    we cannot control the quantity and nature of the resources our partners may devote to the development, commercialization, marketing and distribution of products or product candidates;

    our partners may not develop products generated using our antibody technology as expected;

    disputes between us and our partners may delay or terminate the research, development or commercialization of the applicable products and product candidates or result in costly litigation or arbitration that diverts management's attention and resources;

    we may not receive milestone payments from our partners, at the expected time or at all, if our partners do not achieve future milestones or if we and our partners disagree about whether a milestone has been reached;

    with respect to collaborations under which we have an active role, we and our partners may have differing opinions or priorities, or we may encounter challenges in joint decision making, which may delay or terminate the research, development or commercialization of the applicable products and product candidates;

    our partners may delay, terminate or repeat clinical trials or require a new formulation of a product candidate for clinical testing, or may abandon a product candidate;

    our relationships with our partners may divert significant time and effort of our scientific staff and management team;

    our partners may be subject to regulatory sanctions that could adversely affect the development, approval or commercialization of the applicable products or product candidates;

    our partners may not properly maintain or defend relevant intellectual property rights, or may infringe the intellectual property rights of third parties, or may use our or third parties' proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

    our partners may develop competing products, therapeutic approaches or technologies;

    business combinations, financial difficulties or significant changes in a partner's business strategy may adversely affect that partner's willingness or ability to continue to pursue our products or product candidates; and

    our collaborations may be terminated, breached or allowed to expire, or our partners may reduce the scope of our agreements with them.

        Any one or more of the foregoing risks, if realized, could have a material adverse effect on our business, financial condition and results of operations.

If our license agreements violate the competition provisions of the EC Treaty, then some terms of our key agreements may be unenforceable.

        Certain license agreements that we have entered into, or may enter into, will grant or may grant exclusive licenses of patents, patent applications and know-how and, therefore, might be found to be restrictive of competition under Article 81(1) of the EC Treaty. Article 81(1) prohibits agreements which restrict competition within the European Community and affect trade between member states. We determine on an agreement-by-agreement basis whether an existing exemption from the application of Article 81(1) applies to the agreement. If an exemption is not applicable, provisions of any license agreement which are restrictive of competition under Article 81(1), including those relating to the exclusivity of rights, may be unenforceable and we could lose the benefit of the rights granted under the provision and may be ordered to pay fines and damages to third parties.

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Our product candidates will need to undergo clinical trials that are time consuming and expensive, the outcomes of which are unpredictable, and for which there is a high risk of failure. If clinical trials of our product candidates fail to satisfactorily demonstrate safety and efficacy to the FDA, the EMA and any other comparable regulatory authority, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development of these product candidates.

        The FDA, the EMA and comparable regulatory authorities in other jurisdictions must approve new product candidates before they can be marketed, promoted or sold in those territories. We or our partners must provide these regulatory authorities with data from pre-clinical studies and clinical trials that demonstrate that our product candidates are safe and effective for a specific indication before they can be approved for commercial distribution. DARZALEX and Arzerra are currently our only approved products. We cannot be certain that our or our partners' clinical trials for our product candidates will be successful or that any of our other proprietary or partnered product candidates will receive approval from the FDA, the EMA or any other regulatory authority. In addition, certain other third parties make decisions about products or product candidates based on results of clinical trials, including determinations relating to pricing or reimbursement of approved products or validations or endorsements of treatment options. Such third parties may require additional data or studies for their determinations.

        Pre-clinical studies and clinical trials are long, expensive and unpredictable processes that can be subject to extensive delays. We cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. It may take several years and require significant expenditures to complete the pre-clinical studies and clinical trials necessary to commercialize a product candidate, and delays or failure are inherently unpredictable and can occur at any stage. Topline or interim results of clinical trials do not necessarily predict final results, and success in pre-clinical studies and early clinical trials does not ensure that later clinical trials will be successful. A number of companies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in advanced clinical trials even after promising results in earlier trials, and we cannot be certain that we or our partners will not face similar setbacks. If topline or interim data that we or our partners report differ from final results, if others, including regulatory authorities, disagree with our assumptions, calculations, conclusions, or analyses or interpret or weigh the data differently, or if subsequent studies are unsuccessful, we or our partners may be unable to obtain marketing approval for product candidates on a timely basis or at all, which could impact our reputation, business, financial condition, results of operations and future growth prospects.

        The design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced or completed. In addition, advancements or changes in the industry standards or techniques may impact the value and recognition of our and our partners' clinical data. Failure to adopt new industry standards may result in less comparable or useful study results. Alternately, early adoption of emerging protocols or endpoints may result in data that is not recognized by certain regulatory bodies or industry professionals, or if such protocols are later found to be ineffective, may require us or our partners to change the design of our clinical trials. For example, Janssen has selected minimal residual disease, or MRD, an emerging efficacy endpoint in MM, as the primary endpoint in the Phase III CEPHEUS trial of daratumumab in combination with VRd for the treatment of frontline MM and in the Phase III AURIGA trial of daratumumab in combination with lenalidomide as maintenance treatment for MM patients who are MRD positive after frontline autologous stem cell transplant. Although these trials include more conventional measures as secondary endpoints, such as PFS and OS, this design may not be sufficient to obtain regulatory approval, and Janssen may be required to change the design of these trials or conduct additional trials to obtain regulatory approval for these indications. Similarly, failure of the industry to adopt MRD as a valid endpoint may result in study results being discounted or disregarded by industry professionals. Changing the design of a clinical trial can be

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expensive and time consuming. An unfavorable outcome in one or more trials would be a major setback for our product candidates and for us and may require us or our partners to delay, reduce the scope of or eliminate one or more product development programs, which could have a material adverse effect on our business, financial position, results of operations and future growth prospects. In addition, any delays in product development may allow our competitors to bring products to market before we do or shorten any periods during which we or our partners have the exclusive right to commercialize our product candidates.

        In connection with clinical trials of our product candidates, we face a number of risks, including risks that:

    we or our partners may be unable to manufacture or obtain sufficient quantities of qualified materials for clinical trials or may be required to modify manufacturing processes;

    patient recruitment may be slower than expected;

    a product candidate may be ineffective, inferior to existing approved products for the same indications, unacceptably toxic or have unacceptable side effects;

    patients may die or suffer other adverse effects for reasons that may or may not be related to the product candidate being tested;

    a clinical trial may be delayed, suspended or terminated by the institutional review board or ethics committee responsible for overseeing the clinical study, by regulatory authorities or by us or our partners due to failure to meet clinical protocols, safety issues or adverse effects, failure to demonstrate product efficacy, changes in clinical protocols or applicable regulatory requirements, lack of funding or other factors;

    investigators or other third parties could conduct clinical studies on our products or product candidates that could lead to adverse events or results that could negatively impact the development, regulatory approval or marketability of such products;

    extension studies on long-term tolerance could invalidate the use of our product;

    final results of studies may not confirm positive interim results or the results of earlier trials;

    results may not meet the level of statistical significance required by the FDA, the EMA or other relevant regulatory agencies to establish the safety and efficacy of our product candidates for continued trial or marketing approval;

    even if data is sufficient for regulatory approval, it may not be sufficient to secure pricing reimbursement or to secure validation of our products by key industry players, which could delay or prevent the commercial launch of a product; and

    our partners or contract research organizations, or CROs, may be unable or unwilling to perform under their contracts.

        Furthermore, we sometimes estimate for planning purposes the timing of the accomplishment of various scientific, clinical, regulatory and other product development objectives. These milestones may include our expectations regarding the commencement or completion of scientific studies or clinical trials, the submission of regulatory filings or the achievement of commercialization objectives. From time to time, we may publicly announce the expected timing of some of these milestones, such as the completion of an ongoing clinical trial, the initiation of other clinical programs, receipt of marketing approval or a commercial launch of a product. The achievement of many of these milestones may be outside of our control. All of these milestones are based on a variety of assumptions, which may cause the timing of achievement of the milestones to vary considerably from our estimates. If we fail to achieve announced milestones in the timeframes we expect, or at all, the commercialization of our

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product candidates may be delayed and we may not be entitled to receive certain contractual payments, which could have a material adverse effect on our business, financial condition, results of operations and future growth prospects.

Results of pre-clinical or early clinical trials may not be indicative of results obtained in later clinical trials, the timing and outcomes of which are always uncertain, and our product candidates may not successfully complete clinical trials on our expected timeline or at all.

        Even if we or our partners obtain positive results from pre-clinical or early clinical trials, we or they may not achieve the same success in future trials. In particular, the results of pre-clinical trials are based on animal, in vitro or other laboratory testing and may not be predictive of the safety or efficacy of our product candidates in humans. Similarly, the results of early stage clinical trials are based on a limited number of patients and may, upon further review, be revised or negated by regulatory authorities or by later stage clinical results. Historically, industry wide results from pre-clinical testing and early clinical trials have often not been predictive of results obtained in later clinical trials. Industry wide, a number of new drug and biologic candidates have shown promising results in early clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals. Data obtained from pre-clinical and clinical activities are susceptible to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, regulatory delays or rejections may be encountered as a result of many factors, including emerging knowledge or changes in regulatory policy during the period of product development.

        Clinical trials may not demonstrate statistically sufficient levels of safety and efficacy to obtain the requisite regulatory approvals. The failure of clinical trials to demonstrate safety and efficacy for our desired indications could harm the development of the relevant product candidate as well as other product candidates employing the same technology, which could have a significant impact on our product pipeline and future growth prospects.

We rely on third parties to conduct our clinical trials and if these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for our product candidates.

        We do not currently have the ability to independently conduct clinical trials. With respect to our proprietary product candidates or any other product candidates for which we control the clinical development, we rely on third parties, such as CROs, to conduct clinical trials on our product candidates. For our out-licensed products and product candidates, or for any product candidates where our partner is responsible for clinical development, we rely on such partners to conduct clinical trials. These partners may also hire CROs or other third parties to conduct clinical studies on our products and product candidates. The third parties with whom we and our partners contract for execution of our clinical trials play a significant role in the conduct of these trials and the subsequent collection and analysis of data. These third parties are not our employees and, except for restrictions imposed by our contracts with such third parties, we have limited ability to control the amount or timing of resources that they devote to our programs. Although we rely on these third parties to conduct our clinical trials, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with its investigational plan and protocol. The FDA and regulatory authorities in Europe and other jurisdictions require us to comply with regulations and standards, commonly referred to as current good clinical practices, or cGCPs, for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

        Many of the third parties with whom we contract may also have relationships with other commercial entities, some of which may compete with us. If the third parties conducting our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet

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expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or to cGCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties. This could be costly, and our clinical trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable product candidate, or to commercialize such product candidate being tested in such studies or trials.

We and our partners have conducted and intend to conduct additional clinical trials for selected products and product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations due to the study design and conduct, trial population or for other reasons, or may require additional U.S.-based trials.

        We and our partners have conducted, currently are conducting and intend in the future to conduct, clinical trials outside the United States, particularly in the European Union where we are headquartered. Although the FDA may accept data from clinical trials conducted outside the United States, acceptance of this data is subject to certain conditions imposed by the FDA. For example, the clinical trial must be well designed and conducted by qualified investigators in accordance with cGCPs, including review and approval by an independent ethics committee and receipt of informed consent from trial patients. The trial population must also adequately represent the U.S. population, and the data must be applicable to the U.S. population and U.S. medical practice in ways that the FDA deems clinically meaningful. Generally, the patient population for any clinical trial conducted outside of the United States must be representative of the population for which we intend to seek approval in the United States. In addition, while these clinical trials are subject to applicable local laws, FDA acceptance of the data will be dependent upon its determination that the trials also comply with all applicable U.S. laws and regulations. There can be no assurance that the FDA will accept data from trials conducted outside of the United States. If the FDA does not accept the data from any clinical trials that we or our partners conduct outside the United States, it would likely result in the need for additional clinical trials, which would be costly and time-consuming and delay or permanently halt our ability to develop and market these product candidates for the proposed indications in the United States.

        For example, the FDA may not accept data from Janssen's ongoing pivotal Phase III CASSIOPEIA study based on its design or other factors. Among other things, the study is assessing daratumumab in combination with VTd, a MM treatment regimen more commonly prescribed in Europe, and is being conducted in certain European countries by French Intergroupe Francophone du Myelome, or IFM, in collaboration with the Dutch-Belgian Cooperative Trial Group for Hematology Oncology, or HOVON, and Janssen. In addition, the FDA may not accept the use of sCR, an emerging endpoint, as the primary endpoint for the consolidation stage of the study or may not be satisfied with other aspects of the trial design, including the double randomization feature, in which patients that achieved a response in the first part of the study undergo a second randomization to either receive maintenance treatment of daratumumab versus no further treatment (observation).

        In other jurisdictions, for instance, in Japan, there is a similar risk regarding the acceptability of clinical trial data conducted outside of that jurisdiction. In addition, there are risks inherent in conducting clinical trials in multiple jurisdictions, inside and outside of the United States, such as:

    regulatory and administrative requirements of the jurisdiction where the trial is conducted that could burden or limit our and our partners' ability to conduct clinical trials;

    foreign exchange fluctuations;

    manufacturing, customs, shipment and storage requirements;

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    cultural differences in medical practice and clinical research; and

    the risk that the patient populations in such trials are not considered representative as compared to the patient population in the target markets where approval is being sought.

If we or our partners encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

        The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. We or our partners may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:

    the size and nature of the patient population;

    the patient eligibility criteria defined in the protocol;

    the size of the study population required for analysis of the trial's primary endpoints;

    the proximity of patients to trial sites;

    the design of the trial;

    our ability to recruit clinical trial investigators with the appropriate competencies and experience;

    competing clinical trials for similar therapies or other new therapeutics not involving our product candidates and or related technologies;

    clinicians' and patients' perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating;

    our ability to obtain and maintain patient consents; and

    the risk that patients enrolled in clinical trials will not complete a clinical trial.

        In addition, our and our partners' clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available for our and our partners' clinical trials, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. We expect that we and our partners will conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our and our partners' clinical trials at such clinical trial sites. Moreover, because our product candidates represent a departure from more commonly used methods for cancer treatment, potential patients and their doctors may be inclined to only use conventional therapies, such as chemotherapy and radiation, rather than enroll patients in any future clinical trial.

        Even if we and our partners are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our and our partners' ability to advance the development of our product candidates.

Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics, or to enter into successful commercial arrangements for such diagnostics, could harm our development strategy.

        We may seek to identify patient subsets within a disease category that may derive selective and meaningful benefit from the product candidates we are developing. Through collaborations, we may

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develop companion diagnostics to help us to more accurately identify patients within a particular subset, both during our clinical trials and in connection with the commercialization of our product candidates. Companion diagnostics are subject to regulation by the FDA, the EMA and comparable foreign regulatory authorities as companion diagnostic medical devices and typically require separate regulatory approval prior to commercial use. We expect that we may develop companion diagnostics in collaboration with third parties and may be dependent on the scientific insights and sustained cooperation and effort of such partners in developing and obtaining approval for companion diagnostics. We and our partners may encounter difficulties in developing and obtaining approval for any companion diagnostics, including issues relating to selectivity/specificity, analytical validation, reproducibility or clinical validation. Any delay or failure by us or our partners to obtain regulatory approval of companion diagnostics could delay or prevent approval of our product candidates. In addition, we or our partners may encounter production difficulties that could constrain the supply of the companion diagnostics, and may experience difficulties gaining acceptance of the use of such companion diagnostics in the clinical community. Failure to gain market acceptance of such companion diagnostics could have an adverse effect on our or our partners' ability to successfully commercialize such product candidates. In addition, the diagnostic company with whom we contract may decide to discontinue selling or manufacturing the companion diagnostic that we or our partners anticipate using in connection with development and commercialization of our product candidates, or our relationship with such diagnostic company may otherwise terminate. We may not be able to enter into arrangements with another diagnostic company to obtain supplies of an alternative companion diagnostic test for use in connection with the development and commercialization of our product candidates or do so on commercially reasonable terms, which could adversely affect and/or delay the development or commercialization of our product candidates.

We are subject to extensive and costly government regulation, and are required to obtain and maintain governmental approvals to commercialize our products.

        Product candidates employing our antibody technology are subject to extensive and rigorous government regulation. The FDA, the EMA and similar regulatory agencies in other countries regulate the development, testing, manufacture, safety, efficacy, record-keeping, labeling, storage, approval, advertising, promotion, sale and distribution of biopharmaceutical products. The regulatory review and approval or licensing process is lengthy, expensive and uncertain and requires the submission of extensive pre-clinical and clinical data and supporting information for each indication to establish the product candidate's safety and efficacy. We or our partners may be unable to obtain regulatory approval on the basis of such data if the relevant regulatory authorities disagree with the design or implementation of the clinical trials, determine that the results of such trials do not meet the requisite level of statistical significance, disagree with our or our partners' interpretation of such data, determine that we or our partners have not demonstrated the safety and efficacy of the product candidate or that its benefits outweigh its risks or fail to approve the manufacturing processes or facilities for the product candidate. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions. Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, particularly as we move towards the commercial stage of our product candidates, we may be required to report some of these relationships to the FDA or other regulatory authorities, as well as to certain national registers or other applicable agencies. The FDA or other regulatory authorities may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected the integrity of the study. We have not obtained regulatory approval for any of our proprietary product candidates and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

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        Even if we or our partners are able to obtain approval for our products or product candidates, regulatory authorities may grant approval for fewer or more limited indications than requested, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of such product candidate.

        In addition, once a product obtains regulatory approval, numerous post-approval requirements apply, including periodic monitoring and reporting obligations, review of promotional material, reports on ongoing clinical trials and adverse events and inspections of manufacturing facilities. In addition, material changes to approved products, including any changes to the manufacturing process or labeling, require further review by the appropriate authorities before marketing. Approvals may also be withdrawn or revoked due to safety, effectiveness or potency concerns, including as a result of adverse events reported in patients or ongoing clinical trials, or failure to comply with current good manufacturing practices, or cGMPs. In addition to revocation or withdrawal of approvals, we and our partners may be subject to warnings, fines, recalls, criminal prosecution or other sanctions if we fail to comply with regulatory requirements. If we or our partners are unable to obtain or maintain regulatory approvals for our products and product candidates, our business, financial condition, results of operations and future growth prospects will be negatively impacted and we or our partners may be subject to sanctions. In addition, even if our products are approved for marketing, we or our partners may be unable to market our products, successfully or at all, if we are unable to obtain favorable pricing for our products or if third party payors do not agree to provide reimbursement for our products, at favorable rates or at all. See "—Risks Related to Government Regulation" below for more information about the regulatory risks we and our partners face.

Any approval granted for our products or product candidates in the United States does not assure approval of such products in the European Union or other foreign jurisdictions.

        In order to market and sell our drugs in the European Union and other jurisdictions, we and our partners must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain approval may differ substantially from that required to obtain FDA approval. The marketing approval process outside of the United States generally includes all of the risks associated with obtaining FDA approval. In addition, many countries outside of the United States require that the drug be approved for reimbursement before the drug can be approved for sale in that country. We and our partners may not obtain approvals from regulatory authorities outside of the United States on a timely basis, if at all. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one regulatory authority outside of the United States does not ensure approval by regulatory authorities in other countries or jurisdictions or by the FDA.

Reports of adverse or undesirable events or safety concerns involving daratumumab, ofatumumab or our proprietary or partnered product candidates could delay or prevent us or our partners from obtaining or maintaining regulatory approvals, or could negatively impact sales and prospects of our products and product candidates.

        As with most biological drug products, use of our products and product candidates could be associated with undesirable side effects or adverse events which can vary in severity from minor reactions to death and in frequency from infrequent to prevalent. In particular, many of our and our partners' clinical trials are conducted in patients with serious life-threatening diseases for whom conventional treatments have been unsuccessful or for whom no conventional treatment exists, and in some cases, our product candidates are used in combination with approved therapies that themselves have significant adverse event profiles. During the course of treatment, these patients could suffer adverse medical events or die for reasons that may or may not be related to our product candidates.

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Reports of adverse events or safety concerns could have negative impacts on our or our partners' clinical trials, regulatory processes, reputation and results.

        Such adverse events or safety concerns involving our products or product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials, or could negatively impact patient enrolment in, or completion of, clinical trials. For example, in May 2018, the CALLISTO Phase Ib/II study of daratumumab in combination with atezolizumab in patients with previously treated NSCLC was terminated following a planned review by a data monitoring committee. The data monitoring committee had determined that there was no observed benefit in the combination treatment arm versus atezolizumab alone and observed a numerical increase in mortality-related events, which were subsequently determined to be primarily due to disease progression, in the combination arm of the study. Based on these findings, a Phase I study of daratumumab and Janssen's proprietary anti-PD-1 antibody for the treatment of patients with MM was also terminated. In addition, in June 2018, a Phase I study of JNJ-63709178, one of the product candidates being developed by Janssen through our DuoBody collaboration was put on clinical hold due to the occurrence of a Grade 3 adverse event. This hold was subsequently lifted and the study is ongoing. However, there can be no assurance that this study will not be halted again or terminated in the future.

        In addition, reports of adverse events or safety concerns involving our products or product candidates could result in regulatory authorities limiting, denying, withdrawing approval of or recalling such product for any or all indications, including the use of such product in its previously approved indications, or may require additional clinical trials, updates to the prescribing information, including boxed warnings, contraindications, or other labeling statements, implementation of a Risk Evaluation and Mitigation Strategy or the issuance of field alerts, warnings or other communications to physicians, pharmacies or patients. For example, the prescribing information for Arzerra includes a warning that Arzerra may cause hepatitis B virus, or HBV, infection to reoccur, which may cause serious liver problems and death, and may cause progressive multifocal leukoencephalopathy, or PML, a rare brain infection that causes severe disability and can lead to death. In certain cases, regulatory authorities may order us or our partners to conduct additional trials or to cease further development or commercialization of the product or product candidate entirely.

        Furthermore, actual or potential drug related side effects could affect patient recruitment or the ability of enrolled patients to complete a trial for our products or product candidates. Reports of adverse events or safety concerns, or changes to regulatory approvals or labeling, may also have a significant impact on market acceptance of our products by patients and physicians or may trigger potential product liability claims, fines, injunctions or the imposition of civil or criminal penalties. Any of these events could prevent us or our partners from developing, commercializing or maintaining market acceptance of daratumumab, ofatumumab or the particular product candidate or could substantially increase commercialization costs, which could significantly harm our business, financial condition, results of operations and future growth prospects. In addition, the reporting of adverse safety events involving daratumumab, ofatumumab or our product candidates, or public rumors about such events, could cause our stock price to decline or experience periods of volatility. There are no assurances that patients receiving daratumumab, ofatumumab or our product candidates will not experience serious adverse events in the future.

We have received Fast Track Designation, or FTD, and Breakthrough Therapy Designation, or BTD, for certain indications in the past and may seek FTD or BTD, or may seek to participate in other programs for expedited development or review, in the future. We may fail to obtain such designation and may not be eligible for participation in such programs, and even if received, such designations or programs may not lead to a faster development or regulatory review or approval process.

        If a product candidate is intended for the treatment of a serious or life-threatening disease or condition, and pre-clinical or clinical data demonstrate the potential to address an unmet medical need

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for this condition, a product sponsor may apply for FTD from the FDA for such indication. Similarly, the FDA may grant BTD to expedite the development and review of products that treat serious or life-threatening diseases when "preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development." In addition, the FDA or other regulatory bodies periodically introduce other programs for expedited review of applications, including the FDA's recently released Real-Time Oncology Review, or RTOR, Pilot Program, which is currently available for certain supplemental applications for already-approved cancer drugs, and the FDA's priority review designation. The RTOR Pilot Program allows the FDA to review data before the applicant formally submits its completed supplemental application, resulting in a more efficient review when the applicant submits the full supplemental application. Priority review is an FDA designation under which the FDA sets the target date for FDA action on a BLA or sBLA at six months after the FDA accepts the application for filing, rather than the standard 10-month FDA review period. Priority review is granted when there is evidence that the proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or prevention of a serious condition. In May 2019, the FDA granted priority review for Janssen's sBLA submission for daratumumab as a combination treatment for frontline MM based on the CASSIOPEIA study.

        Although these designations and pilot programs are intended to expedite the review and approval of drug candidates, they do not ensure that marketing approval will be granted in a particular timeframe or at all. The FDA and other regulatory authorities have broad discretion whether or not to grant these designations or include product candidates within pilot programs, and, even if we or our partners believe a particular product candidate is eligible for these designations or programs, we cannot assure you that such authority would agree. Even though the FDA has granted priority review designation to the sBLA for daratumumab based on the CASSIOPEIA study, and even if we or our partners receive such designations or are eligible for inclusion in expedited review pilot programs in the future, we may not experience a faster development, review or approval process compared to conventional procedures. In addition, such designations or processing under such pilot programs may be withdrawn if the FDA or the relevant regulatory body no longer believes such product candidate meets the criteria for the designation or program. Furthermore, these designations and pilot programs do not change the scientific and medical standard for approval or the quality of evidence necessary to support approval. As a result, applications for product candidates granted expedited review or BTD or FTD designation may be denied based on study data, study design or other factors. See also "—We and our partners have conducted and intend to conduct additional clinical trials for selected products and product candidates at sites outside the United States, and the FDA may not accept data from trials conducted in such locations due to the study design and conduct, trial population or for other reasons, or may require additional U.S.-based trials." See "Business—Government Regulation" for more information about BTD and FTD and other programs for expedited review.

        Daratumumab has received BTD for three indications of R/R MM and FTD for one indication of R/R MM, and ofatumumab has received BTD and FTD, each for one CLL indication. These products have been approved for each of the designated indications and these designations are not applicable to ongoing studies for daratumumab and ofatumumab in other indications. In addition, teprotumumab, one of our product candidates currently in Phase III clinical development by Horizon Pharma through our collaboration with Roche has received FTD and BTD for the treatment of Graves' Orbitopathy. Although Horizon Pharma announced that it expects to submit a BLA to the FDA for teprotumumab based on positive topline results in the Phase III study reported in February 2019, there can be no assurance that the regulatory review for teprotumumab will be expedited as a result of such designations or that it will obtain regulatory approval. We or our partners may seek FTD or BTD or seek eligibility for other expedited review or approval programs for some or all of our other product candidates in the future, but we may never receive such designation or be accepted to such program, and, even if received or accepted, the development or regulatory review of our product candidates may

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not be expedited or benefited by such designation or program. In addition, such designation or acceptance to such program does not assure ultimate approval by the FDA or the applicable regulatory body.

Enhanced governmental and private scrutiny over, or investigations or litigation involving, pharmaceutical manufacturer donations to patient assistance programs offered by charitable foundations may require us or our partners to modify such programs and could negatively impact our business practices, harm our reputation, divert the attention of management and increase our expenses.

        To help patients afford our products, certain of our partners have, and we may have in the future, patient assistance programs and we or our partners also occasionally make donations to independent charitable foundations that help financially needy patients. These types of programs designed to assist patients in affording pharmaceuticals have become the subject of scrutiny. In recent years, some pharmaceutical manufacturers were named in class action lawsuits challenging the legality of their patient assistance programs and support of independent charitable patient support foundations under a variety of U.S. federal and state laws. At least one insurer also has directed its network pharmacies to no longer accept manufacturer co-payment coupons for certain specialty drugs the insurer identified. Our or our partners' patient assistance programs and support of independent charitable foundations could become the target of similar litigation.

        In addition, there has been regulatory review and enhanced government scrutiny of donations by pharmaceutical companies to patient assistance programs operated by charitable foundations. For example, the Office of Inspector General of the U.S. Department of Health & Human Services, or OIG, has established specific guidelines permitting pharmaceutical manufacturers to make donations to charitable organizations that provide co-pay assistance to Medicare patients, provided that such organizations are bona fide charities, are entirely independent of and not controlled by the manufacturer, provide aid to applicants on a first-come basis according to consistent financial criteria, and do not link aid to use of a donor's product. If we, our partners or our vendors or donation recipients are deemed to fail to comply with laws or regulations in the operation of these programs, we or such partner could be subject to damages, fines, penalties or other criminal, civil or administrative sanctions or enforcement actions. Further, numerous organizations, including pharmaceutical manufacturers, have received subpoenas from the OIG and other enforcement authorities seeking information related to their patient assistance programs and support. We cannot ensure that our compliance controls, policies and procedures will be sufficient to protect against acts of our partners, employees, business partners or vendors that may violate the laws or regulations of the jurisdictions in which we operate. Regardless of whether we have complied with the law, a government investigation could negatively impact our business practices, harm our reputation, divert the attention of management and increase our expenses.

We currently rely primarily on one contract manufacturer to produce our product candidates for clinical trials and are currently negotiating arrangements for commercial scale production.

        To ultimately be successful, our antibody products must be manufactured in commercial quantities in compliance with regulatory requirements and at acceptable costs. Janssen is responsible for the manufacture of daratumumab, and Novartis for the manufacture of ofatumumab. For the products we are responsible to manufacture, we currently rely primarily upon one single source third-party contract manufacturing organization, or CMO, Lonza, to manufacture and supply large quantities of our product candidates. As part of our efforts in building our in-house commercialization capabilities, we are currently in negotiations with a CMO for commercial production of tisotumab vedotin if and when approved. If these negotiations are unsuccessful, we believe that additional facilities would be available for commercial production of tisotumab vedotin if and when approved. We expect to negotiate contracts for commercial production on a product-by-product basis for products that we choose to commercialize ourselves.

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        We are aware of only a limited number of companies on a worldwide basis who operate manufacturing facilities in which our product candidates can be manufactured under cGMP regulations. It would take a substantial period of time for a contract facility that has not been producing antibodies to begin producing antibodies under cGMP. We cannot be certain that we will be able to contract with any of these companies on acceptable terms, if at all. New suppliers would also need to have sufficient rights under applicable intellectual property laws to the method of manufacturing such ingredients. In addition, significant cancellation penalties and the long lead times required for initial orders or to make any changes to existing orders, including changing the scale of production, limit our flexibility in connection with product development, clinical trials or commercial sales. For example, we may be required to order products for the second part of a clinical trial or for a proposed follow-on clinical trial before we have initial results from the study, which could result in loss if we terminate the study or need to make changes to the product.

We and our manufacturing partners must obtain and maintain compliance with applicable laws and regulations, including cGMPs.

        Before commercializing new pharmaceutical and biologic products, manufacturers must comply with the laws and regulations, including drug and biologic cGMPs, of the applicable governmental authorities. Compliance with cGMP regulations requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturing facilities are also subject to pre-approval and ongoing periodic inspection by applicable governmental agencies, including unannounced inspections, and must be licensed before they can be used in commercial manufacturing of products employing our technology. The FDA, the EMA or similar regulatory agencies at any time may also implement new standards, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products.

        Manufacturers of pharmaceutical and biologic products often encounter difficulties in production, including difficulties with production yields, stability of the product candidate, quality control and assurance, shortages of qualified personnel, compliance with relevant regulations, production costs and development of advanced manufacturing techniques and process controls. If our manufacturer were to encounter any of these difficulties or otherwise fail to comply with its obligations to us or under applicable regulations, our ability to provide study materials in our pre-clinical studies and clinical trials would be jeopardized. Any delay or interruption in the supply of pre-clinical study or clinical trial materials could delay the completion of our pre-clinical studies and clinical trials, increase the costs associated with maintaining our pre-clinical study and clinical trial programs and, depending upon the period of delay, require us to commence new trials at significant additional expense or terminate the studies and trials completely.

        In addition, we have little control over our manufacturers' compliance with these regulations and standards and manufacturers of our products and product candidates may be unable to comply with these cGMP requirements and with other regulatory requirements. The discovery of manufacturing, quality control or regulatory documentation problems or failure to maintain compliance with cGMP or other requirements after approval of a product may result in restrictions on the marketing of a product, revocation of the license, withdrawal of the product from the market, seizures, injunctions, fines or criminal sanctions. If the safety of any product supplied is compromised due to the manufacturers' failure to adhere to applicable laws or for other reasons, we or our partners may not be able to obtain regulatory approval for or successfully commercialize such products, and we or our partners may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our products and product candidates or entail higher costs or impair our reputation. No assurance is given that third party manufacturers will be able to comply adequately with the applicable regulations.

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We face intense competition and rapid technological change, which may result in others discovering, developing or commercializing competing products before or more successfully than we do, or earlier than we anticipate.

        The biotechnology and biopharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. Many third parties compete with us in developing various approaches to antibody therapy. They include pharmaceutical companies, biotechnology companies, academic institutions and other research organizations. Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, pre-clinical testing, conducting clinical trials, obtaining regulatory approval and marketing than we do. In addition, many of these competitors are active in seeking patent protection and licensing arrangements in anticipation of collecting royalties for use of technology that they have developed. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, as well as in acquiring technologies complementary to our programs. In addition, many other pharmaceutical and biotechnology companies are developing and/or marketing therapies for the same types of cancer that our products and product candidates are designed and being developed to treat. For example, Sanofi presented data from its Phase III study of isatuximab, a mAb targeting CD38, at ASCO in June 2019, reporting that isatuximab in combination with Pom-d improved PFS in patients with R/R MM compared to treatment with Pom-d alone. If Sanofi is able to obtain regulatory approval for isatuximab in this indication, it may directly compete with daratumumab in the MM treatment space. We are also aware of other companies that have or are developing technologies that may be competitive with ours, including bispecific, ADC, CAR modified T-cell, or CAR-T, and ribonucleic acid, or RNA,-based, technologies. In addition, our DuoBody and other technology partners may develop compounds utilizing our technologies that may compete with product candidates that we are developing. See "Business—Competition" below for more information about our competitors.

        In addition, in the United States, the Biologics Price Competition and Innovation Act of 2009, or BPCIA, created an abbreviated approval pathway for biological products that are demonstrated to be "highly similar" or "biosimilar" to or "interchangeable" with an FDA-approved biological product. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first approved by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first approved. The 12-year exclusivity period runs from the initial approval of the innovator product and not from approval of a new indication. In addition, the 12-year exclusivity period does not prevent another company from independently developing a product that is highly similar to the innovative product, generating all the data necessary for a full BLA and seeking approval. Exclusivity only assures that another company cannot rely on the FDA's prior approvals in approving a BLA for an innovator's biological product to support the biosimilar product's approval. Further, under the FDA's current interpretation, it is possible that a biosimilar applicant could obtain approval for one or more of the indications approved for the innovator product by extrapolating clinical data from one indication to support approval for other indications. The BPCIA is complex and is still being interpreted and implemented by the FDA. As a result, the ultimate impact of the BPCIA is subject to uncertainty.

        We believe that any of our product candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that this exclusivity could be shortened due to congressional action or otherwise, or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for biosimilar competition sooner than anticipated. Other aspects of the BPCIA, some of which may impact the BPCIA exclusivity provisions, have also been the subject of recent litigation. Moreover, the extent to which a biosimilar, once approved, could be substituted for any one of our reference products

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in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

        In the European Union, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued since 2005. We are aware of many pharmaceutical and biotechnology and other companies that are actively engaged in research and development of biosimilars or interchangeable products.

        It is possible that our competitors will succeed in developing products and technologies that are more effective than our products and product candidates or that would render our technology obsolete or noncompetitive, or will succeed in developing biosimilar or interchangeable products for our products or our product candidates. We anticipate that we will continue to face increasing competition in the future as new companies enter our market and scientific developments surrounding biosimilars and other cancer therapies continue to accelerate. We cannot predict to what extent the entry of biosimilars or other competing products will impact potential future sales of our products or our product candidates.

        In addition, the pricing of our products depend, and the pricing of our products and product candidates, if and when approved for marketing, will depend, in part, on the pricing strategies adopted by our competitors. If we or our partners are forced to reduce the prices of our products, or if sales of our products fall, due to competitive pricing, our revenue from milestone payments, sales or royalties related to such products will be negatively affected.

We may face increased competition from lower-cost products imported from other countries.

        Any products we or our partners are able to commercialize in the United States and the European Union may be subject to competition from lower priced imports of those same products, leading to reduced revenues and lower sales margins, as well as lower priced imports of competing products from Eastern Europe, Canada, Mexico and other countries with government price controls or other market dynamics that, in each case, reduce prices of products. The ability of patients and other customers to obtain these lower priced imports has grown significantly. Some of these foreign imports are illegal under current law. However, the volume of imports is now significant, due in part to the limited enforcement resources and the pressure in the current political environment to permit the imports as a mechanism for expanding access to lower priced medicines. Parallel importation or importation of foreign products could adversely affect our future profitability. This impact potentially could become even greater if there is a further change in relevant protective legislation or if state or local governments take further steps to import products from abroad.

Even if any of our product candidates receive marketing approval or if any of our marketed products receive marketing approval for additional indications, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.

        If any of our product candidates receive marketing approval or if any of our marketed products receive marketing approval for additional indications, they may nonetheless fail to gain sufficient market acceptance by physicians, patients, healthcare payors and others in the medical community. For example, current cancer treatments like chemotherapy and radiation therapy are well-established in the medical community, and doctors may continue to rely on these treatments. If our products or product candidates do not achieve an adequate level of acceptance, our commercial opportunity may be limited and/or our revenues from sales of these products may be negatively impacted. The degree of market acceptance of our product candidates and new indications for our marketed products, if approved for commercial sale, will depend on a number of factors, including the price, efficacy, safety, convenience and ease of administration of such products, along with their competitive advantages vis-à-vis other

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therapies, designation as a first-, second- or third-line treatment and any labeling restrictions or warnings. The processes developed for safe administration and any changes to the standard of care for the targeted indications may also have an impact on market acceptance of such products. The willingness of the target patient population to try, and of physicians to prescribe, the product, as well as the availability and amount of coverage and reimbursement from government payors, managed care plans and other third-party payors are also key factors that impact market acceptance of a new product. In addition, the strength of the sales, marketing and distribution support provided by us or our partners will play a key role in the effective commercialization of a new product.

Our target patient population may be lower than our estimates and we may be unable to recoup our investment due to small patient population or restrictions to the approved indication of a product.

        Periodically, we and our partners make estimates regarding the incidence and prevalence of target patient populations for particular diseases based on various third-party sources and internally generated analysis and use such estimates in making decisions regarding product development strategy, including determining indications on which to focus in pre-clinical or clinical trials. These estimates may be inaccurate or based on imprecise data, or patient incidence and prevalence for selected indications may evolve over time as treatments and patient outcomes change. The number of patients in the addressable markets may turn out to be lower than expected, patients may not be otherwise amenable to treatment with our products, or new patients may become increasingly difficult to identify or gain access to, all of which could materially adversely affect our business, financial condition, results of operations and future growth prospects.

        Even if our product candidates obtain significant market share for their approved indications, because certain potential target populations are small, we may never recoup our investment in such product candidate without obtaining regulatory approval for additional indications for such product candidates. In addition, we expect that we or our partners will initially seek approval of some of our product candidates as second- or third-line therapies for patients who have failed other approved treatments, which further limits the size of the potential patient population for such indication. For product candidates that prove to be sufficiently beneficial as second- or third-line therapies, we expect that we or our partners would seek approval of such products as a second-line therapy (with respect to products initially approved as third-line therapies) and/or as frontline therapies. However, such applications may require us or our partners to conduct additional clinical trials at significant cost and risk, and there can be no assurance that such clinical trials or regulatory applications would be successful. If we or our partners are unable to obtain regulatory approval for such products for frontline or second-line therapy, we may be unable to recoup our investment in such products.

We may need to raise additional funding, which may not be available on acceptable terms, or at all, and failure to obtain this capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

        We are currently advancing our proprietary product candidates through clinical development and are conducting pre-clinical studies with respect to other programs. Developing product candidates is expensive, time-intensive and risky, and we expect our research and development expenses to increase in connection with our ongoing activities, particularly as we seek to advance our proprietary product candidates toward commercialization. In addition, we expect our general and administrative expenses to increase over the next few years as we begin to build and eventually expand our commercialization capabilities in a number of jurisdictions. Although we believe that our existing revenue streams, along with the proceeds of this offering, will be sufficient to fund our current projects and commercialization activities, our operating plans may change as a result of a variety of factors, and we may need to seek additional funds sooner than planned through public or private equity or debt financings, government or other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. Further, we may

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seek additional capital if market conditions are favorable or if we have specific strategic objectives which could benefit from additional capital.

        Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our ADS holders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of the ADSs to decline. The sale of additional equity or convertible debt securities could be dilutive to our ADS holders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with partners or at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or proprietary product candidates or otherwise agree to terms unfavorable to us. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any proprietary product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, any of which could impair our business, financial condition, results of operations and future growth prospects.

We expect to incur higher research and development costs and general and administrative expenses in future periods as we advance our proprietary product candidates through clinical development and expand our commercial capabilities.

        We expect to incur higher research and development costs in future periods, including increasing costs for clinical trials and manufacturing as our proprietary product candidates advance in clinical development and we increase the number of product candidates under active clinical development. Our ongoing research and development and, increasingly, pre-launch commercial activities will require substantial amounts of capital and may not ultimately be successful. Over the next several years, we expect that we will continue to incur substantial expenses, primarily as a result of activities related to the continued development of our clinical pipeline and building our late-stage development and commercialization capabilities. Our proprietary product candidates will require significant further development, financial resources and personnel to pursue and obtain regulatory approval and develop into commercially viable products, if at all. Our commitment of resources to the research and continued development of our product candidates and the expansion of our pipeline will likely result in our operating expenses increasing and/or fluctuating as a result of such activities in future periods. We may also incur significant milestone payment obligations to certain of our licensors as our product candidates progress through clinical trials towards potential commercialization.

        We also expect our general and administrative expenses to increase over the next few years as we begin to build and eventually expand our commercialization capabilities in a number of jurisdictions. In addition, we expect the structure and composition of our staff and expenses to change as we focus on advancing our proprietary product candidates and develop our late-stage development and commercialization capabilities.

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We have revenues and expenses in foreign currencies and we have invested a part of our cash position in both Danish and foreign marketable securities and are therefore exposed to different kinds of financial risks including foreign exchange risk, changes in interest rates and credit risks.

        Most of our financial transactions are made in Danish kroner, U.S. dollars and Euro. As our reporting currency is Danish kroner, we experience exchange rate risk with respect to our holdings and transactions denominated in currencies other than Danish kroner. Our U.S. dollar currency exposure is mainly related to cash deposits, marketable securities, and receivables related to our collaborations with Janssen and Novartis. In addition, our reported revenue is affected by the translation of milestone payments, royalties and other income denominated in foreign currencies, primarily U.S. dollars, into Danish kroner as our reporting currency.

        We do not generally hedge our currency exposure on our milestone payments, royalties or other income and expense items in the ordinary course of business. Due to long-standing policy of Danmarks Nationalbank with respect to the €/DKK exchange rate, we believe that there are currently no material transaction exposure or exchange rate risks regarding transactions in Euros. However, should Denmark's policy towards the Euro change, the DKK values of our Euro-denominated assets and costs could be materially different compared to what is calculated and reported under the existing Danish policy towards the €/DKK exchange rate.

        If we fail to manage our financial risks adequately, our business, financial condition, results of operations and future growth prospects and the value of our ADSs may be adversely affected.

We may face product liability claims related to the use or misuse of our products or technologies.

        Our business exposes us to potential product liability risks which are inherent in research and development, pre-clinical and clinical testing, manufacturing, marketing and use of antibody products. Product liability claims may be expensive to defend and may result in judgments against us which are potentially punitive. It is generally necessary for us to secure certain levels of insurance as a condition for the conduct of clinical trials. Although we believe that our current coverage limits are adequate, we cannot be certain that the insurance policies will be sufficient to cover all claims that may be made against us. Product liability insurance is expensive, difficult to obtain and may not be available in the future on acceptable terms. Any claims against us, regardless of their merit, could cause our business to suffer.

        Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, product liability claims may result in decreased demand for our products, injury to our reputation, withdrawal of clinical trial participants and inability to continue clinical trials, initiation of investigations by regulators, costs to defend the related litigation, a diversion of management's time and our resources, substantial monetary awards to trial participants or patients, product recalls, withdrawals or labeling, marketing or promotional restrictions, exhaustion of any available insurance and our capital resources, the inability to commercialize any product or product candidate, loss of any potential future revenue and a decline in the market price of our ADSs.

Our internal computer systems, or those of our partners or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our business and product development.

        Our computer systems, including those hosted by third parties, and those of our partners and other contractors or consultants, may be vulnerable to cyber security breaches, computer viruses and unauthorized access, as well as damage or loss of data due to natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur, it could result in a material disruption of our development programs and our business operations. In addition, any loss or disclosure of trade secrets, clinical data or other proprietary information as a result of such disruption or breach could subject us to litigation or regulatory review and sanctions and may impact our reputation and our

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and our partners' ability to further develop and commercialize our products and product candidates, any of which could have a material adverse effect on our business, financial condition, results of operations and the market price of our ADSs.

We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions or alliances.

        Should attractive opportunities arise, we may acquire companies or technologies that facilitate our access to new medicines, research projects or geographical areas, or that enable us to achieve synergies with our existing operations. However, we may not be able to identify appropriate targets or make acquisitions under satisfactory conditions, in particular, satisfactory price conditions. In addition, we may be unable to obtain the financing for these acquisitions on favorable terms and could be led to finance these acquisitions using cash that could otherwise be allocated to other purposes in the context of our existing operations, or issuances of equity or convertible debt securities, which could be dilutive to our shareholders and ADS holders, including those purchasing ADSs in this offering, and adversely affect the market price of our ADSs. If we acquire or enter into strategic alliances with businesses with promising markets or technologies, we may not be able to realize the benefits of such acquisitions or alliances, including if we are unable to successfully integrate them with our existing operations and company culture, or if we encounter difficulties in developing, manufacturing and marketing any new products resulting from such acquisitions or alliances. We cannot assure you that we will achieve the expected synergies to justify any such transaction, which could have a material adverse effect on our business, financial condition, results of operations and future growth prospects and your ability to realize on your investment.

As a result of the listing of the ADSs on the Nasdaq Global Select Market, we will become subject to the Foreign Corrupt Practices Act.

        As a result of the listing of the ADSs on the Nasdaq Global Select Market, we will become subject to the Foreign Corrupt Practices Act, or FCPA, which generally prohibits companies and their intermediaries from making or offering improper payments to non-U.S. officials for the purpose of obtaining or retaining business. The FCPA generally also requires companies listed on a U.S. stock exchange to maintain a system of adequate internal accounting controls and to make and keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets. Because of the predominance of government-sponsored health care systems around the world, many of our commercial relationships outside of the United States are with governmental entities, and personnel of such entities may be considered non-U.S. officials for purposes of the FCPA. Violations of the FCPA and other applicable anti-bribery laws are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures. In connection with this offering, we are adopting an amended written code of business conduct and other policies and procedures to assist us and our personnel in complying with the FCPA and other applicable anti-bribery laws. However, our personnel and others acting on our behalf could take actions that violate these requirements, which could adversely affect our reputation, business, financial condition and results of operations.

Risks Related to Our Intellectual Property

Our ability to compete may decline if we or our partners are unable to or do not adequately protect intellectual property rights or if our intellectual property rights are inadequate for our products, product candidates or future products or product candidates.

        Our commercial success and viability depend in part on our and our partners' ability to obtain and maintain adequate intellectual property protection in the United States, Europe and other countries with respect to our existing products, product candidates and processes and related technologies owned

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by us and to successfully defend these rights against third party challenges, successfully enforce these rights to prevent third-party infringement, as well as our ability to maintain adequate intellectual property protection for any future technologies and products. If we or our partners do not adequately protect our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have, which could materially harm our business, negatively affect our position in the marketplace, limit our ability to commercialize our products and product candidates and delay or render impossible our achievement of profitability.

        While we rely on a combination of patents, trademarks and trade secret protection, as well as nondisclosure, confidentiality and other contractual agreements to protect the intellectual property related to our brands, products, product candidates and proprietary technologies, our strategy and future prospects are based, in particular, on our patent portfolio. We and our partners or licensees will best be able to protect our technologies, products and product candidates and their uses from unauthorized use by third parties to the extent that valid and enforceable patents, effectively protected trade secrets, or other regulatory exclusivities, cover them. However, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

        The patent position and other intellectual property rights of biopharmaceutical companies involve complex legal, administrative and factual questions, and the issuance, scope, validity and enforceability of patents cannot be predicted with certainty. Also, intellectual property rights have limitations and do not necessarily address all potential threats to our competitive advantage. Our and our partners' ability to obtain patent protection for our or their technologies, products and product candidates is uncertain and the degree of future protection afforded by such intellectual property rights is uncertain due to a number of factors, including, but not limited to:

    we or our partners may not have been the first to make or file patent applications for the inventions covered by pending patent applications or issued patents;

    others may independently develop identical, similar or alternative technologies, products or compositions and uses thereof;

    any or all of our or our partners' pending or any future patent applications may not result in issued patents;

    any patents issued to us or our partners may not provide a basis for commercially viable products, or may not provide any competitive advantages in countries of significant business opportunity;

    third parties may initiate interference, re-examination, post-grant review, inter partes review, or derivation actions in the U.S. Patent and Trademark Office, or USPTO, or oppositions in the European Patent Office, or EPO, or observations or protests, or any similar actions in other patent administrative or court proceedings worldwide that challenge the validity, enforceability or scope of such patents, which may result in our patent claims being narrowed or invalidated which could limit our ability to prevent competitors from developing and marketing similar products;

    our or our partners' technologies, compositions and methods may not be patentable;

    others may design around our or our partners' patent claims to produce competitive products or uses which fall outside of the scope of our patents;

    third parties may have blocking patents that could prevent us from marketing our products or practicing our own patented technology;

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    patent terms may be inadequate to protect our competitive position on our technologies, products and product candidates for an adequate amount of time; or

    the Supreme Court of the United States, other U.S. federal courts, Congress, the USPTO or similar foreign authorities may change the standards of patentability and any such changes could narrow or invalidate, or change the scope of, or change the patent life time of, our or our partners' patents.

Patent applications may be denied. Issued patents covering our products and product candidates could be found invalid or unenforceable if challenged in court. Patents issued to our partners may not entitle us to royalties on the products that they protect.

        Any or all of our or our partners' pending or any future patent applications may not result in issued patents. The determination of patentability by the relevant patent office is complex and may take several years, the breadth of allowed claims is uncertain, and the patent applications may ultimately be denied or result in issued patents with allowed claims that differ from those in the original application. Even if patents do successfully issue and even if such patents cover our technologies, products, product candidates, compositions and methods of use, third parties may initiate interference, re-examination, post-grant review, inter partes review, or derivation actions in the USPTO, third party oppositions in the EPO or observations or protests, or similar actions challenging the validity, enforceability or scope of such patents in other patent administrative proceedings worldwide, which may result in our or our partners' patent claims being narrowed or invalidated. Such proceedings could result in revocation or amendment of such patents in such a way that they no longer cover our technologies, product candidates or competitive products. Further, if we or our partners initiate legal proceedings against a third party to enforce a patent covering our product, product candidate or technology, the defendant could counterclaim that the patent covering our product, product candidate or technology is invalid or unenforceable. In patent litigation in the United States, certain European and other countries worldwide, it is commonplace for defendants to make counterclaims alleging invalidity and unenforceability in the same proceeding, or to commence parallel defensive proceedings such as patent nullity actions to challenge validity and enforceability of asserted patent claims.

        In administrative and court actions, grounds for a patent validity challenge may include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness (lack of inventive step) and in some cases, lack of sufficiently teaching, or non-enablement of, the claimed invention. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the patent examiner during prosecution in the USPTO, the EPO or elsewhere, or made a misleading statement during prosecution in the USPTO. Third parties may also raise similar claims before administrative bodies in the USPTO or the EPO, even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we or the patent examiner were unaware during prosecution. Further, we cannot be certain that all of the potentially relevant art relating to our patents and patent applications has been cited in every patent office. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our technologies, products, product candidates, compositions and methods of use.

        Patents issued to our partners may offer protection for sales of the relevant products by our partners against competition from biosimilars or otherwise, but we will only be entitled to royalties and other payments on those sales to the extent provided by the terms of the relevant agreements with our partners.

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We currently rely on proprietary technology licensed from third parties and may rely on other third party licensors in the future. If we lose our existing licenses or are unable to acquire or license additional proprietary rights from these licensors or other third parties, we may not be able to continue developing our products.

        We currently in-license certain intellectual property from third parties to be able to use such intellectual property in our products and product candidates and to aid in our research activities. In the future we may in-license intellectual property from additional licensors.

        We rely on certain of these licensors to file and prosecute patent applications and maintain patents and otherwise protect the intellectual property we license from them. We have limited control over these activities or any other intellectual property that may be related to our in-licensed intellectual property. For example, we cannot be certain that such activities by these licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. We have limited control over the manner in which our licensors initiate an infringement proceeding against a third-party infringer of the intellectual property rights, or defend certain of the intellectual property that is licensed to us.

        The growth of our business may depend in part on our ability to acquire or in-license additional proprietary rights. For example, our programs may involve additional product candidates that may require the use of additional proprietary rights held by third parties. We may be unable to acquire or in-license any relevant third-party intellectual property rights that we identify as necessary or important to our business operations. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all, which would harm our business. We may need to proceed without making use of the technologies, compositions or methods covered by such third-party intellectual property rights, and may need to attempt to develop alternative approaches that do not infringe on such intellectual property rights which may entail additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible at a reasonable cost or at all. The licensing and acquisition of third-party intellectual property rights is a competitive practice, and companies that may be more established, or have greater resources or greater clinical or commercialization capabilities than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates, products and related proprietary technologies. Furthermore, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Even if we are able to obtain a license under third party intellectual property rights, any such license may be non-exclusive, which may allow our competitors to access the same technologies licensed to us. If we are unable to successfully obtain rights to additional technologies or products, our business, financial condition, results of operations and prospects for growth could suffer.

        Our existing licenses impose various diligence, milestone payment, royalty and other obligations on us. If we fail to comply with these obligations or otherwise materially breach a license agreement, our licensors or partners may have the right to terminate the license. In the event of termination of any of these agreements, we may not be able to develop or market the products covered by such licensed intellectual property. In addition, any claims asserted against us by our licensors may be costly and time-consuming, divert the attention of key personnel from business operations or otherwise have a material adverse effect on our business.

We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful and have a material adverse effect on the success of our business.

        Competitors may infringe our patents, trademarks or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims on a country-by-country basis, which can be expensive and time consuming and divert the time and attention

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of our management and scientific personnel. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents, in addition to counterclaims asserting that our patents are invalid or unenforceable, or both. In any patent infringement proceeding, there is a risk that a court will decide that a patent of ours is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue. There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent's claims narrowly or decide that we do not have the right to stop the other party from continuing its activities on the grounds that our patent claims do not cover these activities. An adverse outcome in a litigation or proceeding involving one or more of our patents could limit our ability to assert those patents against those parties or other competitors, and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive products, which could materially harm our business and negatively affect sales of our products. Similarly, if we assert trademark or trade name infringement claims, a court may determine that the trademarks or trade names we have asserted are invalid or unenforceable, or that the party against whom we have asserted infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks or trade names, which we may need in order to build name recognition with potential partners or customers in our markets of interest, thus this could materially harm our business and negatively affect our position in the marketplace.

        In addition, the standards that courts use to interpret patents are not always applied predictably or uniformly and can change, particularly as new technologies develop. As a result, we cannot predict with certainty how much protection, if any, will be given to our patents if we attempt to enforce them and they are challenged in court. Further, even if we prevail against an infringer in a U.S. district court or foreign trial-level court, there is always the risk that the infringer will file an appeal and the initial court judgment will be overturned at the appeals court and/or that an adverse decision will be issued by the appeals court relating to the validity or enforceability of our patents. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted in a manner insufficient to achieve our business objectives.

        Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation in certain territories, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments, which securities analysts or investors could perceive to be negative. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

Claims that our products or product candidates or their uses infringe the intellectual property rights of third parties could result in costly litigation, and unfavorable outcomes could require us to pay damages or royalties and could limit our research and development activities or our ability to commercialize certain products.

        Even if we or our partners have or obtain patents covering our technologies, products, product candidates, compositions or uses, we or our partners may still be barred from making, using, importing or selling or otherwise exploiting our products, product candidates or technologies because of the patent rights of others. Our competitors have filed, and in the future may file, patent applications covering technology, compositions or products and uses that are similar or identical to ours. There are many issued U.S., European and other worldwide patents relating to therapeutic drugs, and some of these may relate to compounds we or our partners intend to commercialize. Numerous worldwide

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patents and pending patent applications owned by others exist in the cancer field and may cover products or product candidates which we or our partners are developing. It is difficult for industry participants, including us, to identify all third-party patent rights relevant to our products, product candidates and technologies. We cannot guarantee that our technologies, products, product candidates, compositions and their uses do not or will not infringe third party patent or other intellectual property rights. Because patent applications usually take 18 months to publish and many years to issue, there may be currently pending applications with patent claims unknown to us or which will change over time and may later result in issued patents that purportedly cover our technologies, products, product candidates or compositions and uses. These patent applications may have been filed earlier than or have priority over patent applications filed by us or our partners. We may be required to develop or obtain alternative technologies, review product design or, in the case of claims concerning registered trademarks, rename our products or product candidates.

        Claims that our or our partners' technologies, products, product candidates, compositions or their uses infringe or interfere with the patent rights of third parties, or that we or our partners have misappropriated third party trade secrets, could result in costly litigation and could require substantial time and money to resolve, even if litigation were avoided. The basis of such litigation could be existing patents or patents that are granted in the future. If we or our partners were to face infringement claims or challenges by third parties, an adverse outcome could subject us or our partners to significant liabilities to such third parties. Litigation or threatened litigation could result in significant demands on the time and attention of our management team. A negative outcome could expose us or our partners to payment of costs, damages and other financial remedies, including in some jurisdictions, increased damages, such as treble damages and attorneys' fees, if we were found to have willfully infringed a patent. Litigation with third parties concerning alleged infringement of their intellectual property rights could require us and our partners to bear substantial costs and impose burdens on our and their management and personnel, even if we or our partners were to ultimately succeed in such proceedings. Costs of patent litigation and awards of damages in patent infringement cases can be significant, and equitable remedies such as temporary restraining orders and injunctions can negatively impact or prevent product development and commercialization. A negative outcome could also lead us or our partners to delay, curtail or cease the development and commercialization of some or all of our products and product candidates, or could cause us or our partners to seek legal or administrative actions against third parties. We or our partners may need to obtain licenses from third parties and such licenses may not be available on commercially reasonable terms, or at all. Even if we are able to obtain licenses from a third party to resolve a dispute, such settlement arrangements could involve substantial costs including one-time and/or ongoing royalty payments.

If we are unable to protect the confidentiality of our trade secrets and know-how, our business and competitive position would be harmed.

        In addition to seeking patent protection for our products and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, partners, consultants, advisors, vendors, university and/or institutional researchers and other third parties. We also have entered or seek to enter into confidentiality and invention or patent assignment agreements with our employees, advisors and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and once disclosed we may lose trade secret protection. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective. In addition, we may not be able to obtain adequate remedies for such breaches. Our trade secrets may also be obtained by third parties by other means, such as breaches of our physical or computer security systems. Enforcing a claim that a party

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illegally disclosed or misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable and may be inadequate. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, if any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor, our competitive position would be harmed.

        Further, our competitors may independently develop knowledge, methods and know-how similar, equivalent, or superior to our proprietary technologies. Competitors could purchase our products and attempt to reverse engineer and replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technologies, or develop their own competitive technologies that fall outside of our intellectual property rights. In addition, our key employees, consultants, suppliers or other individuals with access to our proprietary technologies and know-how may incorporate such technologies and know-how into projects and inventions developed independently or with third parties. As a result, disputes may arise regarding the ownership of the proprietary rights to such technologies or know-how, and any such dispute may not be resolved in our favor. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us and our competitive position could be adversely affected. If our intellectual property is not adequately protected so as to protect our market against competitors' products and processes, our competitive position could be adversely affected, as could our business.

We will not seek to protect our intellectual property rights or technologies in all jurisdictions throughout the world, and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

        Obtaining and maintaining a patent portfolio entails significant expense and resources. Part of the expense includes periodic maintenance fees, renewal fees, annuity fees, various other governmental fees on patents or applications due in several stages over the lifetime of patents or applications, as well as the cost associated with complying with numerous procedural provisions during the patent application process. Filing, prosecuting and defending patents on our technologies, products and product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive and, therefore, we typically elect to seek less extensive protections in certain jurisdictions only. We may choose not to pursue or maintain protection for particular inventions, products or product candidates. In addition, there are situations in which failure to make certain payments or noncompliance with certain requirements in the patent process can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If we choose to forego patent protection or allow a patent application or patent to lapse purposefully or inadvertently, our competitive position could suffer. Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products in a manner that exploits our technologies and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States or in Europe, and thus such protection may not be sufficient to prevent or stop infringing activities.

        The requirements for patentability may differ from country to country, particularly in developing countries, and the breadth of patent claims allowed can be inconsistent. In addition, the legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biopharmaceuticals or biotechnologies. This could make it difficult for us to stop the infringement of our patents or the misappropriation of our

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other intellectual property rights. Also, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties if the patents are not being exploited within a certain time period. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country or region-by-region basis, which is an expensive and time consuming process with uncertain outcomes. If we fail to timely file a patent application in a specific country or major market, we may be precluded from doing so at a later date. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries. Proceedings and legal actions to enforce our patent rights in the United States or in Europe and in foreign jurisdictions can be expensive, could result in substantial costs, and could divert management time and our efforts and attention from other aspects of our business. In addition, such proceedings or legal actions could put our patents at risk of being invalidated, found unenforceable or interpreted narrowly, could put our patent applications at risk of not being issued and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. We may or may not choose to pursue litigation or other actions against those that have infringed our patents, or used them without authorization, due to the associated expense and time commitment of monitoring these activities. If we fail to protect or to enforce our intellectual property rights successfully, our competitive position could suffer, which could harm our results of operations.

        In addition, changes in the law and legal decisions by courts in the United States, Europe and foreign countries may affect our ability to obtain adequate protection for our technologies, products, product candidates or compositions or uses thereof and the enforcement of intellectual property. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Third parties may challenge the inventorship of our patent filings and other intellectual property or may assert ownership or commercial rights to inventions we develop.

        Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. We have written agreements with our partners that provide for the ownership of intellectual property arising from our collaborations. In some instances, there may not be adequate written provisions to address clearly the resolution of intellectual property rights that may arise from collaboration. Disputes may arise with respect to ownership of the intellectual property developed pursuant to such collaborations. In addition, we may face claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectual property to us are ineffective, or in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have developed or will develop and interfere with our ability to capture the commercial value of such inventions. Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property, or may lose our exclusive rights in that intellectual property. Either outcome could have an adverse impact on our business, financial condition, results of operations and future growth prospects.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products and processes.

        Recent patent reform legislation in the United States could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, Leahy-Smith America Invents Act, or the Leahy-Smith Act was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect

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patent litigation, and switched the United States patent system from a "first-to-invent" system to a "first-to-file" system. Under a "first-to-file" system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had conceived or reduced to practice the invention earlier. The USPTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, in particular, the first-to-file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition.

        In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our patents and pending patent applications. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. Furthermore, the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

        The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our partners fail to maintain the patents and patent applications covering our products, product candidates, technologies or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our own, which would have a material adverse effect on our business.

Patent terms may be inadequate to protect our competitive position on our products and product candidates for an adequate amount of time.

        Patents have a limited lifespan, and the protection patents afford is limited. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date. Even if patents covering our products and product candidates are obtained, once the patent term has expired for patents covering a product or product candidate, we may be open to competition from competitive products and services. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products or product candidates similar or identical to ours.

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Third parties may assert that our employees or consultants or we have wrongfully used or disclosed confidential information or misappropriated trade secrets, or claim ownership of what we regard as our own intellectual property.

        Although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, and no such claims against us are currently pending, we may be subject to claims that we or our employees, consultants or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Such intellectual property rights could be awarded to a third party, and we could be required to obtain a license from such third party to commercialize our technology or products. Such a license may not be available on commercially reasonable terms or at all. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and could otherwise adversely impact our business.

Our collaboration and intellectual property agreements with our partners or other third parties may be subject to disagreements over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology or otherwise affect our rights and obligations under the relevant agreement.

        Certain provisions in our collaboration and intellectual property agreements, including the agreements governing our product or technology collaborations and in-licenses of third party intellectual property or technology, may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could affect the scope of our rights to the relevant intellectual property or technology, or otherwise affect our financial (including with respect to reimbursements, fees, milestones and royalties) or non-financial rights and obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

        In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact conceives or develops intellectual property that we regard as our own. Our assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

        Our registered or unregistered trademarks and trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. If we do not own or control trademarks associated with our products, product candidates or technologies, we may not be in control of defending against any claims brought against those trademarks. At times, competitors may adopt trademarks and trade names similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks. Over the long term, if we are unable to establish name recognition based on our trademarks, then we may not be able to compete effectively and our business may be adversely affected.

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        In addition, any proprietary name we propose to use with any of our product candidate in the United States or other jurisdictions must be approved by the FDA, the EMA or other governmental authorities, regardless of whether we have registered, or applied to register, the proposed proprietary name as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA.

Risks Related to Government Regulation

Government restrictions on pricing and reimbursement, as well as other healthcare payor cost-containment initiatives, may negatively impact our ability to generate revenue.

        Sales of certain of our products and our product candidates, if and when approved for marketing, have and will depend, in part, on the extent to which our products will be covered by third party payors, such as government health care programs like Medicare and Medicaid, commercial insurance and managed healthcare organizations. These third party payors play an important role in determining the extent to which new drugs, biologics and medical devices will be covered. The Medicare and Medicaid programs increasingly are used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs, biologics and medical devices. It is difficult to predict at this time what third party payors will decide with respect to coverage and reimbursement for our product candidates. Further, the adoption and implementation of any future governmental cost containment or other health reform initiative may result in additional downward pressure on the price that we may receive for any approved product. The primary trend in the U.S. healthcare industry and elsewhere has been cost containment, including price controls, restrictions on coverage and reimbursement and requirements for substitution of generic products and/or biosimilars. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits. Adoption of price controls, cost containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures, could limit our net revenue and results.

        Further, from time to time, typically on an annual basis, payment rates are updated and revised by third-party payors. Such updates could impact the demand for our products, to the extent that patients who are prescribed our products, if approved, are not separately reimbursed for the cost of the product. For example, Medicare reimbursement under the Medicare Physician Fee Schedule is updated on an annual basis. The Medicare Access and CHIP Reauthorization Act of 2015 instituted a 0.5% payment update for July 2015 through the end of 2019, and a 0% payment update for 2020 through 2025, along with a merit-based incentive payment system beginning January 1, 2019, that will replace current incentive programs. For 2026 and subsequent years, the payment update will be either 0.75% or 0.25% depending on which Alternate Payment Model the physician participates.

        In addition, in certain jurisdictions, marketing approval for a product, or the ability to launch an approved product, is subject to determination of pricing and reimbursement levels. In such jurisdictions, even if we or our partners are able to obtain marketing approval for our products, commercialization of our products may be significantly delayed or prevented altogether if we are unable to secure reimbursement for our products, at competitive levels or at all.

        Moreover, increasing efforts by governmental and third party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection

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with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs, medical devices and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the successful commercialization of new products.

Even if approved, our products will be subject to extensive post-approval regulation, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

        Once a product is approved, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. For U.S. approvals, the holder of an approved BLA is subject to periodic and other FDA monitoring and reporting obligations, including obligations to monitor and report adverse events and instances of the failure of a product to meet the specifications in the BLA. In addition, the FDA strictly regulates the promotional claims that may be made about pharmaceutical products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product's approved labeling. Application holders must also submit advertising and other promotional material to the FDA and report on ongoing clinical trials. Advertising and promotional materials must comply with FDA rules in addition to other potentially applicable federal and state laws. In addition, we or our partners may be subject to significant liability if physicians prescribe any of our products to patients in a manner that is inconsistent with the approved label and if we are found to have promoted off-label uses of such products. For example, the U.S. federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. Manufacturing facilities remain subject to FDA inspection and must continue to adhere to the FDA's cGMP requirements. Application holders must obtain FDA approval for product and manufacturing changes, depending on the nature of the change. In addition, any regulatory approvals that we or our partners receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of the product candidate.

        Sales, marketing and scientific/educational grant programs must comply with the U.S. Medicare-Medicaid Anti-Fraud and Abuse Act, as amended, the False Claims Act, also as amended, and similar state laws. Pricing and rebate programs must comply with the Medicaid rebate requirements of the Omnibus Budget Reconciliation Act of 1990, as amended, and the Veteran's Health Care Act, as amended. If products are made available to authorized users of the Federal Supply Schedule of the General Services Administration, additional laws and requirements apply. All of these activities are also potentially subject to federal and state consumer protection and unfair competition laws.

        Within the European Union, once a Marketing Authorization is obtained, numerous post-approval requirements also apply. The requirements are regulated by both EU regulations (such as reporting of adverse events, etc.) as well as national applicable regulations (related to, for example, prices and promotional material). In addition, as part of its marketing authorization process, the EMA may grant marketing authorizations on the basis of less complete data than is normally required, when, for certain categories of medicinal products, doing so may meet unmet medical needs of patients and serve the interest of public health. In such cases, it is possible for the Committee for Medicinal Products for Human Use, or CHMP, to recommend the granting of a marketing authorization, subject to certain

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specific obligations to be reviewed annually, which is referred to as a conditional marketing authorization. This may apply to medicinal products for human use that fall under the jurisdiction of the EMA, including those that target the treatment, prevention, or medical diagnosis of seriously debilitating diseases or life-threatening diseases and those designated as orphan medicinal products. The granting of a conditional marketing authorization is restricted to situations in which only the clinical part of the application is not yet fully complete. Incomplete non-clinical or quality data may only be accepted if duly justified and only in the case of a product intended to be used in emergency situations in response to public-health threats. Conditional marketing authorizations are valid for one year, on a renewable basis. The holder will be required to complete ongoing studies or to conduct new studies with a view to confirming that the benefit-risk balance is positive. In addition, specific obligations may be imposed in relation to the collection of pharmacovigilance data. Although we may seek a conditional marketing authorization for one or more of our product candidates by the EMA, the EMA or CHMP may ultimately not agree that the requirements for such conditional marketing authorization have been satisfied. Certain approvals of DARZALEX and Arzerra in the European Union were initially granted on the basis of conditional marketing authorizations. Each of these conditions have been met.

        Other jurisdictions also impose certain post-approval requirements or may grant conditional marketing approvals. Depending on the circumstances, failure to meet these post-approval requirements can result in criminal prosecution, fines or other penalties, injunctions, notices or warning letters, recall or seizure of products, total or partial suspension of production or changes to manufacturing processes, denial or withdrawal of pre-marketing product approvals, import controls, or refusal to allow us to enter into supply contracts, including government contracts, each of which could have a significant impact on our business, financial condition, results of operations, future growth prospects and reputation. In addition, even if we and our partners comply with FDA, EMA and other applicable requirements, new information regarding the safety or effectiveness of a product could lead the FDA, the EMA or other regulatory authorities to modify or withdraw a product approval. Any government investigation of alleged violations of law could also require us or our partners to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our and our partners' ability to commercialize and generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results could be adversely affected.

We may face difficulties from changes to current regulations and future legislation.

        Existing regulatory policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our products and product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States, the European Union or in other countries. We expect more rigorous coverage criteria in the future in the U.S. healthcare market and an additional downward pressure on the prices that we or our partners receive for approved products, which may trigger a similar reduction in payments from private payors. If we or our partners are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we and our partners are not able to maintain regulatory compliance, we or they may lose any marketing approval that we or they may have obtained, which could adversely impact our business and financial results.

        In particular, since its enactment, there have been judicial and congressional challenges to certain aspects of the Affordable Care Act, or the ACA, as well as efforts by the current administration to repeal or replace certain aspects of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. There is currently uncertainty with respect to the impact any

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such repeal may have and any resulting changes may take time to unfold, which could have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the ACA. However, we cannot predict the ultimate content, timing or effect of any such legislation or executive action or the impact of potential legislation or executive action on us. Most recently, the Tax Cuts and Jobs Act was enacted, which, among other things, removes the penalties for not complying with the ACA's individual mandate to carry health insurance. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the ACA are invalid as well. While the Trump Administration and the Centers for Medicare & Medicaid Services, or CMS, have both stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent appeals, if any, and other efforts to repeal and replace the ACA will impact the ACA and our business. There may be additional challenges and amendments to the ACA in the future.

        In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year, effective April 1, 2013, which, due to subsequent legislative amendments, will stay in effect through 2027 unless additional Congressional action is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the U.S. government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on customers for our out-licensed products and product candidates (if and when approved) and accordingly, our financial results.

        Furthermore, the Trump Administration has taken several executive actions, including the issuance of a number of executive orders, that could impose significant burdens on, or otherwise materially delay, the FDA's ability to engage in routine oversight activities such as implementing statutes through rulemaking, issuing guidance, and reviewing and approving marketing applications. It is difficult to predict how these orders will be implemented and the extent to which they will impact the FDA's ability to exercise its regulatory authority. If these executive actions impose restrictions on the FDA's ability to engage in oversight and implementation activities in the normal course, we and our partners could be limited and/or delayed in obtaining new regulatory approvals or maintaining existing approvals, either of which could have a material adverse effect on our business, financial condition, results of operations and future growth prospects.

We are subject to various laws protecting the confidentiality of certain patient health information, and our failure to comply could result in penalties and reputational damage.

        Numerous countries in which we, our partners and our third party contractors, including CROs and CMOs, operate, manufacture and sell our products have, or are developing, laws protecting personal data and the individual's right to privacy as well as the confidentiality of certain patient health information. EU member states and other jurisdictions have adopted data protection laws and regulations, which impose significant compliance obligations. For example, the EU General Data Protection Regulation, or the GDPR, became applicable on May 25, 2018, introduced new data protection requirements in the European Economic Area (the 28 member states of the European Union plus Iceland, Liechtenstein and Norway), or the EEA, and substantial fines for infringements of the data protection rules. For several EEA jurisdictions, the GDPR expanded significantly the jurisdictional reach of EEA data protection law by extending the law's application to the processing of personal data in connection with the offering of goods or services to data subjects located in the EEA and processing personal data in connection with monitoring the behavior of data subjects located in the EEA. The GDPR imposes several increased obligations and specific restrictions on controllers and

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processors processing personal data including, for example, additional requirements in relation to the information obligation, where applicable, higher standards for organizations to demonstrate compliance, such as obtainment of valid consent or assessment of another legal basis to justify the data processing activities, increased requirements pertaining to health data (including, in certain situations, where such data is key-coded), mandatory data breach notification requirements, appointment of a data protection officer where the core activities of the controller or the processor consist of processing of sensitive personal data (i.e., health data) on a large scale, additional mandatory requirements for the content of data processing agreements with service providers processing personal data, implementation of appropriate technical and organizational measures, and expanded rights for individuals over their personal data. This could affect our and our partners or third party contractors' ability to collect, analyze and transfer personal data, including health data from clinical trials and adverse event reporting, or could cause our costs to increase, potentially leading to harm to our business and financial condition. If the measures implemented by us or our partners or service providers in order to comply with the GDPR requirements are not considered sufficient to ensure the necessary compliance level, we may be subject to litigation, regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to €20 million or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, as well as compensation claims by affected individuals, negative publicity and a potential loss of business. Claims that we have violated individuals' privacy rights or breached our contractual obligations, even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.

        While the GDPR, as a directly effective regulation, was designed to harmonize data protection law across the EEA, it does permit member states to legislate in many areas (particularly with regard to the processing of genetic, biometric or health data), meaning that inconsistencies between different member states will still arise. EEA member states have their own regimes on medical confidentiality and national and EEA-level guidance on implementation and compliance practices is often updated or otherwise revised, which adds to the complexity of processing personal data in the EEA.

        In addition to the GDPR, we, our partners and our third party contractors are subject to similar data privacy and confidentiality laws in other countries in which we or they operate or market our products. Such laws and regulations may also impose costly compliance obligations and potentially significant fines or other penalties for non-compliance.

Our operations involve hazardous materials and we and third parties with whom we contract must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

        As a biotechnology company, we are subject to environmental and safety laws and regulations, including those governing the use of hazardous materials. The cost of compliance with health and safety regulations is substantial. Our business activities involve the controlled use of hazardous materials. Our research and development activities involve the controlled storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We, our partners and manufacturers and suppliers with whom we may contract are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers' facilities pending their use and disposal. We cannot eliminate the risk of accidental contamination or injury from these materials, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. We cannot guarantee that the safety procedures utilized by our partners and by third party manufacturers and suppliers with whom we may contract will comply with the standards prescribed by

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laws and regulations or will eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources. In addition, European, U.S. federal and state or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage. In the event of an accident or environmental discharge, we may be held liable for any consequential damage and any resulting claims for damages, which may exceed our financial resources and may materially adversely affect our business, financial condition, results of operations and future growth prospects, and the value of our ADSs.

We are subject to healthcare laws and regulations, which may require substantial compliance efforts and could expose us to criminal sanctions, civil penalties, exclusion from government healthcare programs, contractual damages, reputational harm and diminished profits and future earnings, among other penalties.

        Healthcare providers, such as physicians and others, play a primary role in the recommendation and prescription of our products. Our or our partners' arrangements with such persons and third party payors and our general business operations will expose us or our partners to broadly applicable fraud and abuse regulations, as well as other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we research, market, sell and distribute our products. Restrictions under applicable U.S. federal and state and non-U.S. healthcare laws and regulations include, but are not limited to, the Anti-Kickback Statute, the Beneficiary Inducement Statute, the Health Insurance Portability and Accountability Act of 1996, as amended, or HIPAA, federal civil and criminal false claims laws and civil monetary penalties laws, including the civil False Claims Act, the federal transparency requirements under the Physician Payments Sunshine Act and analogous U.S. state laws. Rules and regulations covering many of the same matters are found in numerous other countries, including in Denmark, and may be more stringent or result in higher exposures than those in the United States.

        Ensuring that our business arrangements with third parties comply with applicable healthcare laws and regulations will likely be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could substantially disrupt our operations. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs. For more information about these and other applicable regulations, see "Business—Government Regulation" below.

Our employees and partners may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements, which could significantly harm our business.

        We are exposed to the risk of fraud or other misconduct of our employees and partners. Misconduct by our partners could include intentional failures to comply with legal requirements or the requirements of the FDA, the EMA and other comparable regulatory authorities; failure to provide accurate information to applicable government authorities; failure to comply with fraud and abuse and other healthcare laws and regulations in the United States, Denmark and other jurisdictions; failure to comply with the FCPA and other applicable anti-bribery laws; failure to report financial information or

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data accurately; or failure to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing, bribery and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Our collaboration agreements include provisions regarding regulatory compliance, but it is not always possible to identify and deter misconduct, and the precautions we and our partners take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

Changes in Danish, U.S. or other foreign tax laws or compliance requirements, or the practical interpretation and administration thereof, could have a material adverse effect on our business, financial condition and results of operations.

        We are affected by various Danish, U.S. and foreign taxes, including direct and indirect taxes imposed on our global activities, such as corporate income, withholding, customs, excise/energy, value added, sales, environmental and other taxes. Significant judgment is required in determining our provisions for taxes and there are many transactions and calculations where the ultimate tax determination is uncertain.

        Changes in Danish or foreign direct or indirect tax laws or compliance requirements, including the practical interpretation and administration thereof, including in respect to market practices, or otherwise, could have a material adverse effect on our business, financial condition, results of operations and future growth prospects.

Risks Related to this Offering

You will not be directly holding our shares.

        As a holder of the ADSs, you will not be treated as one of our shareholders and you will not have shareholder rights. Our depositary, Deutsche Bank Trust Company Americas, will be the holder of the shares underlying your ADSs. As a holder of ADSs, you will have contractual ADS holder rights. The deposit agreement among us, the depositary and you, as an ADS holder, and all other persons directly or indirectly holding ADSs sets out ADS holder rights as well as the rights and obligations of the depositary. ADS holders may only exercise voting rights with respect to the shares underlying their respective ADSs in accordance with the provisions of the deposit agreement, which provides that you may vote the shares underlying your ADSs either by withdrawing the shares or by instructing the depositary to vote the shares or other deposited securities underlying your ADSs. However, you may not know about the meeting sufficiently in advance to withdraw the shares and, even if you instruct the depositary to vote the shares underlying your ADSs, we cannot guarantee you that the depositary will vote in accordance with your instructions. Please see the risk factor entitled "—You may not be able to exercise your right to vote the shares underlying your ADSs."

        In addition to voting rights, your right to receive any dividends we declare on our shares, whether in the form of cash or bonus securities, will also be more limited than that of our shareholders. For example, we may elect to offer subscription rights to our shareholders without offering such rights directly to you as ADS holders as such subscription rights will be offered to the depositary as shareholder. The depositary has substantial discretion as to what will happen with any offered subscription rights and may determine that it is not legal or reasonably practicable to make such rights available to ADS holders, in which case the depositary will endeavor to sell such rights and distribute the proceeds to ADS holders, which it may not be able to do at the then-current market price or at all.

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If the depositary is unable to distribute or sell such rights, they will lapse, and ADS holders will receive no value. See "Description of American Depositary Shares—Dividends and Other Distributions."

There has been no prior market for the ADSs on a U.S. national securities exchange and an active and liquid market for our securities may fail to develop, which could harm the market price of the ADSs.

        Prior to this offering, while our shares have been traded on Nasdaq Copenhagen since October 2000 and certain ADRs have been traded on the over-the-counter market in the United States since May 2013 through our existing sponsored Level 1 ADR program with Deutsche Bank Trust Company Americas, there has been no public market on a U.S. national securities exchange for the ADSs or our shares. Although we have applied to list the ADSs on the Nasdaq Global Select Market, an active trading market for the ADSs may never develop or be sustained following this offering. The offering price of the ADSs will be based on the market price for our shares on Nasdaq Copenhagen at the time of this offering. This offering price may not be indicative of the market price of the ADSs or shares after this offering. In the absence of an active trading market for the ADSs or shares, investors may not be able to sell their ADSs at or above the offering price or at the time they would like to sell. The absence of an active trading market may also impair our ability to raise additional capital by selling ADSs and may impair our ability to acquire other businesses or technologies or in-license new product candidates using our ADSs as consideration.

        In addition, although we expect the price of the ADSs in this offering to be based on the closing price of the underlying shares on Nasdaq Copenhagen at the time of this offering, there is no guarantee that such price will be free from challenge by our existing shareholders based on allegations that it does not reflect the "market price" at which we are required by our articles of association and Danish law to sell our shares. Any such shareholder challenge could be time-consuming and costly and, if decided in a manner unfavorable to us, could result in liability to us and our directors, and could prevent this offering from closing.

The trading price of our equity securities may be volatile due to factors beyond our control, and purchasers of the ADSs could incur substantial losses.

        The market prices of the ADSs and shares may be volatile. The stock market in general and the market for biotechnology companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their ADSs or shares at or above the price originally paid for the security. The market price for the ADSs and shares may be influenced by many factors, including, but not limited to:

    actual or anticipated fluctuations in our financial condition and operating results;

    the release of new data from the clinical trials of our products and product candidates;

    actual or anticipated changes in our growth rate relative to our competitors;

    competition from existing products or new products that may emerge;

    announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

    failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public;

    issuance of new or updated research or reports by securities analysts;

    fluctuations in the valuation of companies perceived by investors to be comparable to us;

    currency fluctuations;

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    price and volume fluctuations attributable to inconsistent trading volume levels of our ADSs;

    additions or departures of key management or scientific personnel;

    disputes or other developments related to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies, products and product candidates;

    changes to coverage policies or reimbursement levels by commercial third party payors and government payors and any announcements relating to coverage policies or reimbursement levels;

    announcement or expectation of additional debt or equity financing efforts;

    issuances or sales of our shares or ADSs by us, our insiders or our other shareholders or ADS holders; and

    general economic and market conditions.

        These and other market and industry factors may cause the market price and demand for the ADSs to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from readily selling their shares or ADSs at a favorable price or at all, and may otherwise negatively affect the liquidity of the trading market for our ADSs. In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of the holders of shares or ADSs were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit, the attention of our senior management would be diverted from the operation of our business, and we could incur significant liabilities, any one of which could have a material adverse effect on our business, financial condition and results of operations.

We have broad discretion over the use of the net proceeds from this offering and may use them in ways with which you do not agree and in ways that may not enhance our operating results or the price of our ADSs.

        Our board of directors and management will have broad discretion over the application of the net proceeds that we receive from this offering. We may spend or invest these proceeds in ways with which our shareholders and holders of ADSs disagree or that do not yield a favorable return, if at all. We intend to use the net proceeds from this offering to continue the development of our proprietary product candidates, to continue our pre-commercial activities, to continue building our commercial capabilities and to advance our earlier stage product candidates, as described in "Use of Proceeds." However, our actual use of the net proceeds from this offering may differ substantially from our current plans. Failure by our management to apply these funds effectively could harm our business and financial condition and cause the market price of the ADSs to decline. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the price of the ADSs and their trading volume could decline.

        The trading market for the ADSs and shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. We are currently followed by analysts, but there can be no assurance that these analysts will continue to follow us or that additional securities or industry analysts will commence coverage of us. If no or only limited securities or industry analysts cover our company, the trading price for the ADSs would be negatively impacted. If one or more of the analysts who covers us downgrades our equity securities, publishes inaccurate or unfavorable research about our business or expresses a negative opinion regarding the performance of our securities, or if our clinical trial results or operating performance fail to meet analyst expectations, the

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price of the ADSs would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, or downgrades our securities, demand for ADSs could decrease, which could cause the price of the ADSs and their trading volume to decline.

We currently intend to retain all available funds and any future earnings and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of the ADSs.

        We have never declared or paid any cash dividends on our shares, and we currently intend to retain all available funds and any future earnings to fund the development and expansion of our business. Therefore, you are not likely to receive any dividends on your ADSs for the foreseeable future and the success of an investment in ADSs will depend upon any future appreciation in their value. Consequently, investors may need to sell all or part of their holdings of ADSs after price appreciation, which may never occur, as the only way to realize any future gains on their investment. There is no guarantee that the ADSs will appreciate in value or even maintain the price at which our investors have purchased them. Investors seeking cash dividends should not purchase the ADSs or shares.

        In addition, if we choose to pay dividends in the future, exchange rate fluctuations may affect the amount of Danish kroner that we are able to distribute, and the amount in U.S. dollars that our ADS holders receive, upon the payment of cash dividends or other distributions we declare and pay in Danish kroner, if any. Additionally, dividends will generally be subject to Danish withholding tax. See the section of this prospectus titled "Material Danish Income Tax Consequences" for a more detailed description of Danish taxes on dividends. These factors could impair the value of the ADSs.

        ADS investors may also not realize all of the benefits of being a shareholder in our company. For instance, the votes of ADS holders will not be represented directly on our books, but only through a vote by the depositary of the underlying shares on the basis of the instructions received by the ADS holders, if any. Separately, we may elect to offer subscription rights to our shareholders without offering such rights to ADS holders.

        Furthermore, even if we declare and pay cash dividends in the future, your right to receive such dividends as an ADS holder, and the amount you will be entitled to receive, may be more limited than that of our shareholders. If we pay cash dividends on our shares in the future, the depositary will convert or cause to be converted such amounts into U.S. dollars, provided that, if the depositary determines in its judgment that such conversions or transfers are not practicable or lawful, or if any government approval or license is needed and cannot be obtained at a reasonable cost within a reasonable period or otherwise sought, the depositary will distribute such amounts in the form of Danish kroner, but only to those ADS holders to whom it is possible to do so, and will hold the foreign currency on behalf of any ADS holders that were not paid. If the exchange rates fluctuate at a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution. In addition, prior to making any such distributions, the depositary will deduct its own fees and expenses, in addition to the taxes described above. See "Description of American Depositary Shares—Dividends and Other Distributions."

Investors in this offering will experience immediate and substantial dilution in the book value of their investment.

        We expect the initial public offering price of the ADSs to be substantially higher than the as adjusted net book value per ADS after giving effect to this offering. Accordingly, if you invest in the ADSs in this offering, you will incur immediate and substantial dilution of approximately $15.58 per ADS, representing the difference between the assumed initial public offering price of $18.11 per ADS, and our as adjusted net book value of $2.53 per ADS as of March 31, 2019. In addition, following this offering, investors in this offering will have contributed approximately 29% of the total gross consideration paid to purchase our outstanding shares and ADSs, but will only own ADSs representing approximately 4% of our shares

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outstanding after this offering. Furthermore, if additional shares are issued pursuant to the underwriters' exercise of their option to purchase additional ADSs, if our board of directors authorizes us to issue additional shares, including in the form of ADSs, or if warrants or other convertible securities are issued and subsequently exercised, you could experience further dilution. For a further description of the dilution that you will experience immediately after this offering, see "Dilution."

        We may issue additional shares in the future without pre-emptive rights to our existing shareholders and at a price that may cause further dilution of the investment made by the investors in the ADSs or our shareholders.

        In addition, as of March 31, 2019, warrants in respect of 1,419,895 shares at a weighted average exercise price of approximately DKK 523.74 were outstanding, representing approximately 2.3% of our issued and outstanding share capital as at March 31, 2019 and, after giving effect to this offering (assuming no exercise of the underwriters' option to purchase additional ADSs), would have represented approximately 2.2% of our issued and outstanding share capital as at March 31, 2019. If any such warrants are exercised, investors will suffer further dilution. In addition, warrants may be granted under our warrant plan in the future at prices that are lower than the price paid by the investors. For a further description of our warrant program and outstanding warrants, see "Management—Compensation—Warrant Program."

Investors should be aware that the rights provided to our shareholders and holders of ADSs under Danish corporate law and our articles of association differ in certain respects from the rights that you would typically enjoy as a shareholder of a U.S. company under applicable U.S. federal and state laws.

        Under Danish corporate law, except in certain limited circumstances, which require at a minimum that a proposal for inspection has been supported by a minimum of 25% of the share capital at a general meeting, our shareholders may not require an inspection of our corporate records, while under Delaware corporate law any shareholder, irrespective of the size of such shareholder's shareholdings, may do so. Shareholders of a Danish limited liability company are also unable to initiate a derivative action, a remedy typically available to shareholders of U.S. companies, in order to enforce a right of our company, in case we fail to enforce such right ourselves, other than in certain cases of board member/management liability under limited circumstances. In addition, a majority of our shareholders may release a member of our board of directors or our registered managers from any claim of liability we may have, including if such board member or manager has acted in bad faith or has breached his or her duty of loyalty. However, a shareholder may bring a derivative action on behalf of our company against, among other persons, a member of our board of directors or one or more of our registered managers, provided that the circumstances of the act or omission giving rise to the claim of liability were not known to the shareholders at the time of such shareholder resolution, or if shareholders representing at least 10% of the share capital represented at the relevant general meeting has opposed such shareholder resolution. In contrast, most U.S. federal and state laws prohibit a company or its shareholders from releasing a board member from liability altogether if such board member has acted in bad faith or has breached such board member's duty of loyalty to our company. Additionally, distribution of dividends from Danish companies to foreign companies and individuals can be subject to non-refundable withholding tax, and not all receiving countries allow for deduction. See "Material Danish Income Tax Consequences" for a more detailed description of the withholding tax. In addition, the use of the tax asset consisting of the accumulated tax losses requires that we are able to generate positive taxable income and the use of tax losses carried forward to offset against future income is subject to certain restrictions and can be restricted further by future amendments to Danish tax law. Finally, Danish corporate law may not provide appraisal rights in the case of a business combination equivalent to those generally afforded a shareholder of a U.S. company under applicable U.S. laws. For additional information on these and other aspects of Danish corporate law and our articles of association, see the section herein entitled "Description of Share Capital and Certain Corporate

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Matters." As a result of these differences between Danish corporate law and our articles of association, on the one hand, and U.S. federal and state laws, on the other hand, in certain instances, you could receive less protection as an equity holder of our company than you would as a shareholder of a U.S. company.

You may not be able to exercise your right to vote the shares underlying your ADSs.

        ADS holders may only exercise voting rights with respect to the shares underlying their respective ADSs in accordance with the provisions of the deposit agreement and not as a direct shareholder of the company. In order to vote the shares underlying their ADSs, ADS holders may either withdraw the shares underlying their ADSs or instruct the depositary to vote the shares underlying such ADSs. However, you may not know about the meeting far enough in advance to withdraw the underlying shares, and after such withdrawal, you would no longer hold ADSs, but would instead hold the underlying shares directly.

        The depositary will try, as far as practicable, to vote the shares underlying the ADSs as instructed by the ADS holders. In such an instance, if we ask for your instructions, the depositary, upon timely notice from us, will notify you of the upcoming vote and arrange to deliver our voting materials to you. We cannot guarantee that you will receive the voting materials in time to ensure that you will be able to instruct the depositary to vote your shares or to withdraw your shares so that you can vote them yourself. If the depositary does not receive timely voting instructions from you, it may give a proxy to a person designated by us to vote the shares underlying your ADSs. Voting instructions may be given only in respect of a number of ADSs representing an integral number of shares or other deposited securities. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise any right to vote that you may have with respect to the underlying shares, and there may be nothing you can do if the shares underlying your ADSs are not voted as you requested. In addition, the depositary is only required to notify you of any particular vote if it receives timely notice from us in advance of the scheduled meeting. Our articles of association permit, in the case of general meetings, notice to be delivered within a relatively short time span, in which case the depositary would not be required to provide you with notice of and access to such vote.

You may be subject to limitations on the transfer of your ADSs and the withdrawal of the underlying shares.

        Your ADSs, which will be evidenced by ADRs, are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason subject to your right to cancel your ADSs and withdraw the underlying shares. Temporary delays in the cancellation of your ADSs and withdrawal of the underlying shares may arise because the depositary has closed its transfer books or we have closed our transfer books, the transfer of shares is blocked to permit voting at a shareholders' meeting or we are paying a dividend on our shares. In addition, you may not be able to cancel your ADSs and withdraw the underlying shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities. See "Description of American Depositary Shares."

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Future sales, or the perception of future sales, of a substantial number of our shares or ADSs could adversely affect the price of the ADSs, and actual sales of our equity will dilute shareholders and ADS holders.

        Future sales of a substantial number of our shares or ADSs, or the perception that such sales will occur, could cause a decline in the market price of the ADSs. Following the completion of this offering, based on the number of shares outstanding as of July 5, 2019, we will have 64,470,143 shares outstanding (assuming no exercise of the underwriters' option to purchase additional ADSs). This includes the shares underlying the ADSs offered in this offering, which may be resold in the public market immediately without restriction, other than the shares underlying any ADSs purchased by our "affiliates," as that term is defined in Rule 144 under the Securities Act, which may be resold only if registered under the Securities Act or in accordance with the requirements of Rule 144 or another applicable exemption from the registration requirements of the Securities Act. See "Shares and American Depositary Shares Eligible for Future Sale—Rule 144." Shares held by our directors and senior management will be subject to the lock-up agreements described in the "Underwriting" section of this prospectus. If, after the period during which such lock-up agreements restrict sales of the ADSs and shares, or if the representatives of the underwriters waive the restrictions set forth therein (which may occur at any time), one or more of our directors or senior management sells a substantial number of their shares, or the market perceives that such sales may occur, the market price of the ADSs and our ability to raise capital through an issue of equity securities in the future could be adversely affected.

Shareholders outside Denmark may be subject to exchange rate risk.

        The shares underlying the ADSs are denominated in Danish kroner. Accordingly, an investment in the ADSs by an investor whose principal currency is not the Danish krone may expose such investor to foreign currency exchange rate risk. Any depreciation of the Danish krone against such foreign currency would reduce the value of the investment in the ADSs in terms of such foreign currency.

Your rights to pursue claims against the depositary as a holder of ADSs are limited by the terms of the deposit agreement.

        The deposit agreement governing the ADSs provides that the depositary may, in its sole discretion, require that any dispute or difference arising from the relationship created by the deposit agreement be referred to and finally settled by an arbitration conducted under the terms described in the deposit agreement, although the arbitration provisions do not preclude you from pursuing claims under U.S. federal securities laws in federal courts. Furthermore, if you are unsuccessful in such arbitration, you may be responsible for the fees of the arbitrator and other costs in connection with such arbitration pursuant to the deposit agreement.

        In addition, the deposit agreement provides that, subject to the depositary's right to require a claim to be submitted to arbitration, the federal or state courts in the City of New York have non-exclusive jurisdiction to hear and determine claims arising under the deposit agreement and in that regard, to the fullest extent permitted by law, ADS holders waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws.

        If we or the depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable U.S. state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the U.S. federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a

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party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.

        If you or any other holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit agreement or the ADSs, including claims under U.S. federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

        Nevertheless, if this jury trial waiver provision is not enforced, to the extent a court action proceeds, it would proceed under the terms of the deposit agreement with a jury trial. No condition, stipulation or provision of the deposit agreement or ADSs serves as a waiver by any holder or beneficial owner of ADSs or by us or the depositary of compliance with any substantive provision of, or a disclaimer of liability under, the U.S. federal securities laws and the rules and regulations promulgated thereunder.

Claims of U.S. civil liabilities may not be enforceable against us.

        We are incorporated under the laws of Denmark. Although our wholly owned subsidiary, Genmab US, Inc., has an office in the United States, substantially all of our assets are located outside the United States. The majority of our directors and senior management reside outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or to enforce judgments against them or us in U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. securities laws.

        The United States and Denmark currently do not have a treaty providing for the reciprocal recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters. Consequently, a final judgment for payment given by a U.S. court, whether or not predicated solely upon U.S. securities laws, would not be enforceable in Denmark.

        In order to obtain a judgment that is enforceable in Denmark, the party in whose favor a final and conclusive judgment of the U.S. court has been rendered will be required to file its claim again with a court of competent jurisdiction in Denmark. The Danish court will not be bound by the judgment by the U.S. court, but the judgment may be submitted as evidence. It is up to the Danish court to assess the judgment by the U.S. court and decide if and to what extent the judgment should be followed. Danish courts are likely to deny claims for punitive damages and may grant a reduced amount of damages compared to U.S. courts.

        Based on the lack of a treaty as described above, U.S. investors may not be able to enforce against us or members of our board of directors or our senior management, or certain experts named herein who are residents of Denmark or countries other than the United States any judgments obtained in U.S. courts in civil and commercial matters, including judgments under the U.S. federal securities laws.

We are a "foreign private issuer," as defined in the SEC's rules and regulations, and, consequently, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States.

        We are a "foreign private issuer," as defined in the SEC's rules and regulations, and, consequently, we are not subject to all of the disclosure requirements applicable to public companies organized within the United States. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act, including the

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U.S. proxy rules under Section 14 of the Exchange Act. In addition, our directors and senior management are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, while we currently publish annual and quarterly reports on our website pursuant to the rules of Nasdaq Copenhagen and expect to file such financial reports on an annual and quarterly basis with the SEC, we will not be required to file such reports with the SEC as frequently or as promptly as U.S. public companies and will not be required to file quarterly reports on Form 10-Q or current reports on Form 8-K that a U.S. domestic company would be required to file under the Exchange Act. Accordingly, there may be less publicly available information concerning our company than there would be if we were not a foreign private issuer.

As a foreign private issuer and as permitted by the listing requirements of the Nasdaq Stock Market LLC, or the Nasdaq Stock Market, we will comply with certain home country corporate governance practices rather than the corporate governance requirements of Nasdaq Stock Market.

        We qualify as a foreign private issuer and have applied to list the ADSs on the Nasdaq Global Select Market. As a result, in accordance with the listing requirements of the Nasdaq Stock Market and exemptions thereunder, we will comply with certain home country governance practices rather than the corporate governance requirements of the Nasdaq Stock Market. For example, the listing rules for the Nasdaq Stock Market, or the Nasdaq Listing Rules, for domestic U.S. issuers require, among other things, that a majority of the directors of a listed company be independent, and that independent directors have oversight over executive compensation, nomination of board members and corporate governance matters. While we intend to comply with the majority of these requirements, we are permitted to follow home country practice in lieu of the above requirements. Danish law does not require that a majority of our directors be independent directors or the implementation of a nominating and corporate governance committee, and our board may thus in the future not include, or include fewer, independent directors than would be required if we were subject to the Nasdaq Listing Rules, or they may decide that it is in our interest not to have a compensation committee or nominating and corporate governance committee, or may decide to have such committees governed by practices that would not comply with the Nasdaq Listing Rules. We intend to follow home country practice with regard to, among other things, quorum requirements generally applicable to general meetings of shareholders. Danish law does not have a regulatory regime for the solicitation of proxies and the solicitation of proxies is not a generally accepted business practice in Denmark; thus, our practice will vary from the requirement of Nasdaq Listing Rule 5620(b). In addition, our shareholders have authorized our board of directors to issue securities, including in connection with certain events such as the acquisition of shares or assets of another company, the establishment of or amendments to equity-based compensation plans for employees, rights issues at or below market price, certain private placements, directed issues at or above market price, and issuance of convertible notes. To this extent, our practice varies from the requirements of Nasdaq Listing Rule 5635, which generally requires an issuer to obtain shareholder approval for the issuance of securities in connection with such events. We also intend to follow home country practice with respect to the composition of the compensation committee rather than Nasdaq Listing Rule 5605, which states that the compensation committee must be composed of independent directors. Danish law does not have such a requirement. One of the members of our compensation committee, who will remain thereon, is considered non-independent by our board of directors, solely by virtue of his length of tenure as a director. Finally, we intend to follow home country practice with respect to the oversight of the director nominations process, rather than Nasdaq Listing Rule 5605, which requires that such oversight be independent. There is no such requirement under Danish law. The chairman of our nominating and corporate governance committee, who will remain thereon, is considered by our board of directors to be non-independent solely by virtue of the length of his tenure as a director. For an overview of our corporate governance principles, see "Description of Share Capital and Certain Corporate Matters." Accordingly, you may not have the

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same protections afforded to shareholders of companies that are subject to these Nasdaq Listing Rule requirements.

If we lose our foreign private issuer status in the future, we would incur significant additional costs and expenses.

        As a foreign private issuer, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. While we currently qualify as a foreign private issuer, the determination of foreign private issuer status is made annually on the last business day of an issuer's most recently completed second fiscal quarter and, accordingly, we could lose our foreign private issuer status in the future. We will next make a determination with respect to our foreign private issuer status on June 30, 2019.

        The regulatory and compliance costs to us under U.S. securities laws if we lose our foreign private issuer status would be significantly more than the costs we expect to incur as a foreign private issuer. If we lose our foreign private issuer status, we would be required to report as a U.S. domestic issuer and be subject to other U.S. securities laws applicable to U.S. domestic issuers. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly greater than the costs we incur as a foreign private issuer. For example, as a U.S. domestic issuer, we would be required to file periodic reports and registration statements with the SEC on U.S. domestic issuer forms, which are more detailed and extensive in certain respects than the forms available to us as a foreign private issuer. We would also be required to prepare our financial statements in accordance with U.S. GAAP and modify certain of our policies to comply with corporate governance practices applicable to U.S. domestic issuers. Such conversion and modifications would involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, which could also increase our costs.

If we are a passive foreign investment company for U.S. federal income tax purposes for any taxable year, U.S. holders of our ADSs could be subject to adverse U.S. federal income tax consequences.

        A non-U.S. corporation will be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such taxable year is "passive income" (as defined in the relevant provisions of the U.S. Internal Revenue Code of 1986, as amended, or the Code) or (ii) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated value of our assets and the nature and composition of our income and assets, we do not expect to be a PFIC for U.S. federal income tax purposes for our current taxable year ending December 31, 2019 or in the foreseeable future. However, the determination of whether or not we are a PFIC according to the PFIC rules is made on an annual basis and will depend on the nature and composition of our income and assets and the value of our assets from time to time. Therefore, changes in the nature and composition of our income or assets or the value of our assets may cause us to become a PFIC. The determination of the value of our assets (including goodwill not reflected on our balance sheet) may be based, in part, on the total market value of our shares and ADSs, which is subject to change and may be volatile.

        If we are a PFIC for any taxable year during which a U.S. person holds ADSs, certain adverse U.S. federal income tax consequences could apply to such U.S. person. See "Material U.S. Federal Income Tax Considerations—Passive Foreign Investment Company Considerations."

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As a result of becoming a public company in the United States, we will become subject to additional regulatory compliance requirements, including Section 404 of the Sarbanes-Oxley Act, and if we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud.

        As a U.S. public company listed on the Nasdaq Global Select Market, we will incur legal, accounting and other expenses that we did not previously incur. We will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Nasdaq Listing Rules and other applicable securities rules and regulations, as well as the FCPA. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources, particularly after we are no longer an "emerging growth company" and/or a foreign private issuer. The Exchange Act would require that, as a public company, we file annual, semi-annual and current reports with respect to our business, financial condition and result of operations. However, as a foreign private issuer, we are not required to file quarterly and current reports with respect to our business and results of operations. We currently issue annual and quarterly reports with respect to our listing on Nasdaq Copenhagen. Following this offering, we intend to submit, on a quarterly basis, interim financial data to the SEC under cover of the SEC's Form 6-K.

        Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, our management will be required to assess and attest to the effectiveness of our internal control over financial reporting in connection with issuing our audited consolidated financial statements beginning with our audited consolidated financial statements as of and for the year ending December 31, 2020. Section 404 also requires an attestation report on the effectiveness of internal control over financial reporting be provided by our independent registered public accounting firm beginning with our first annual report following the date on which we are no longer an "emerging growth company", which may be up to five fiscal years following the date of this offering. See "Prospectus Summary—Implications of Being an Emerging Growth Company and a Foreign Private Issuer."

        Compliance with Section 404 will significantly increase our compliance costs and management's attention may be diverted from other business concerns, which could adversely affect our results of operations. We may need to hire more employees in the future or engage outside consultants to comply with these requirements, which would further increase expenses. If we fail to comply with the requirements of Section 404 in the required timeframe, we may be subject to sanctions or investigations by regulatory authorities, including the SEC and the Nasdaq Stock Market. Furthermore, if we are unable to attest to the effectiveness of our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, and the market price of our shares and ADSs could decline. Failure to implement or maintain effective internal control over financial reporting could also restrict our future access to the capital markets and subject each of us, our directors and our senior management to significant monetary and criminal liability. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expense and a diversion of management's time and attention from revenue generating activities to compliance activities. Furthermore, as a public reporting company in the United States and Denmark with securities listed on the Nasdaq Global Select Market and Nasdaq Copenhagen, we will

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have the additional burden of complying with multiple regulatory and disclosure regimes, which may result in further uncertainty regarding compliance matters, additional costs and further diversion of management's time and attention. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business, financial condition, results of operations and future growth prospects may be adversely affected.

Holders of the ADSs will not be able to exercise the pre-emptive subscription rights related to the shares that they represent, and may suffer dilution of their equity holdings in the event of future issuances of our shares.

        Under the Danish Companies Act (Selskabsloven), or DCA, our shareholders benefit from a pre-emptive subscription right on the issuance of shares for cash consideration only and not in the event of issuance of shares against non-cash contribution or debt conversion. Shareholders' pre-emptive subscription rights, in the event of issuances of shares against cash payment, may be dis-applied by a resolution of the shareholders at a general meeting of our shareholders and/or the shares may be issued on the basis of an authorization granted to the board of directors pursuant to which the board may dis-apply the shareholders' pre-emptive subscription rights. The absence of pre-emptive rights for existing equity holders in these situations may cause substantial dilution to such holders.

        Our ADS holders in the United States will not be entitled to exercise or sell such pre-emptive subscription rights related to the shares underlying their ADSs unless we register the pre-emptive subscription rights and the securities to which such pre-emptive subscription rights relate under the Securities Act, or if an exemption from the registration requirements of the Securities Act is available. We are under no obligation to file a registration statement with respect to any such rights or securities. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, ADS holders may be unable to participate in any rights offering and may experience dilution in their holdings.

        If we offer shareholders any rights to subscribe for additional shares, we will advise the depositary whether we wish to make such rights available to ADS holders. If we decide to make such rights available to ADS holders, but the depositary determines that it is not legal or reasonably practicable to make the rights available to ADS holders, the depositary will endeavor to sell the rights and in a riskless principal capacity or otherwise, at such place and upon such terms (including public or private sale) as it may deem proper and distribute the net proceeds in the same way as it does with cash. However, if timing or market conditions do not permit such sale, the depositary will allow rights that are not distributed or sold to lapse, in which case, you would receive no value for such rights.

We are a Danish company with limited liability. The rights of our shareholders may be different from the rights of shareholders in companies governed by the laws of U.S. jurisdictions.

        We are, and will upon the consummation of this offering be, a Danish company with limited liability. Our corporate affairs are governed by our articles of association and by the laws governing companies incorporated in Denmark. The rights of shareholders and the responsibilities of members of our board of directors may be different from the rights and obligations of shareholders and boards of directors in companies governed by the laws of U.S. jurisdictions. In the performance of its duties, our board is required by Danish law to consider the interests of our company, its shareholders, its employees and other stakeholders. It is possible that some of these parties will have interests that are different from, or in addition to, the interests of our shareholders. See "Description of Share Capital and Certain Corporate Matters—Articles of Association and Danish Corporate Law."

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "aim," "anticipate," "assume," "believe," "contemplate," "continue," "could," "due," "estimate," "expect," "goal," "intend," "may," "objective," "plan," "predict," "potential," "positioned," "seek," "should," "target," "will," "would," and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

        These forward-looking statements include, but are not limited to, statements about:

    our expectations regarding sales, clinical development, regulatory approvals and commercialization of daratumumab and ofatumumab by Janssen and Novartis, respectively;

    our expectations regarding the clinical development, regulatory approval and commercialization of tisotumab vedotin and our other proprietary and partnered product candidates;

    our expectations with regard to our ability to create and develop additional product candidates and to submit INDs and/or CTAs for our pre-clinical product candidates;

    our receipt of future milestone payments and royalties from our partners, and the expected timing of such payments;

    our estimates and expectations regarding the potential market size and the size of the patient populations for our products and product candidates;

    our expectations regarding the potential advantages of our products and product candidates over existing therapies or therapies currently in development;

    our expectations regarding the potential advantages of our proprietary technologies over existing antibody technologies and the prospects for our ongoing and future technology collaborations;

    our plans to expand our translational research platform and the potential benefits of such platform;

    our expectations with regard to the willingness and ability of our current and future partners to pursue the development, approval and commercialization of our products and product candidates;

    our and our partners' product discovery, development and commercialization plans with respect to our products and product candidates and our proprietary technologies;

    our potential to enter into new collaborations;

    our and our partners' ability to develop, acquire and advance product candidates into, and successfully complete, clinical trials;

    the initiation, timing, progress and results of our pre-clinical studies and clinical trials, and our research and development programs;

    the timing or likelihood of regulatory filings and approvals for our products and product candidates;

    our ability to identify, and to negotiate contracts with, suitable CMOs and the ability of such CMOs to manufacture sufficient quantities of our products and product candidates for clinical trials or commercialization in compliance with cGMPs;

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    the commercialization and market acceptance of our products and product candidates;

    our plans to build our commercialization capabilities and to potentially commercialize tisotumab vedotin or other proprietary product candidates in-house;

    the pricing of and reimbursement for our approved products;

    the implementation of our business model and strategic plans for our business, products, product candidates and technologies;

    our ability to operate our business without violating applicable laws and regulations;

    our and our partners' ability to operate our businesses without infringing the intellectual property rights and proprietary technology of third parties;

    the scope of protection we and our partners are able to establish and maintain for intellectual property rights covering our products, product candidates and technologies;

    our analysis of potential patent infringement claims and our or our partners' rights with respect to such claims;

    estimates of our future expenses and revenue;

    our expectations regarding regulatory developments in the United States, the European Union and other jurisdictions;

    our exposure to additional scrutiny as a U.S. public company;

    our ability to effectively manage our anticipated growth;

    our ability to attract and retain suitably qualified employees and key personnel, particularly for our commercialization efforts;

    our use of proceeds from this offering;

    our future financial performance; and

    developments and projections relating to our competitors and our industry, including competing therapies and technologies.

        These forward-looking statements are based on our current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management's beliefs and assumptions, and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under "Risk Factors" and elsewhere in this prospectus. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this prospectus. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC, after the date of this prospectus. See "Where You Can Find More Information."

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MARKET, INDUSTRY AND OTHER DATA

        This prospectus contains estimates, projections and other information concerning our industry, our business and the markets for our products and product candidates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from our own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. Management estimates are derived from publicly available information, our knowledge of our industry and assumptions based on such information and knowledge, which we believe to be reasonable.

        In addition, assumptions and estimates of our and our industry's future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in "Risk Factors." These and other factors could cause our future performance to differ materially from our assumptions and estimates. See "Special Note Regarding Forward-Looking Statements."

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USE OF PROCEEDS

        We estimate that the net proceeds from this offering will be approximately $472.6 million (DKK 3,132.2 million), after deducting the underwriting commission and estimated offering expenses payable by us, based on an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the U.S. dollar/DKK exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1. If the underwriters exercise their option to purchase additional ADSs in full, we estimate that the net proceeds to us from this offering will be approximately $543.9 million (DKK 3,605.3 million), after deducting the underwriting commission and estimated offering expenses payable by us. Each $1.00 increase (decrease) in the assumed initial public offering price of $18.11 per ADS would increase (decrease) the net proceeds to us from this offering, after deducting the underwriting commission and estimated offering expenses payable by us, by $26.3 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of 10% in the number of ADSs we are offering would increase (decrease) the net proceeds to us from this offering, after deducting the underwriting commission and estimated offering expenses payable by us, by $47.6 million, assuming the assumed initial public offering price stays the same.

        We intend to use the net proceeds from this offering to continue the development of our proprietary product candidates, to continue our pre-commercial activities, to continue building our commercial capabilities and to advance earlier stage product candidates.

        We intend to use the net proceeds from the offering as follows:

    approximately $100.0 million to advance tisotumab vedotin to commercialization in recurrent and/or metastatic cervical cancer, to progress tisotumab vedotin in other solid tumor indications and to continue building our commercial capabilities in connection with the potential future approval of tisotumab vedotin; and

    approximately $275.0 million to fund drug discovery efforts, to further our development of existing and new technology platforms, and to fund the development of our earlier stage clinical and pre-clinical programs, including:

    the ongoing development of enapotamab vedotin in various solid tumor indications;

    the ongoing Phase I/II clinical trial of HexaBody-DR5/DR5 for the treatment of solid tumors;

    the ongoing Phase I/II clinical trial of DuoBody-CD3xCD20 for the treatment of B-cell malignancies; and

    the launch and conduct of Phase I/II clinical trials following submission of INDs and/or CTAs in 2019 for DuoBody-PD-L1x4-1BB, DuoBody-CD40x4-1BB and DuoHexaBody-CD37.

        We intend to use any remaining net proceeds to maximize relationships with partners, to increase strategic flexibility to potentially retain significant ownership and value of select products and product candidates and for general corporate purposes.

        This expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We cannot predict with certainty all of the particular uses of the net proceeds of this offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures may vary significantly depending on numerous factors, including the relative success and cost of our research, pre-clinical and clinical development programs, our ability to

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obtain regulatory approvals in respect of our product candidates, changes in the competitive landscape, ongoing developments in our relationships with current and future partners, reduction in existing royalty streams and any unforeseen cash needs. As a result, management will have broad discretion in the application of the net proceeds, and investors will be relying on our judgment regarding the application of the net proceeds of this offering. See "Risk Factors—Risks Related to this Offering—We have broad discretion over the use of the net proceeds from this offering and may use them in ways with which you do not agree and in ways that may not enhance our operating results or the price of our ADSs."

        Pending our application of the net proceeds from this offering as described above, we plan to invest such proceeds in a variety of capital preservation investments, including short- and intermediate-term interest-bearing obligations and certificates of deposit.

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DIVIDEND POLICY

        We do not currently pay out cash dividends on our shares and have not paid out any dividends within the last three financial years. Any future determination related to our dividend policy and the declaration of any dividends will be made at the discretion of our board of directors and will depend on a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

        To understand how any future determination by us regarding the payment of dividends would affect you as a holder of ADSs, please see the section of this prospectus entitled "Description of American Depositary Shares—Dividends and Other Distributions."

Legal and Regulatory Requirements

        In accordance with the DCA, ordinary dividends, if any, are declared with respect to a financial year at the annual general meeting of shareholders in the following year, where the statutory annual report (which includes the audited financial statements) for that financial year is approved. Further, our shareholders may resolve at a general meeting to distribute interim dividends and our shareholders may also grant our board of directors an authorization to distribute interim dividends. Any resolution to distribute interim dividends within six months of the date of the balance sheet as set out in our latest adopted annual report must be accompanied by the balance sheet from our latest annual report or an interim balance sheet which must be reviewed by our auditor. If the decision to distribute interim dividends is passed more than six months after the date of the balance sheet as set out in our latest adopted annual report, an interim balance sheet must be prepared and reviewed by our auditor. The balance sheet or the interim balance sheet, as applicable, must show that sufficient funds are available for distribution. Dividends may not exceed the amount recommended by the board of directors for approval by the general meeting of shareholders. Moreover, ordinary dividends and interim dividends may only be made out of distributable reserves and may not exceed what is considered sound and adequate with regard to our financial condition or be to the detriment of our creditors and such other factors as the board of directors may deem relevant.

        In accordance with the DCA, share buybacks may only be carried out by the board of directors using funds that could have been distributed as dividends at the latest annual general meeting of shareholders. Any share buyback must be conducted in accordance with an authorization obtained at a general meeting of our shareholders. The authorization must be granted for a defined period of time not exceeding five years. In addition, the authorization must specify the maximum permitted value of treasury shares as well as the minimum and maximum amount that we may pay as consideration for such shares. A decision by our board of directors to engage in share buybacks, if any, will be made in accordance with the factors applicable to dividend payments set forth above.

        Our board of directors, under two separate authorizations, is currently authorized to repurchase up to a total of 1,000,000 shares (with a nominal value of DKK 1,000,000) at a price per share that may not deviate by more than 10% from the price quoted on Nasdaq Copenhagen at the time of the acquisition. The first authorization, granted on March 17, 2016, authorizes the board of directors to repurchase up to a total of 500,000 shares (with a nominal value of DKK 500,000) and shall lapse on March 17, 2021. The second authorization, granted on March 29, 2019, authorizes the board of directors to repurchase up to an additional 500,000 shares (with a nominal value of DKK 500,000) and shall lapse on March 28, 2024. The authorizations are intended to cover obligations in relation to the RSU program and reduce the dilution effect of share capital increases resulting from future exercises of warrants. As of July 5, 2019, we have repurchased a total of 225,000 shares (with a nominal value of DKK 225,000) under the first authorization and no shares under the second authorization. As of July 5, 2019, up to a further 275,000 shares (with a nominal value of DKK 275,000) can be repurchased under

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the first authorization and up to 500,000 shares (with nominal value of DKK 500,000) can be repurchased under the second authorization.

        See "Material Danish Income Tax Considerations" for a description of Danish withholding taxes and certain other Danish considerations relevant to the purchase or holding of shares and ADSs and "Material U.S. Federal Income Tax Considerations" for a description of U.S. federal income tax considerations relevant to the purchase or holding of shares and ADSs.

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CAPITALIZATION

        The following table sets forth our cash position and capitalization as of March 31, 2019 on an actual basis, and on an as adjusted basis to give effect to the issuance of 27,800,000 ADSs, representing 2,780,000 shares, in this offering at an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the U.S. dollar/DKK exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1, after deducting the underwriting commission and estimated offering expenses payable by us.

        Actual data as of March 31, 2019 in the table below is derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The as adjusted data included in the table below is unaudited. You should read this information together with our consolidated financial statements appearing elsewhere in this prospectus and the information set forth under the headings "Selected Consolidated Financial Data," "Use of Proceeds" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."

 
  As of March 31, 2019  
 
  Actual   As adjusted(2)  
(in thousands)
  $(1)
  DKK
  $(1)
  DKK
 

Cash position(3)

    1,027,943     6,830,272     1,500,498     9,970,209  

Shareholders' equity:

                         

Share capital

    9,259     61,524     9,678     64,304  

Share premium

    1,213,614     8,063,977     1,685,750     11,201,138  

Other reserves

    14,399     95,674     14,399     95,674  

Accumulated deficit

    (14,149 )   (94,013 )   (14,149 )   (94,013 )

Total shareholders' equity

    1,223,123     8,127,162     1,695,678     11,267,103  

Total capitalization

    1,223,123     8,127,162     1,695,678     11,267,103  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2019 as reported by Danmarks Nationalbank.
(2)
A $1.00 increase (decrease) in the assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the U.S. dollar/DKK exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019 and an ADS-to-share ratio of 10 to 1, would increase (decrease) our as adjusted cash position, total shareholders' equity and total capitalization by approximately DKK 174.1 million ($26.3 million), assuming the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of 10% in the number of ADSs we are offering would increase (decrease) our as adjusted cash position, total shareholders' equity and total capitalization by approximately DKK 315.4 million ($47.6 million), assuming the assumed initial public offering price per ADS remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.
(3)
Represents cash and cash equivalents and marketable securities.

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DILUTION

        If you invest in the ADSs in this offering, your interest will be immediately diluted to the extent of the difference between the initial public offering price per ADS in this offering and the net book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ADS is substantially in excess of the net book value per ADS. As of March 31, 2019, we had a historical net book value per ADS of $1.88, or DKK 124.85 per share ($18.79). Our net book value per ADS represents total consolidated tangible assets less total consolidated liabilities, all divided by the number of shares outstanding as of March 31, 2019 converted to ADS at an ADS-to-share ratio of 10 to 1 and converted to U.S. dollars at a rate of DKK 6.6446 per $1.00.

        After giving effect to the sale of 27,800,000 ADSs in this offering at an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the DKK/U.S. dollar exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1, and after deducting the underwriting commission and estimated offering expenses, our as adjusted net book value at March 31, 2019 would have been DKK 168.28 per share ($25.33), or $2.53 per ADS. This represents an immediate increase in the as adjusted net book value of $6.54 per share to existing shareholders and an immediate dilution of $15.58 per ADS to new investors. The following table illustrates this dilution per ADS:

Assumed initial public offering price per ADS

  $ 18.11  

Historical net book value per ADS as of March 31, 2019

  $ 1.88  

Increase in net book value per ADS attributable to new investors purchasing ADSs in this offering

  $ 0.65  

As adjusted net book value per ADS after this offering

  $ 2.53  

Dilution per ADS to new investors participating in this offering

  $ 15.58  

        A $1.00 increase (decrease) in the assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the DKK/U.S. dollar exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019 and an ADS-to-share ratio of 10 to 1, would increase (decrease) our as adjusted net book value as of March 31, 2019, after giving effect to this offering (excluding the potential exercise by the underwriters of their option to purchase additional ADSs) by approximately DKK 2.71 per share ($0.41), or $0.04 per ADS, and would increase (decrease) dilution to investors in this offering by $0.04 per ADS assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. We may also increase or decrease the number of ADSs we are offering. An increase (decrease) of 10% in the number of ADSs we are offering would increase (decrease) our as adjusted net book value as of March 31, 2019 after giving effect to this offering (excluding the potential exercise by the underwriters of their option to purchase additional ADSs) by approximately DKK 4.20 per share ($0.63), or approximately $0.06 per ADS, and would decrease (increase) dilution to investors in this offering by approximately $0.06 per ADS, assuming the assumed initial public offering price per ADS remains the same, after deducting the underwriting commission and estimated offering expenses payable by us. The as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing. If the underwriters fully exercise their option to purchase additional ADSs, the as adjusted net book value after this offering would increase to approximately $2.63 per ADS, and there would be an immediate dilution of approximately $15.48 per ADS to new investors.

        We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that

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we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our equity holders.

        The following table shows, as of March 31, 2019, on an as adjusted basis, the number of shares purchased from us, the total consideration paid to us and the average price paid per share by existing shareholders and by new investors purchasing ADSs in this offering at an assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at the DKK/U.S. dollar exchange rate of 6.6283 as of July 5, 2019, multiplied by the ADS-to-share ratio of 10 to 1, before deducting the underwriting commission and estimated offering expenses payable by us (in thousands, except share and per share amounts and percentages):

 
  Shares Purchased
(Directly or in the Form of ADSs)(1)
  Total Consideration    
   
 
 
  Amount
(in millions)
   
  Average
Price per
Share
  Average
Price per
ADS(2)
 
 
  Number   Percentage   Percentage  

Existing shareholders

    61,523,868     96 % $ 1,222.9     71 % $ 19.88   $ 1.99  

New investors

    2,780,000     4 % $ 503.5     29 % $ 181.10   $ 18.11  

Total

    64,303,868     100 % $ 1,726.4     100 %            

(1)
Each ADS represents one-tenth of one share and as such any shares purchased in the form of ADSs will be reflected as one-tenth of one share.
(2)
Presented on the basis of converting all shares to ADSs at an ADS-to-share ratio of 10 to 1.

        A $1.00 increase (decrease) in the assumed initial public offering price of $18.11 per ADS, the U.S. dollar equivalent of the closing price of our shares on Nasdaq Copenhagen of DKK 1,200.50 on July 5, 2019, at DKK/U.S. dollar exchange rate of DKK 6.6283 per $1.00 as of July 5, 2019 and an ADS-to-share ratio of 10 to 1, would increase (decrease) total consideration paid by new investors by $27.8 million, assuming that the number of ADSs offered by us, as set forth on the cover page of this prospectus, remains the same, before deducting the estimated underwriting commission and estimated offering expenses payable by us.

        The number of shares and ADSs outstanding after this offering is based on the number of shares outstanding as of March 31, 2019, and excludes up to 1,419,895 shares that may be issued upon the exercise of warrants outstanding as of March 31, 2019, and assumes no exercise of the underwriters' option to purchase up to 4,170,000 additional ADSs.

        To the extent that warrants are exercised or we issue additional ADSs or shares, including shares underlying additional ADSs, in the future, there will be further dilution to investors participating in the offering. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders.

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SELECTED CONSOLIDATED FINANCIAL DATA

        The following tables present selected consolidated financial data of our business. We derived the selected consolidated income statement data for the years ended December 31, 2018 and 2017 and the selected consolidated balance sheet data as of December 31, 2018 from our audited consolidated financial statements included elsewhere in this prospectus. We derived the selected consolidated income statement data for the three months ended March 31, 2019 and 2018 and the selected consolidated balance sheet data as of March 31, 2019 from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We maintain our books and records and report our financial results in DKK, and prepare our audited consolidated financial statements in accordance with IFRS as issued by the IASB. You should read this data together with our consolidated financial statements and related notes included elsewhere in this prospectus and the information under the captions "Capitalization" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our historical results are not necessarily indicative of our future results, and our results for any interim period are not necessarily indicative of the results to be expected for a full year.

Consolidated Income Statement Data

 
  Year Ended December 31,   Three Months Ended March 31,  
(in thousands, except per share data)
  2018   2018   2017   2019   2019   2018  
 
  $(1)   DKK   DKK   $(1)   DKK   DKK  

Revenue

    455,278     3,025,137     2,365,436     88,946     591,009     681,012  

Operating expenses

                                     

Research and development expenses

    (215,387 )   (1,431,159 )   (874,278 )   (82,184 )   (546,080 )   (312,551 )

General and administrative expenses

    (32,161 )   (213,695 )   (146,987 )   (10,664 )   (70,853 )   (44,416 )

Total operating expenses

    (247,548 )   (1,644,854 )   (1,021,265 )   (92,848 )   (616,933 )   (356,967 )

Operating result

    207,730     1,380,283     1,344,171     (3,902 )   (25,924 )   324,045  

Financial income

    36,567     242,975     71,699     18,351     121,936     14,695  

Financial expenses

    (1,698 )   (11,287 )   (352,150 )   (299 )   (1,990 )   (83,175 )

Net result before tax

    242,599     1,611,971     1,063,720     14,150     94,022     255,565  

Corporate tax

    (21,045 )   (139,830 )   39,831     (3,283 )   (21,813 )   (56,991 )

Net result

    221,554     1,472,141     1,103,551     10,867     72,209     198,574  

Basic net result per share(2)

    3.62     24.03     18.14     0.18     1.18     3.25  

Diluted net result per share(2)

    3.57     23.73     17.77     0.18     1.17     3.20  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2019 as reported by Danmarks Nationalbank.
(2)
See note 2.5 to our audited consolidated financial statements included elsewhere in this prospectus for further details regarding the calculation of basic and diluted net result per share.

Consolidated Balance Sheet Data

 
  As of March 31,   As of December 31,  
(in thousands)
  2019   2019   2018  
 
  $(1)
  DKK
  DKK
 

Total assets

    1,314,559     8,734,717     8,460,999  

Accumulated deficit

    (14,149 )   (94,013 )   (197,459 )

Share capital

    9,259     61,524     61,498  

Total shareholders' equity

    1,223,123     8,127,162     8,014,360  

Total liabilities

    91,436     607,555     446,639  

(1)
Translated solely for convenience into U.S. dollars at an assumed exchange rate of DKK 6.6446 per $1.00, which was the rounded official exchange rate of such currencies as of March 31, 2019 as reported by Danmarks Nationalbank.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

        You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. The following discussion is based on our financial information prepared in accordance with IFRS, as issued by the IASB, which might differ in material respects from accounting principles generally accepted in other jurisdictions, including accounting principles generally accepted in the United States. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

        We are an international biotechnology company specializing in antibody therapeutics for the treatment of cancer and other diseases. Our core purpose is to improve the lives of patients by creating and developing innovative antibody products. Our vision is to transform cancer treatment by launching our own proprietary product by 2025 and advancing our pipeline of differentiated and well-tolerated antibodies. We are building and expanding our late-stage development and commercial capabilities to allow us to bring our proprietary products to market in the future. Today, we have a well-diversified portfolio of products, product candidates and technologies. Our portfolio includes two marketed partnered products, daratumumab, marketed as DARZALEX for the treatment of certain MM indications, and ofatumumab, marketed as Arzerra for the treatment of certain CLL indications, in addition to a broad pipeline of differentiated product candidates. Our pipeline includes five proprietary product candidates in clinical development and approximately 20 proprietary and partnered pre-clinical programs, including two proprietary product candidates for which we have submitted or intend to submit an IND to the FDA and/or a CTA to the EMA in 2019. In addition to our proprietary clinical product candidates and our partners' ongoing label expansion studies for daratumumab and ofatumumab, our partners have ten additional product candidates in clinical development through collaboration agreements with us. Our portfolio also includes four proprietary antibody technologies that play a key role in building our product pipeline, enhancing our partnerships and generating revenue. We selectively enter into strategic alliances with other biotechnology and pharmaceutical companies that build our network in the biotechnology space and give us access to complementary novel technologies or products that move us closer to achieving our vision and fulfilling our core purpose.

        In addition to our partnered marketed products, we are currently in the early stages of building and expanding our commercial capabilities to allow us to market our own products in the future for the indications and in the geographies we determine would be most effective to create value for our shareholders. Our goal is to become a commercial-stage company with oncology products in the United States, Europe and Japan. Our initial focus will be on achieving commercial launch readiness in Western Europe and Japan to support the potential launch of tisotumab vedotin for the treatment of cervical cancer, subject to obtaining regulatory approval and, where applicable, reimbursement approval.

        In the three months ended March 31, 2019, we generated revenue of DKK 591.0 million ($88.9 million) and recorded operating losses of DKK 25.9 million ($3.9 million) and net income of DKK 72.2 million ($10.9 million). In 2018, we generated revenue of DKK 3,025.1 million ($464.0 million) and recorded operating income of DKK 1,380.3 million ($211.7 million) and net income of DKK 1,472.1 million ($225.8 million), as compared to revenue of DKK 2,365.4 million

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($362.8 million), operating income of DKK 1,344.2 million ($206.2 million) and net income of DKK 1,103.6 million ($169.3 million) in 2017. Our results of operations have been, and we expect them to continue to be, affected by our collaboration with Janssen for the development and commercialization of daratumumab. Since inception, we have funded our operating requirements primarily through proceeds from equity financings and milestone payments and royalties from our partners. We expect to continue to fund a significant portion of our development costs for our proprietary product candidates as well as our planned commercialization activities with funds received from royalties and milestone payments from our partners as well as the net proceeds of this offering.

Our Collaborations and Technology Licenses

        We enter into collaborations with biotechnology and pharmaceutical companies to advance the development and commercialization of our product candidates and to supplement our internal pipeline. We seek collaborations that will allow us to retain significant future participation in product sales through either profit-sharing or royalties paid on net sales. Below is an overview of some of our collaborations that have had a significant impact or that we expect may in the near term have a significant impact on our financial results. This is not a complete list, and we have several other collaborations or other agreements with third parties that could affect our results and financial condition. See "Business—Product and Technology Collaborations."

Collaboration with Janssen (Daratumumab/DARZALEX)

        In August 2012, we entered into a global license, development, and commercialization agreement with Janssen for daratumumab (marketed as DARZALEX for the treatment of MM). Under this agreement, Janssen is fully responsible for developing and commercializing daratumumab and all costs associated therewith. We receive 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 biosimilar product remains for sale in that country). 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 daratumumab in such country. We are also eligible to receive certain additional payments in connection with development, regulatory and sales milestones.

        Sales of DARZALEX have grown since it received its first marketing approval in the United States in 2015. In the fourth quarter of 2018, we moved from the 13% royalty tier (applicable to net sales exceeding $750.0 million in a calendar year) to the royalty tier of 16% on the portion of net 2018 sales exceeding $1.5 billion, and then to the 18% royalty tier on the portion of net 2018 sales exceeding $2.0 billion. The 20% royalty tier will be payable on the portion of net sales in excess of $3.0 billion in any calendar year. The total amount of potential milestone payments under the contract is approximately $1,015 million, and to date, we have recorded approximately $571.0 million in milestone payments from Janssen and could be entitled to receive up to $444.0 million in further payments if certain additional milestones are met. The next sales milestones are payable upon net sales reaching $2.5 billion and $3.0 billion in a calendar year.

        See "Business—Product and Technology Collaborations—Collaborations for our Marketed Products—Janssen Daratumumab License and Development Agreement."

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Collaboration with Novartis (Ofatumumab)

        Ofatumumab is commercialized by Novartis under a co-development and collaboration agreement with us, which it acquired from GSK in 2015. Under the agreement with Novartis, we are entitled to royalties of 20% of worldwide net sales of ofatumumab for the treatment of cancer and 10% of worldwide net sales for non-cancer treatments, as well as certain potential regulatory and sales milestones, of which only certain sales milestones remain. Novartis is fully responsible for all costs associated with developing and commercializing ofatumumab.

        See "Business—Product and Technology Collaborations—Collaborations for our Marketed Products—Novartis Ofatumumab Collaboration."

Collaboration with Seattle Genetics (Tisotumab vedotin)

        In October 2011, we entered into a license and collaboration agreement with Seattle Genetics. In August 2017, Seattle Genetics exercised an option it was granted pursuant to this agreement to co-develop and co-commercialize tisotumab vedotin with us. All costs and profits for tisotumab vedotin will be shared on a 50:50 basis.

        Our cost-sharing arrangement with Seattle Genetics in respect of the co-development and co-commercialization of tisotumab vedotin is such that, from time to time, one partner may be required to bear certain costs in furtherance of the collaboration for which it would be entitled to seek reimbursement of 50% of the costs from the other partner. Such reimbursements may not be immediate or may be offset by other costs incurred or profits received by one or both partners. As a result, we may incur costs for which we are not ultimately responsible, and this may affect our working capital, liquidity and availability of resources for other projects. On the other hand, we may also be responsible for reimbursing Seattle Genetics in respect of the portion of its spending in furtherance of the collaboration for which we are responsible. In addition, we record all development expenses incurred by us in connection with this collaboration as research and development expenses, while reimbursements received from Seattle Genetics related to such development expenses are recorded in revenue as reimbursement income.

        See "Business—Product and Technology Collaborations—Collaborations for our Proprietary Product Candidates—Seattle Genetics Tisotumab Vedotin Collaboration."

Collaboration with BioNTech (DuoBody-PD-L1x4-1BB and DuoBody-CD40x4-1BB)

        In May 2015, we entered an agreement with BioNTech to jointly research, develop and commercialize bispecific antibody products using our DuoBody technology platform and antibodies. If BioNTech and us jointly select any product candidates for clinical development, 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. The agreement also includes provisions which will allow the parties to opt out of joint development at key points. Two product candidates are currently in development in connection with this agreement, DuoBody-PD-L1x4-1BB and DuoBody-CD40x4-1BB. We submitted CTAs for these products in 2019 and dosed the first patient in a Phase I/II study for DuoBody-PD-L1x4-1BB in May 2019.

        Our cost sharing arrangement with BioNTech is similar to the one with Seattle Genetics described above with respect to tisotumab vedotin.

        See "Business—Product and Technology Collaborations—Collaboration for our Proprietary Product Candidates—BioNTech DuoBody Collaboration."

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In-Licensed Technology

        While not material in 2018 or in the three months ended March 31, 2019, in the future, our results and financial condition could be affected by milestone payments and royalties related to technology we have licensed or acquired. This includes payments under our asset purchase agreement with IDD Biotech in connection with our development of HexaBody-DR5/DR5, our ADC license agreement with Seattle Genetics in connection with our HuMax-AXL antibody and our research, collaboration and exclusive license agreement with Immatics to discover and develop next-generation bispecific immunotherapies to target multiple cancer indications.

Key Components of Our Results and Related Trends

Revenues

        Our revenues are currently comprised of royalties, milestone payments, license fees and reimbursement income. Royalty income from licenses is based on third-party sales of licensed products. Milestone payments are typically related to reaching particular stages in product development, regulatory approval or net sales. License fees are non-refundable, upfront fees for our intellectual property received from our partners. Reimbursement income is mainly comprised of the reimbursement of certain research and development costs related to the development work under our collaboration agreements.

        In the three months ended March 31, 2019, royalties, milestone payments, license fees and reimbursement income represented 86%, nil, nil and 14%, respectively, of our total revenues. The corresponding percentages were 58%, 23%, 11% and 8% in 2018 and 45%, 48%, 4% and 3% in 2017. At this time, all of our revenues come from payments made to us by our partners under our collaboration agreements. We do not earn any revenue from direct sales of our own products, and we will not earn such revenue unless and until we obtain regulatory approvals for any candidates in our proprietary pipeline and successfully commercialize such candidates. Our reported revenue is affected by the translation of royalties and other income denominated in foreign currencies—primarily U.S. dollars—into Danish kroner as our reporting currency.

        In the three months ended March 31, 2019, DKK 502.2 million, or 85% of our total revenues, related to our various collaborations with Janssen, as compared to DKK 2,390.4 million, or 79% of our total revenues, in 2018 and DKK 2,214.0 million, or 94% of our total revenues, in 2017. In the three months ended March 31, 2019, all DKK 502.2 million of our revenues received under our various collaborations with Janssen were related to royalties and milestone payments with respect to DARZALEX, as compared to DKK 2,294.0 million, or 96% of revenues, in 2018, and DKK 2,121.4 million, or 96%, in 2017.

        In addition to existing approvals of DARZALEX for the treatment of certain MM indications in the United States, the European Union, Japan and certain other countries, applications for label expansion in the United States, the European Union and Japan and for initial approval in China are currently pending with applicable regulators. Clinical studies are ongoing to expand daratumumab to new indications of MM. In March 2019, Janssen submitted an MAA to the EMA for daratumumab in combination with lenalidomide and dexamethasone, or Rd, for frontline treatment of transplant-ineligible MM patients based on the pivotal Phase III MAIA study. In June 2019, daratumumab was approved by the FDA for this indication based on the MAIA study. In March 2019, Janssen also submitted an sBLA to the FDA and an MAA to the EMA for daratumumab in combination with bortezomib, thalidomide and dexamethasone, or VTd, for frontline treatment of transplant-eligible MM patients based on the pivotal Phase III CASSIOPEIA study. In May 2019, the FDA granted priority review for the sBLA submission. In addition, we expect Janssen to submit regulatory applications for a subQ formulation of daratumumab based on the Phase III COLUMBA study in 2019 and to release efficacy data for the Phase II GRIFFIN study for daratumumab as a

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combination treatment for frontline MM. In addition to the ongoing studies of daratumumab for the treatment of MM, Janssen is conducting a number of studies to assess the use of daratumumab in the treatment of other malignant and pre-malignant diseases in which CD38 is expressed, including amyloidosis, acute lymphocytic leukemia and NKT-cell lymphoma. Our ability to generate revenue will significantly depend on the success of Janssen's continued ability to effectively maintain and grow sales of DARZALEX for its approved indications, expand its indications, and successfully compete with existing and additional investigational agents and technologies that are currently being marketed or studied for the same indications as DARZALEX.

        Our historical revenue also reflects milestone payments and royalties related to our collaboration with Novartis for ofatumumab, marketed as Arzerra for the treatment of certain indications of CLL, and milestone and other payments relating to our other collaborations. We expect competitive pressures in the CLL treatment space to remain or intensify, which may cause sales of Arzerra to further decline, particularly as Novartis continues to transition Arzerra to compassionate use in most jurisdictions. For these and other reasons, we believe that our future prospects for material revenues from ofatumumab depend on Novartis' ability to expand the labeled indications of use for ofatumumab and to successfully commercialize it for such indications. Novartis is currently investigating a subQ formulation of ofatumumab in two Phase III clinical studies, ASCLEPIOS I and II, in RMS. Novartis reported that it completed recruitment for these studies in May 2018 and expects to complete the studies during 2019. Subject to study completion and achievement of positive results, Novartis has indicated that it plans to evaluate the potential for a regulatory filing soon thereafter.

        In addition to the key studies ongoing for daratumumab and ofatumumab outlined above, we anticipate that our partners under our collaboration agreements will report results or preliminary data for a number of additional clinical studies in 2019. However, there can be no assurance that any of the studies conducted by Janssen or Novartis or by us or our other partners will be completed on the expected timeline or at all, or that the final results will be positive. Our ability to generate revenue from our partnered product candidates depends on our and our partners' ability to successfully complete clinical trials for our product candidates and receive regulatory approvals, which could impact the commercial potential of such products and our potential to receive milestone payments and royalties for these products in the future.

Operating Expenses

        Our operating expenses currently consist of research and development expenses and general and administrative expenses. Research and development expenses represent the majority of our operating expenses.

        Our research and development expenses include internal costs relating to our research and development departments as well as external costs relating to studies performed by external suppliers and partners. Internal research and development costs consist primarily of salaries and benefits for our research and development staff and related expenses, including expenses related to cash bonuses, warrant and restricted stock unit, or RSU, programs as applicable to such personnel, costs of related facilities, equipment and other overhead expenses that have been determined to be directly attributable to research and development, costs associated with obtaining and maintaining patents for intellectual property, amortization of licenses and rights, amortization and impairment of intangible assets and property, and depreciation of capital assets used to develop our product candidates.

        Major components of the external costs are fees and other costs paid to CROs in conjunction with pre-clinical studies and the performance of clinical trials, milestone payments for in-licensed technology, as well as fees paid to contract manufacturers in conjunction with the production of clinical compounds, drug substances and drugs. This includes (i) antibody clinical material for use in clinical trials and (ii) preparation for production of process validation batches for potential future regulatory

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submissions and related activities. These costs are expensed as incurred, because they do not qualify to be capitalized as inventory under IFRS since the technical feasibility of the materials is not proven and no alternative use for them exists in the absence of marketing approval. Research and development expenses include amortization of intangible assets only in connection with licenses and rights we have acquired and capitalized. We do not capitalize intellectual property generated through our internal development activities.

        We expect to incur higher research and development costs in future periods, including increasing costs for clinical trials and manufacturing as our proprietary product candidates advance in clinical development and we increase the number of product candidates under active clinical development. Our research and development expenses may vary substantially from period to period based on the timing of our research and development activities, including timing due to regulatory approvals and enrollment of patients in clinical trials. See "—Liquidity and Capital Resources" below.

        Our general and administrative expenses consist primarily of wages and salaries for personnel other than research and development staff, including expenses related to cash bonus and warrant and RSU programs as applicable to such personnel. Also included are expenses related to depreciation, amortization and impairment of intangible assets, property, plant and equipment, to the extent such expenses are related to the administrative functions. As a result of becoming a U.S. public company listed on the Nasdaq Global Select Market, we will incur legal, accounting, and other expenses that we did not previously incur, resulting in increases in our general and administrative expenses in future periods.

        Overhead expenses are allocated to research and development expenses or general and administrative expenses based on the number of employees and their relevant functions. The Dutch Research and Development Act, or WBSO, provides compensation for a part of research and development wages and other costs at our Utrecht facility through a reduction in payroll taxes in The Netherlands. WBSO grant amounts are offset against wages and salaries included in research and development costs.

        Our ongoing research and development and, increasingly, pre-launch commercialization activities will require substantial amounts of capital and may not ultimately be successful. Over the next several years, we expect that we will continue to incur substantial expenses, primarily as a result of activities related to the continued development of our proprietary pipeline and building our commercial capabilities. Our proprietary product candidates will require significant further development, financial resources and personnel to pursue and obtain regulatory approval and develop into commercially viable products, if they are approved and commercialized at all. Our commitment of resources to the research and continued development of our product candidates and expansion of our proprietary pipeline will likely result in our operating expenses increasing and/or fluctuating as a result of such activities in future periods. We may also incur significant milestone payment obligations to certain of our licensors as our product candidates progress through clinical trials towards potential commercialization.

Other Income and Expense Items

        Financial income includes interest on our marketable securities and other financial income, as well as realized and unrealized exchange rate and fair value hedge adjustments. Financial expenses include interest and other financial expenses, as well as realized and unrealized exchange rate and marketable securities adjustments. We record realized losses on marketable securities when a security is purchased at a price above par and held to maturity. We are compensated for these realized losses with above market interest rates.

        Exchange rate adjustments recognized in financial income or expenses reflect adjustments to the value of assets and liabilities denominated in foreign currencies as a result of exchange rate movements. Transactions denominated in foreign currencies are translated into Danish kroner, our

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reporting currency, at the exchange rates in effect on the date of the transaction. Exchange rate gains and losses arising between the transaction date and the settlement date (or the balance sheet date for unsettled assets or liabilities) are recognized in the income statement as either financial income or expenses. See "—Quantitative and Qualitative Disclosures about Market Risk—Exchange Rate Risk" below.

        Our corporate tax is comprised of current tax and the adjustment of deferred taxes during the period. In any given period, the adjustment to our deferred tax position, including the reversal of valuation allowances, may partially or wholly offset current tax expense.

        We record a valuation allowance to reduce deferred tax assets to reflect the net amount that is more likely than not to be realized. Realization of our deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which is uncertain. The valuation allowance requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. As our profitability outlook has changed, we determined that it was appropriate to reverse a portion of the valuation allowance in 2017 and a further portion in 2018. There was no reversal of the valuation allowances on deferred tax assets in the three months ended March 31, 2019.

Results of Operations

Financial Results for the Three Months Ended March 31, 2019 Compared to the Three Months Ended March 31, 2018

Revenue

        The following table provides information regarding our revenue by source for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018.

 
  Three Months
Ended
March 31,
  Percentage
change
 
(in millions of DKK)
  2019   2018   2019/2018  

Revenue by source

                   

Royalties

    508.0     317.8     59.8  

Milestone payments

             

License fees

        304.1     (100.0 )

Reimbursement income

    83.0     59.1     40.4  

Total revenue

    591.0     681.0     (13.2 )

Revenue by collaboration partner

                   

Janssen

    502.2     309.8     62.1  

Novartis

    5.8     312.5     (98.1 )

Other partners

    83.0     58.7     41.4  

Total revenue

    591.0     681.0     (13.2 )

        Revenue for the three months ended March 31, 2019 was DKK 591.0 million, as compared to DKK 681.0 million for the three months ended March 31, 2018. Revenues in the three months ended March 31, 2018 were DKK 90.0 million, or 13.2%, higher than in the three months ended March 31, 2019, mainly driven by the one-time payment from Novartis of $50.0 million (DKK 304.1 million) during the three months ended March 31, 2018 for lost potential milestones and royalties following announcement of Novartis' intention to transition Arzerra to limited availability via compassionate use programs for CLL in non-U.S. markets, partly offset by higher DARZALEX royalties and reimbursement income from our collaborations with Seattle Genetics and BioNTech.

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        Of the revenue for the three months ended March 31, 2019, DKK 508.0 million, or 86%, was attributable to royalties and DKK 83.0 million, or 14%, to reimbursement income. This is compared to DKK 317.8 million, or 47%, attributable to royalties, DKK 304.1 million, or 44%, to license fees, and DKK 59.1 million, or 9%, to reimbursement income for the three months ended March 31, 2018.

        Royalty income was DKK 508.0 million for the three months ended March 31, 2019, as compared to DKK 317.8 million for the three months ended March 31, 2018, representing an increase of DKK 190.2 million. The increase was driven by higher DARZALEX royalties under our daratumumab collaboration with Janssen, which were partly offset by lower Arzerra royalties under our collaboration with Novartis. In the three months ended March 31, 2019, net sales of DARZALEX by Janssen were $629 million, as compared to $432 million in the three months ended March 31, 2018. The increase of $197 million, or 46%, was driven by the continued strong uptake following the regulatory approval of DARZALEX in the United States, the European Union and Japan. Royalty income on net sales of DARZALEX was DKK 502.2 million in the three months ended March 31, 2019, as compared to DKK 309.8 million in the three months ended March 31, 2018, representing an increase of DKK 192.4 million, or 62%. The increase in royalties was higher than the increase in the underlying sales due primarily to currency fluctuations between the U.S. dollar and the Danish krone. In the three months ended March 31, 2018, net sales of Arzerra by Novartis were $4 million, as compared to $7 million in the three months ended March 31, 2018, representing a decrease of $3 million, or 43%. Royalty income on net sales of Arzerra was DKK 5.8 million in the three months ended March 31, 2019, as compared to DKK 8.4 million in the three months ended March 31, 2018, representing a decrease of DKK 2.6 million, or 31%. The decrease in Arzerra net sales and resulting royalties was due to Novartis' ongoing transition of Arzerra to limited availability in most jurisdictions and continued ongoing competition in the CLL treatment space.

        There was no milestone income recognized during the three months ended March 31, 2019 or 2018. Milestone income may fluctuate significantly from period to period due to both the timing of achievements and the varying amount of each individual milestone under our license and collaboration agreements.

        There was no license fee income during the three months ended March 31, 2019. By comparison, license fee income was DKK 304.1 million for the three months ended March 31, 2018, driven by the one-time payment from Novartis of $50.0 million (DKK 304.1 million) during the three months ended March 31, 2018.

        We recorded reimbursement income of DKK 83.0 million in the three months ended March 31, 2019, as compared to DKK 59.1 million in the three months ended March 31, 2018, representing an increase of DKK 23.9 million. The increase was driven by reimbursement payments associated with our development activities relating to tisotumab vedotin under our collaboration with Seattle Genetics and the continued advancement of product candidates under our collaboration with BioNTech.

Research and Development Expenses

        Research and development expenses for the three months ended March 31, 2019 were DKK 546.1 million, or 89% of our total operating expenses for three months ended March 31, 2019, as compared to DKK 312.6 million, or 88% of our total operating expenses for the three months ended March 31, 2018. The increase of DKK 233.5 million, or 74.7%, was driven by the advancement of enapotamab vedotin and tisotumab vedotin, the additional investment in our product pipeline, and the increase in the number of employees undertaking research and development.

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        The following table provides information regarding our research and development spending for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018.

 
  Three Months
ended
March 31,
  Percentage
Change
 
(in millions of DKK)
  2019   2018   2019/2018  

Research(1)

    125.8     82.7     52.1  

Development and contract manufacturing(2)

    209.4     105.3     98.9  

Clinical(3)

    154.3     100.1     54.1  

Other(4)

    56.6     24.5     131.0  

Total research and development expenses

    546.1     312.6     74.7  

(1)
Research expenses include, among other things, personnel, occupancy and laboratory expenses, technology access fees associated with identification of new mAbs, expenses associated with development of new proprietary technologies and research activities associated with our product candidates, such as in vitro and in vivo studies, translational research, and IND enabling toxicology studies.
(2)
Development and contract manufacturing expenses include personnel and occupancy expenses, external contract manufacturing costs for the scale-up and pre-approval manufacturing of drug product used in research and our clinical trials, costs for drug product supplied to our collaborators, costs related to preparation for production of process validation batches to be used in potential future regulatory submissions, quality control and assurance activities, and storage and shipment of our product candidates.
(3)
Clinical expenses include personnel, travel, occupancy costs, and external clinical trial costs including costs for clinical sites, CROs, contractors and regulatory activities associated with conducting human clinical trials.
(4)
Other research and development expenses primarily include share-based compensation, depreciation and amortization expenses.

        The increase in research and development expenses of DKK 233.5 million, or 74.7%, was driven by the advancement of enapotamab vedotin and tisotumab vedotin, the additional investment in our product pipeline, and the increase in the number of employees undertaking research and development.

        We utilize our employee and infrastructure resources across multiple research and development projects. We track human resource efforts expended on many of our programs for purposes of billing our collaborators for time incurred at agreed upon rates and for resource planning. We do not account for actual costs on a project basis as it relates to our infrastructure, facility, employee and other indirect costs; however, we do separately track significant third-party costs including clinical trial costs, manufacturing costs and other contracted service costs on a project basis.

        The following table shows third-party costs incurred for research, contract manufacturing of our product candidates and clinical and regulatory services for the three months ended March 31, 2019, as compared to the three months ended March 31, 2018. The table also presents unallocated costs and overhead consisting of third-party costs for our pre-clinical stage programs, personnel, facilities and other indirect costs not directly charged to development programs.

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  For the Three
Months ended
March 31,
  Percentage
Change
 
(in millions of DKK)
  2019   2018   2019/2018  

Tisotumab vedotin

    107.9     84.4     27.8  

Enapotamab vedotin

    71.9     21.5     234.4  

Other clinical stage programs

    46.9     26.1     79.7  

Total third-party costs for clinical stage programs

    226.7     132.0     71.7  

Pre-clinical projects

    112.2     65.8     70.5  

Unallocated costs and overhead

    207.2     114.8     80.5  

Total research and development expenses

    546.1     312.6     74.7  

        Third-party costs for tisotumab vedotin increased by DKK 23.5 million, or 27.8%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to advancement of clinical trials.

        Third-party costs for enapotamab vedotin increased by DKK 50.4 million, or 234.4%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to increases in clinical trial and contract manufacturing costs related to the progression of the program.

        Third-party costs for our other clinical stage programs increased by DKK 20.8 million, or 79.7%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to an increase in contract manufacturing costs.

        Research and development expenses related to our pre-clinical projects increased by DKK 46.4 million, or 70.5%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, driven by the expansion and continued advancement of our pre-clinical programs.

        Unallocated costs and overhead increased by DKK 92.4 million, or 80.5%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to an increase in staffing levels and the expansion of our facilities to accommodate our growth.

General and Administrative Expenses

        General and administrative expenses for the three months ended March 31, 2019 were DKK 70.9 million, or 11% of our total operating expenses for the quarter, as compared to DKK 44.4 million for the three months ended March 31, 2018, or 12% of our total operating expenses for the quarter. The increase of DKK 26.5 million, or 59.7%, was driven by higher general consultancy expenses and an increase in administrative employees to support the expansion of our product pipeline.

Net Financial Items

        Financial income for the three months ended March 31, 2019 was DKK 121.9 million, reflecting net realized and unrealized exchange rate gains of DKK 84.5 million, interest and other financial income of DKK 21.2 million, and gains on marketable securities of DKK 16.2 million. By comparison, financial income for the three months ended March 31, 2018 was DKK 14.7 million, reflecting interest and other financial income of DKK 12.4 million and net realized and unrealized gains on fair value hedges of DKK 2.3 million.

        Financial expenses for the three months ended March 31, 2019 were DKK 2.0 million, which were solely related to interest and other financial expenses, as compared to DKK 83.2 million for the three months ended March 31, 2018, of which DKK 74.3 million was related to net realized and unrealized

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exchange rate losses, DKK 8.8 million was related to net realized and unrealized losses on marketable securities and DKK 0.1 million was related to interest and other financial expenses.

        As a result of the above, net financial items for the three months ended March 31, 2019 were a net gain of DKK 119.9 million, as compared to a net loss of DKK 68.5 million for the three months ended March 31, 2018. The variance in net financial items was driven primarily by foreign exchange movements, which positively impacted our U.S. dollar-denominated portfolio and cash holdings in 2019, as compared to 2018. In the three months ended March 31, 2019, the U.S. dollar strengthened significantly against the Danish krone, increasing from 6.5194 at December 31, 2018 to 6.6446 at March 31, 2019. By comparison, in the three months ended March 31, 2018, the U.S. dollar weakened significantly against the Danish krone, decreasing from 6.2067 at December 31, 2017 to 6.0101 at March 31, 2018.

Income Tax

        Corporate tax for the three months ended March 31, 2019 was an expense of DKK 21.8 million, as compared to an expense of DKK 57.0 million for the three months ended March 31, 2018. The corporate tax expense in the three months ended March 31, 2019 was based on an estimated annual effective corporate tax rate of 23%, as compared to 22% for the three months ended March 31, 2018. There has been no reversal of the valuation allowances on deferred tax assets in the three months ended March 31, 2019 or 2018.

Financial Results for the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Revenue

        The following table provides information regarding our revenue by source for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

 
  Year Ended
December 31,
  Percentage
change
 
(in millions of DKK)
  2018   2017   2018/2017  

Revenue by source

                   

Royalties

    1,741.5     1,060.7     64.2  

Milestone payments

    687.3     1,133.3     (39.4 )

License fees(1)

    347.7     90.1     285.9  

Reimbursement income

    248.6     81.3     205.8  

Total revenue

    3,025.1     2,365.4     27.9  

Revenue by collaboration partner

                   

Janssen

    2,390.4     2,214.0     8.0  

Novartis

    337.7     48.1     602.1  

Other partners

    297.0     103.3     187.5  

Total revenue

    3,025.1     2,365.4     27.9  

(1)
For the year ended December 31, 2017, license fees income consisted only of deferred revenue related to the amortization of upfront payments previously received under our license and collaboration agreements. In 2018, the full deferred revenue balance was reclassified to accumulated deficit as a result of the adoption of IFRS 15. See "—Significant Accounting Policies—Implementation of New and Revised Standards and Interpretations" below.

        Revenue for the year ended December 31, 2018 was DKK 3,025.1 million, as compared to DKK 2,365.4 million for the year ended December 31, 2017. The increase of DKK 659.7 million, or 28%, was mainly driven by higher DARZALEX royalties under our daratumumab collaboration with

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Janssen, the one-time payment from Novartis of $50.0 million (DKK 304.1 million) for lost potential milestones and royalties due to Novartis' planned transition of Arzerra to compassionate use in most jurisdictions, and reimbursement income from our collaborations with Seattle Genetics and BioNTech, partly offset by a decrease in DARZALEX milestone payments in the year ended December 31, 2018.

        Of the 2018 revenue, DKK 1,741.5 million, or 58%, was attributable to royalties, DKK 687.3 million, or 23%, to milestone payments, DKK 347.7 million, or 11%, to license fees and DKK 248.6 million, or 8%, to reimbursement income. This is compared to DKK 1,133.3 million, or 48%, attributable to milestone payments, DKK 1,060.7 million, or 45%, to royalties, DKK 90.1 million, or 4%, to deferred revenue associated with license fees, and DKK 81.3 million, or 3%, to reimbursement income for the year ended December 31, 2017.

        The 28% increase in revenue in 2018 was mainly related to an increase of DKK 680.8 million, or 64%, in royalty income, driven by higher DARZALEX royalties under our daratumumab collaboration with Janssen, which was partly offset by lower Arzerra royalties. Net sales of DARZALEX by Janssen were $2,025 million in 2018 compared to $1,242 million in 2017. The increase of $783 million, or 63%, was driven by the continued strong uptake of DARZALEX following regulatory approvals in the United States, the European Union and Japan. The resulting royalty income on net sales of DARZALEX was DKK 1,708.1 million in 2018 compared to DKK 1,013.2 million in 2017, an increase of DKK 694.9 million, or 69%. During the fourth quarter of 2018, the royalty rate on net sales of DARZALEX moved into the 16% royalty tier on net sales exceeding $1.5 billion in a calendar year and the 18% royalty tier on net sales exceeding $2.0 billion in a calendar year, up from the 13% royalty tier on net sales exceeding $750.0 million in a calendar year achieved in the third quarter of 2017. The increase in royalties of 69% is higher than the increase in the underlying sales due to the change in royalty tiers in 2018. Novartis' net sales of Arzerra were $26 million in 2018 compared to $36 million in 2017, a decrease of $10 million, or 28%. The resulting royalty income on net sales of Arzerra was DKK 33.3 million in 2018 compared to DKK 47.5 million in 2017, a decrease of DKK 14.2 million, or 30%. The decrease in Arzerra net sales and resulting royalties was due to Novartis' ongoing transition of Arzerra to limited availability in most jurisdictions and continued ongoing competition in the CLL treatment space.

        Increased royalty revenues in 2018 were partially offset by a decrease in milestone payments, as compared to 2017. Milestone income was DKK 687.3 million in 2018, as compared to DKK 1,133.3 million in 2017, a decrease of DKK 446.0 million, or 39%. The decrease was mainly driven by lower DARZALEX milestone payments received in 2018, as compared to 2017, partially offset by milestones achieved under the Janssen and Novo Nordisk DuoBody collaborations in 2018. In 2018, we recorded $100.5 million in milestone payments from Janssen, including (i) a $75.0 million payment related to achievement of $2.0 billion in net sales of DARZALEX in the fourth quarter of 2018 and (ii) a $13.0 million milestone payment related to the first sale of DARZALEX in combination with VMP in patients with newly diagnosed MM. The remaining $12.5 million included milestone payments related to pre-clinical and clinical progress under our DuoBody collaboration with Janssen. By comparison, in 2017, we recorded $171.0 million in milestone payments from Janssen, including (i) a $20.0 million milestone payment relating to progress in the ongoing Phase III ANDROMEDA (AMY3001) study of subQ daratumumab in combination with cyclophosphamide, bortezomib and dexamethasone, or CyBord, for the treatment of amyloidosis, (ii) a $50.0 million sales volume milestone payment triggered by annual sales of DARZALEX reaching $1.0 billion in 2017, (iii) a $25.0 million milestone payment in connection with the regulatory approval and first commercial sale of DARZALEX in Japan, (iv) a $25.0 million milestone payment in connection with the FDA approval and first commercial sale of DARZALEX in combination with pomalidomide and dexamethasone, or Pom-d, for the treatment of patients with MM who have received at least two prior therapies, including lenalidomide and a proteasome inhibitor, or PI, and (v) a $48.0 million milestone payment in connection with the first commercial sales of DARZALEX in combination with Rd or bortezomib and dexamethasone, or Vd,

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for the treatment of MM patients who have received at least one prior line of therapy. Milestone income may fluctuate significantly from period to period due to both the timing of achievements and the varying amount of each individual milestone under our license and collaboration agreements.

        License fees income was DKK 347.7 million for 2018, as compared to DKK 90.1 million in 2017, representing an increase of DKK 257.6 million, which was driven by (i) the $50.0 million one-time payment from Novartis related to lost potential Arzerra milestones and royalties due to the transition of Arzerra to limited availability in most jurisdictions, under the Novartis ofatumumab collaboration, (ii) payment from Janssen for additional DuoBody target pairs under the Janssen DuoBody collaboration and (iii) the payment from Novo Nordisk for extending exclusivity of the commercial license for a DuoBody target pair under the Novo Nordisk DuoBody collaboration. During 2017, license fees income consisted only of deferred revenue related to the amortization of upfront payments previously received under our license and collaboration agreements on a straight line basis over the planned development periods. There was no deferred revenue for the year ended December 31, 2018 and the full deferred revenue balance of DKK 150.6 million as of December 31, 2017 was reclassified to accumulated deficit in the first quarter of 2018 as a result of the adoption of IFRS 15. See "—Significant Accounting Policies—Implementation of New and Revised Standards and Interpretations" below.

        We recorded reimbursement income in 2018 of DKK 248.6 million, as compared to DKK 81.3 million in 2017, representing an increase of DKK 167.3 million. The increase was driven by our collaboration agreements with Seattle Genetics and BioNTech. Seattle Genetics exercised its option to co-develop and co-commercialize tisotumab vedotin in 2017, resulting in increased reimbursement payments from Seattle Genetics in 2018 for our development activities relating to tisotumab vedotin. Pre-clinical projects under the BioNTech collaboration continued to advance in 2018.

Research and Development Expenses

        Research and development expenses for the year ended December 31, 2018 were DKK 1,431.2 million, or 87% of our total operating expenses for 2018, as compared to DKK 874.3 million, or 86% of our total operating expenses for 2017. The increase of DKK 556.9 million, or 64%, was driven by the clinical advancement of tisotumab vedotin and enapotamab vedotin, additional investment in our proprietary pipeline, and the increase in employees to support the expansion of our proprietary pipeline, partly offset by (i) an increase of DKK 21.7 million in WBSO grants, to DKK 85.7 million in 2018 from DKK 64.0 million in 2017, and (ii) the absence of impairment losses in 2018, as compared to DKK 22.2 million of impairment losses in 2017, which related to licensed assets and were recognized as part of research and development expenses as certain programs were discontinued.

        The following table provides information regarding our research and development spending for the year ended December 31, 2018, as compared to the year ended December 31, 2017.

 
  Year ended
December 31,
  Percentage
Change
 
(in millions of DKK)
  2018   2017   2018/2017  

Research(1)

    355.9     287.8     23.7  

Development and contract manufacturing(2)

    509.2     275.6     84.8  

Clinical(3)

    423.9     206.9     104.9  

Other(4)

    142.2     104.0     36.7  

Total research and development expenses

    1,431.2     874.3     63.7  

(1)
Research expenses include, among other things, personnel, occupancy and laboratory expenses, technology access fees associated with identification of new mAbs, expenses associated with development of new proprietary technologies and

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    research activities associated with our product candidates, such as in vitro and in vivo studies, translational research, and IND enabling toxicology studies.

(2)
Development and contract manufacturing expenses include personnel and occupancy expenses, external contract manufacturing costs for the scale-up and pre-approval manufacturing of drug product used in research and our clinical trials, costs for drug product supplied to our collaborators, costs related to preparation for production of process validation batches to be used in potential future regulatory submissions, quality control and assurance activities, and storage and shipment of our product candidates.
(3)
Clinical expenses include personnel, travel, occupancy costs, and external clinical trial costs including costs for clinical sites, CROs, contractors and regulatory activities associated with conducting human clinical trials.
(4)
Other research and development expenses primarily include share-based compensation, depreciation and amortization expenses.

        The increase in research and development expenses of DKK 556.9 million, or 63.7%, was driven by the advancement of tisotumab vedotin and enapotamab vedotin, the additional investment in our product pipeline, and the increase in research and development employees.

        The following table shows third-party costs incurred for research, contract manufacturing of our product candidates and clinical and regulatory services for the year ended December 31, 2018, as compared to the year ended December 31, 2017. The table also presents unallocated costs and overhead consisting of third-party costs for our pre-clinical stage programs, personnel, facilities and other indirect costs not directly charged to development programs.

 
  For the year
ended
December 31,
  Percentage
Change
 
(in millions of DKK)
  2018   2017   2018/2017  

Tisotumab vedotin

    291.9     161.2     81.1  

Enapotamab vedotin

    126.3     50.1     152.1  

Other clinical stage programs

    102.0     109.6     (6.9 )

Total third-party costs for clinical stage programs

    520.2     320.9     62.1  

Pre-clinical projects

    404.7     182.1     122.2  

Unallocated costs and overhead

    506.3     371.3     36.4  

Total research and development expenses

    1,431.2     874.3     63.7  

        Third-party costs for tisotumab vedotin increased by DKK 130.7 million, or 81%, in 2018 as compared to 2017, primarily due to advancement of clinical trials and initiation of new Phase II clinical trials.

        Third-party costs for enapotamab vedotin increased by DKK 76.2 million, or 152%, in 2018 as compared to 2017, primarily due to increases in clinical trial and contract manufacturing costs related to the progression of the program.

        Third-party costs for our other clinical stage programs were related to multiple earlier-stage development programs and were relatively consistent across 2018 and 2017.

        Research and development expenses related to our pre-clinical projects increased by DKK 222.6 million, or 122%, in 2018 as compared to 2017, driven by the expansion and continued advancement of our pre-clinical programs.

        Unallocated costs and overhead increased by DKK 135.0 million, or 36%, in 2018 as compared to 2017, primarily due to an increase in staffing levels and the expansion of our facilities to accommodate our growth.

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General and Administrative Expenses

        General and administrative expenses for the year ended December 31, 2018 were DKK 213.7 million, or 13% of our total operating expenses for 2018, as compared to DKK 147.0 million for the year ended December 31, 2017, or 14% of our total operating expenses for 2017. The increase of DKK 66.7 million, or 45%, was driven by higher general consultancy expenses and an increase in administrative employees to support the expansion of our operations. DKK 121.9 million, or 57% of general and administrative expenses in 2018, was related to remuneration of employees and senior management involved in general and administrative activities, as compared to DKK 94.2 million, or 64% of general and administrative expenses in 2017.

Net Financial Items

        Financial income for the year ended December 31, 2018 was DKK 243.0 million, reflecting interest and other financial income of DKK 62.9 million, net realized and unrealized gains on fair value hedges of DKK 2.3 million and net realized and unrealized exchange rate gains of DKK 177.8 million, as compared to DKK 71.7 million for the year ended December 31, 2017, reflecting interest and other financial income of DKK 41.4 million and net realized and unrealized gains on fair value hedges of DKK 30.3 million.

        Financial expenses for the year ended December 31, 2018 were DKK 11.3 million, of which DKK 10.9 million was related to realized and unrealized losses on marketable securities, as compared to DKK 352.2 million for the year ended December 31, 2017, of which DKK 329.7 million was related to net realized and unrealized exchange rate losses, DKK 19.6 million was related to net realized and unrealized losses on marketable securities and DKK 2.8 million was related to interest and other financial expenses.

        As a result of the above, net financial items for the year ended December 31, 2018 were a net gain of DKK 231.7 million, as compared to a net loss of DKK 280.5 million for the year ended December 31, 2017. The variance in net financial items was driven primarily by net realized and unrealized exchange rate gains of DKK 177.8 million in 2018, as compared to net realized and unrealized exchange rate losses of DKK 329.7 million in 2017. Net realized and unrealized exchange rate gains were driven by foreign exchange movements which positively impacted our U.S. dollar denominated portfolio and cash holdings in 2018, as compared to 2017. The U.S. dollar strengthened significantly against the Danish krone during 2018, increasing from 6.2067 at December 31, 2017 to 6.5194 at December 31, 2018.

Income Tax Benefit

        Corporate tax for the year ended December 31, 2018 was an expense of DKK 139.8 million, as compared to an income of DKK 39.8 million for the year ended December 31, 2017. The corporate tax expense in 2018 was due to current and deferred tax expenses of DKK 407.4 million, partially offset by the reversal of valuation allowances on deferred tax assets related to future taxable income, which resulted in a discrete tax benefit of DKK 267.6 million. The corporate tax income in 2017 was due to the partial reversal of valuation allowances on deferred tax assets related to future taxable income, resulting in a discrete tax benefit of DKK 285.7 million in 2017, which more than offset current and deferred tax expenses of DKK 245.9 million.

        The partial reversal of the valuation allowance was recorded in 2018 because, based upon the weight of available evidence at December 31, 2018, we determined that it was more likely than not that a portion of our deferred tax assets would be realizable as a result of probable future taxable income and fully released the remaining valuation allowance on deferred tax assets for our parent entity, Genmab A/S. We intend to continue to maintain a valuation allowance against a significant portion of

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our deferred tax assets related to our subsidiaries, until there is sufficient evidence to support the reversal of all or some additional portion of these allowances.

        In 2018, a deferred tax asset of DKK 386.4 million was recognized on the balance sheet, as compared to DKK 296.9 million in 2017. In 2018, a current tax benefit of DKK 23.8 million and a deferred tax benefit of DKK 66.1 million, each related to excess tax benefits for share-based instruments, was recorded directly in shareholders' equity, as compared to a current tax benefit of DKK 71.9 million which was recorded directly in shareholders' equity in 2017.

        As of December 31, 2018, we had gross tax loss carry-forwards of DKK 2.6 billion for income tax purposes, as compared to DKK 4.4 billion in 2017. The reduction was driven primarily by the expiration of DKK 1.0 billion of gross tax loss carry-forwards related to a capital loss at our U.S. subsidiary in 2018. This capital loss was (i) related to the sale of our former manufacturing facility in 2013, (ii) was limited to a 5 year carry-forward period and (iii) could only be utilized to offset specific types of capital income.

        Of DKK 2.6 billion in gross tax loss carry-forwards as of December 31, 2018, DKK 1.2 billion consists of net operating losses that can be carried forward without limitation. The remaining DKK 1.4 billion can be carried forward through various periods through 2028.

Liquidity and Capital Resources

        As of March 31, 2019, we had cash, cash equivalents and marketable securities (cash position) of DKK 6,830.3 million, as compared to DKK 6,106.1 million as of December 31, 2018. This represents a net increase of DKK 724.2 million, or 12%, from December 31, 2018, which was mainly driven by positive working capital adjustments of DKK 732.8 million related to milestones achieved in the fourth quarter of 2018, which were received in the three months ended March 31, 2019, and net exchange rate gains of DKK 84.5 million driven by the strengthening of the U.S. dollar, which were partly offset by corporate taxes of DKK 140.3 million paid during the three months ended March 31, 2019.

        As of March 31, 2019, DKK 1,176.8 million, as compared to DKK 532.9 million as of December 31, 2018, was held as cash and cash equivalents, and DKK 5,653.5 million, as compared to DKK 5,573.2 million as of December 31, 2018, was held as liquid investments in short-term government and other debt instruments.

        We require cash to meet our operating expenses and capital expenditures. We have funded our cash requirements since our inception, including through March 31, 2019, primarily with equity financing, upfront payments and royalty and milestone payments from our partners.

        We expect to continue to fund a significant portion of our development costs for our proprietary product candidates as well as our planned commercialization activities with funds received from royalties and milestone payments from our partners as well as the net proceeds of this offering. However, because our product candidates are in various stages of development and the outcome of these efforts is uncertain, we cannot estimate the actual amounts necessary to successfully complete the development and to obtain regulatory approval of, and ultimately commercialize, our product candidates.

        Our expenditures on our current and future pre-clinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. In order to advance our product candidates toward commercialization, the product candidates are tested in numerous pre-clinical safety, toxicology and efficacy studies. We then conduct clinical trials for those product candidates that take several years or more to complete. The length of time varies substantially based upon the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of a variety of factors, including: the number of patients required in our clinical trials; the length of time required to enroll trial participants; the

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number and location of sites included in the trials; the costs of producing supplies of the product candidates needed for clinical trials and regulatory submissions; the safety and efficacy profile of the product candidate; the use of CROs to assist with the management of the trials; and the costs and timing of, and the ability to secure, regulatory approvals.

        Our expenses also fluctuate from period to period based on the degree of collaborative activities, timing of manufacturing campaigns, numbers of patients enrolled in our clinical trials and the outcome of each clinical trial event. As a result, we are unable to determine with any degree of certainty the anticipated completion dates, duration and completion costs of our research and development projects, or when and to what extent we will receive cash inflows from the commercialization and sale of any of our product candidates. We also cannot predict the actual amount or timing of future royalties and milestone payments to us, and these may differ from our estimates.

        We expect to make additional capital outlays and to increase operating expenditures over the next several years as we hire additional employees, support our pre-clinical development, manufacturing and clinical trial activities for tisotumab vedotin and our other proprietary product candidates, and expand internationally, as well as commercialize tisotumab vedotin, if we receive regulatory approval. As we increase our spending on research and development related to our product collaborations, we may be required to make certain capital outlays against which we expect to receive reimbursement income to the extent the outlay exceeds our share under the applicable collaboration agreement. We expect that the time-lag between the expenditure by us, on the one hand, and the reimbursement by our partner of its relevant share, on the other hand, will increase our working capital needs. To the extent our capital resources are insufficient to meet our future capital requirements, we will need to finance our operating requirements and cash needs through public or private equity offerings, debt financings, or additional corporate collaboration and licensing arrangements.

Cash Flows

        The following table provides information regarding our cash flows for the three months ended March 31, 2019 and March 31, 2018, as well as the years ended December 31, 2018 and December 31, 2017.

 
  Year Ended
December 31,
  Three Months
Ended
December 31,
 
(in millions of DKK)
  2018   2017   2019   2018  

Cash inflow / (outflow) from operating activities

    1,014.8     1,589.0     647.2     464.1  

Cash (outflow) from investing activities

    (1,777.6 )   (667.6 )   (13.5 )   (682.8 )

Cash (outflow) / inflow from financing activities

    (70.9 )   214.9     (10.5 )   (127.8 )

Increase (decrease) in cash and cash equivalents

    (833.7 )   1,136.3     623.2     (346.5 )

        Cash inflow from operating activities for the three months ended March 31, 2019 was DKK 647.2 million, as compared to DKK 464.1 million for the three months ended March 31, 2018. The increase of DKK 183.1 million, or 40%, was primarily associated with our operating result, working capital fluctuations, reversal of net financial items, and adjustments related to non-cash expenses, all of which may be highly variable period to period.

        Cash outflow from investing activities for the three months ended March 31, 2019 was DKK 13.5 million, as compared to an outflow of DKK 682.8 million for the three months ended March 31, 2018. The decrease of DKK 669.3 million, or 98%, primarily reflects differences between the proceeds

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received from sale and maturity of our investments and amounts invested. Purchases of marketable securities exceeded sales and maturities in the three months ended March 31, 2018 but remained flat in the three months ended March 31, 2019.

        Cash outflow from financing activities for the three months ended March 31, 2019 was DKK 10.5 million, as compared to an outflow of DKK 127.8 million for the three months ended March 31, 2018. In the three months ended March 31, 2019, the primary driver of the lower cash used in financing activities was related to the purchase of treasury shares during the three months ended March 31, 2018 of DKK 146.2 million. There were no purchases of treasury shares during the three months ended March 31, 2019.

        The total cash at March 31, 2019 was DKK 1,176.8 million, as compared to DKK 956.8 million at March 31, 2018.

        Cash inflow from operating activities for the year ended December 31, 2018 was DKK 1,014.8 million, as compared to DKK 1,589.0 million for the year ended December 31, 2017. The decrease of DKK 574.2 million, or 36%, was primarily associated with higher positive working capital adjustments in 2017 as compared to 2018, which were related to milestones achieved in the fourth quarter of 2016, the payments for which were received in 2017. Working capital fluctuations, reversal of net financial items and adjustments related to non-cash expenses, all of which may be highly variable period to period, also contributed to the variation.

        Cash outflow from investing activities for the year ended December 31, 2018 was DKK 1,777.6 million, as compared to DKK 667.6 million for the year ended December 31, 2017. The increase of DKK 1,110.0 million, or 166%, primarily reflects differences between the proceeds received from sale and maturity of our investments and amounts invested, and investments in intangible assets. During 2018, investments in intangible assets were DKK 405.7 million, primarily related to the DKK 345.4 million upfront fee paid to Immatics in connection with our collaboration agreement to discover and develop next-generation bispecific cancer immunotherapies and the DKK 44.6 million milestone payment to Seattle Genetics, triggered by the initiation of expansion cohorts in the ongoing Phase I/II trial of enapotamab vedotin in solid tumors. There were no investments in intangible assets during 2017.

        Cash outflow from financing activities for the year ended December 31, 2018 was DKK 70.9 million, as compared to a cash inflow of DKK 214.9 million for the year ended December 31, 2017. In 2018, cash outflow from financing activities was primarily related to the purchase of treasury shares for DKK 146.2 million, partly offset by the proceeds from the exercise of warrants of DKK 75.3 million. During 2017, we did not purchase any treasury shares and the proceeds from the exercise of warrants were DKK 214.9 million, or DKK 139.6 million higher than during 2018.

        The total cash at year end December 31, 2018 was DKK 532.9 million, as compared to DKK 1,347.5 million at year end December 31, 2017.

Contractual Obligations

        The following table summarizes our operating lease obligations as of December 31, 2018.

(in millions of DKK)
  Less than
1 year
  1 to 3 years   More than
3 years but
less than
5 years
  More than
5 years
  Total  

Operating lease obligations

    34.7     63.4     44.6     41.0     183.7  

        Our operating lease obligations in the table above relate to operating leases for office space, which are non-cancelable for various periods up to 2027. In addition to our operating leases, we have also

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entered into a number of agreements primarily related to research and development activities. These short term contractual obligations amounted to DKK 786.9 million as of December 31, 2018, all of which is due in less than one year.

        We also have certain contingent commitments under our license and collaboration agreements that may become due for future payments. As of December 31, 2018, these contingent commitments amounted to approximately $857.6 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. These milestone payments generally become due and payable only upon the achievement of certain development, clinical, regulatory or commercial milestones. The events triggering such payments or obligations have not yet occurred.

        In addition to the above obligations, we enter into a variety of agreements and financial commitments in the normal course of business. 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 particular agreement.

Off-Balance Sheet Arrangements

        We have not entered into any off-balance sheet arrangements.

Quantitative and Qualitative Disclosures about Market Risk

        Our activities primarily expose us to the financial risks of changes in foreign currency exchange rates. Increases or decreases in the exchange rate of foreign currencies against the Danish krone can affect our results and cash position negatively or positively.

Exchange Rate Risk

        Most of our financial transactions are made in Danish kroner, U.S. dollars, Euros and British pounds sterling, or GBP. As our reporting currency is Danish kroner, we experience exchange rate risk with respect to our holdings and transactions denominated in currencies other than Danish kroner. Our U.S. dollar currency exposure is mainly related to cash deposits, marketable securities and receivables related to our collaborations with Janssen and Novartis. Our Euro currency exposure is mainly related to our marketable securities, contracts and other costs denominated in Euros. Our GBP currency exposure is mainly related to contracts and marketable securities denominated in GBP.

        Our royalties and milestone payments are largely paid in U.S. dollars and Euros. We entered into derivative contracts during the fourth quarter of 2016 to hedge a portion of the associated currency exposure of royalty payments from net sales of DARZALEX by Janssen. The foreign exchange forward contracts were purchased to match the anticipated timing of quarterly royalty payments from Janssen in May 2017, August 2017, November 2017, and February 2018. The total notional amount of the forward contracts was $42.0 million with the U.S. dollar/€ forward contract rate ranging from 1.0469 to 1.0640. Due to their lower cost and Denmark's fixed exchange rate policy against the Euro, U.S. dollar/€ forward contracts were utilized instead of U.S. dollar/DKK forward contracts. The total notional amount of foreign exchange forward contracts that matured in 2018 was $15.0 million, as compared to $27.0 million in 2017. There were no gains or losses recognized as part of financial income related to these contracts in the three months ended March 31, 2019, as compared to a gain of DKK 2.3 million in the three months ended March 31, 2018. As of March 31, 2019 and December 31, 2018, there were no derivatives outstanding, as compared to one forward exchange contract with a notional amount of $15.0 million and a fair value of DKK 12.2 million which was outstanding as of December 31, 2017.

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        While we may enter into derivative contracts in the future, we do not generally hedge our currency exposure on our royalties and milestone payments or other income and expense items in the ordinary course.

        Due to the long-standing policy of Danmarks Nationalbank with respect to the €/DKK exchange rate, we believe that there are currently no material transaction exposure or exchange rate risks regarding transactions in Euros. Since the introduction of the Euro in 1999, Denmark has committed to maintaining a central rate of 7.46 DKK to €1. This rate may fluctuate within a +/– 2.25% band. Although there has been some pressure on the Danish krone, we do not expect the €/DKK exchange rate to move outside of the current limits. However, should Denmark's policy towards the Euro change, the Danish krone values of our Euro-denominated assets and costs could be materially different compared to what is calculated and reported under the existing Danish policy towards the €/DKK exchange rate.

Interest Rate Risk

        Our exposure to interest rate risks is primarily related to marketable securities, as we currently do not have significant interest-bearing debts. To control and minimize interest rate risk, we maintain an investment portfolio in a variety of securities with a relatively short effective duration. As of December 31, 2018, the portfolio had a weighted average effective duration of approximately 1.4 years, with no securities that had an effective duration of more than 8 years, which means that a change in the interest rates of one percentage point will cause the fair value of the securities to change by approximately 1.4%.

        Due to the short-term nature of the current investments and to the extent that we are able to hold the investments to maturity, we consider our current exposure to changes in fair value due to interest rate changes to be insignificant compared to the fair value of the portfolio.

Credit Risks

        We are exposed to credit risks in respect of our marketable securities and bank deposits. To manage and reduce credit risks on our marketable securities, only securities from investment grade issuers are eligible for our portfolios (i.e., A-1 or A- or higher in the short-term and long-term, respectively, by Standard & Poor's). As of December 31, 2018, 90% of our marketable securities had a triple A-rating. To reduce the credit risks on our bank deposits, we only invest cash deposits with highly rated financial institutions (i.e., A-1 or higher short-term rating by Standard & Poor's). The maximum credit risk related to financial assets corresponds to the carrying amounts recognized in the balance sheet.

        We are also exposed to the credit risk of our partners. As of December 31, 2018, 95% of our receivables were related to our collaboration agreements with our partners. The credit risk on these receivables is considered to be limited and the provision for expected credit losses as of December 31, 2018 was not significant, given that there have been no credit losses on receivables from our partners over the last three years and that our partners are top tier life science companies. However, if any of our partners become unable to meet their obligations under one or more of our collaboration agreements, this may negatively impact our ability to receive income to which we are entitled.

Significant Accounting Policies

        Our consolidated financial statements have been prepared in accordance with IFRS, as issued by the IASB. A description of our significant accounting policies is provided in Note 1.1 to our audited consolidated financial statements as of, and for the years ended, December 31, 2018 and December 31, 2017 included elsewhere in this prospectus.

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Implementation of New and Revised Standards and Interpretations

        Effective January 1, 2018, we adopted IFRS 15, which requires us to apply a five step model to determine when, how and in which amount revenue is to be recognized depending on whether certain criteria are met. This is different from the prior accounting standards, under which revenue recognition was based on the transfer of risks and rewards.

        We adopted IFRS 15 using the modified retrospective transition method. Under this method, the cumulative effect of initially applying the new revenue standard was recognized as an adjustment to the opening balance of accumulated deficit. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. IFRS 15 applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, and financial instruments.

        Under IFRS 15, we recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration that we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of IFRS 15, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once the contract is determined to be within the scope of IFRS 15, we assess the goods or services promised within each contract and identify, as a performance obligation, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

        Changes in revenue recognition for licenses of functional intellectual property resulted in a timing difference of revenue recognition between prior accounting standards and IFRS 15. For certain of our agreements, the value associated with the licenses and certain other deliverables had been assessed as one unit of accounting and recognized over a period of time pursuant to revenue recognition guidance in effect at the time of such agreements. Under IFRS 15, the licenses of functional intellectual property were determined to be distinct from other deliverables and the customers obtained the right to use the functional intellectual property on the effective date of the agreements when control transferred. This timing difference of revenue recognition resulted in the full deferred revenue balance of DKK 150.6 million as of December 31, 2017 being reclassified to accumulated deficit in the first quarter of 2018.

        IFRS 15 may have an impact on the timing of recognition of milestone payments which are not related to achievement of certain sales levels. Under prior accounting standards, we recognized such payments as revenue in the period that the payment-triggering event occurred or was achieved. IFRS 15 requires us to recognize such payments as revenue before the payment-triggering event is completely achieved, subject to management's assessment of whether it is highly probable that the triggering event will be achieved and that a significant reversal in the amount of cumulative revenue recognized will not occur.

        IFRS 15 will not have an impact on revenue recognition for sales-based royalties and commercial sales-based milestone payments and they will continue to be recognized in the period to which the sales relate based on estimates provided by collaboration partners.

        We have also adopted IFRS 9 effective January 1, 2018, which replaced the provisions of IAS 39 that relate to the classification, measurement and derecognition of financial assets and financial liabilities, hedge accounting, and impairment of financial assets. The adoption of IFRS 9 resulted in

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changes in accounting policies, but did not result in material adjustments to amounts recognized in the consolidated financial statements. In accordance with the transitional provisions of IFRS 9, comparative figures have not been restated. We have also implemented IFRIC 22, amendments to IAS 40, IFRS 2, IFRS 4 and annual improvements to IFRSs 2014-2016 with effect from January 1, 2018, which did not impact the recognition and measurement of our assets and liabilities.

        Please refer to Note 1.2 to our audited consolidated financial statements included elsewhere in this prospectus for further description of new standards adopted effective January 1, 2018 and the impact of their adoption on our consolidated financial statements.

        Effective January 1, 2019, we adopted IFRS 16 using the modified retrospective transition method. Under this method, all leases are recognized in the balance sheet as a right-of-use, or ROU, asset with a corresponding lease liability, except for short term assets in which the lease term is 12 months or less, or low value assets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The ROU asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis over the lease term. In the income statement, the lease costs are replaced by depreciation of the ROU asset recognized over the lease term in operating expenses, and interest expenses related to the lease liability are classified in financial items. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

        Genmab determines if an arrangement is a lease at inception. Genmab leases various properties and information technology, or IT, equipment. Rental contracts are typically made for fixed periods. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

        Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of fixed payments, less any lease incentives. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).

        ROU assets are measured at cost and include the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and restoration costs.

        Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less and low-value assets comprise IT equipment and small items of office furniture.

        On adoption of IFRS 16, the group recognized lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of January 1, 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on January 1, 2019 was 3.7%.

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        The impact of the adoption of IFRS 16 on the financial statements as of January 1, 2019 is shown in the table and further described below:

 
  January 1,  
(in millions of DKK)
  2019  

Operating lease commitments disclosed as at December 31, 2018

    183.7  

Discounted using the group's incremental borrowing rate of 3.7%

    (42.4 )

(Less): short-term leases recognized on a straight-line basis as expense

    (2.9 )

Add/(less): adjustments as a result of a different treatment of extension and termination options

    66.4  

Lease liability recognized at January 1, 2019

    204.8  

        The ROU assets established on the balance sheet at January 1, 2019 were DKK 204.8 million. As a result of adopting IFRS 16 in the three months ended March 31, 2019, the net result decreased by DKK 1.5 million, cash flows from operating activities increased by DKK 8.7 million and cash flows from financing activities decreased by DKK 7.2 million.

        For purposes of applying the modified retrospective approach in adoption of IFRS 16, we used the following practical expedients permitted by the standard:

    applied the exemption not to recognize ROU assets and liabilities for leases with less than 12 months of lease term from January 1, 2019; and

    excluded initial direct costs for the measurement of the ROU assets at the date of initial application.

There are no ROU assets that meet the definition of investment property.

Standards and Interpretations Not Yet in Effect

        At the date of the approval of the unaudited consolidated interim financial statements for the three months ended March 31, 2019, there were no new and revised standards and interpretations issued and not yet effective.

Significant Accounting Estimates, Assumptions and Uncertainties

        In the preparation of the consolidated financial statements, we make a number of accounting estimates which form the basis for the presentation, recognition and measurement of our assets and liabilities.

        In the application of our accounting policies, we are required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

        The used estimates are based on assumptions assessed to be reasonable by management. However, estimates are inherently uncertain and unpredictable. The assumptions can be incomplete or inaccurate and unexpected events or circumstances might occur. Furthermore, we are subject to risks and uncertainties that might result in deviations in actual results compared to estimates.

        In connection with the preparation of the consolidated financial statements, we have made a number of estimates and assumptions concerning carrying amounts.

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        Revenue recognition is one of the most significant accounting estimates and assessments applied by us in our consolidated financial statements. Royalty income under license and collaboration agreements includes sales-based royalties and is recognized when the related sales occur. Milestone payments related to the achievement of certain sales levels are recognized when such sales levels are achieved. The estimated value of milestone payments not related to achievement of sales levels is included in the transaction price of each arrangement that includes such payments if (i) the achievement of the milestones is within our control or the control of our partner, (ii) the achievement of the milestones is considered highly probable at the inception of the arrangement, and (iii) it is highly probable that a significant revenue reversal would not occur. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related constraints and, if necessary, adjust the estimate of the overall transaction price. Revenue from non-refundable upfront fees allocated to a license to our functional intellectual property is recognized as license fees revenue at the point in time the license is transferred to the licensee and the licensee is able to use and benefit from the license, if the license is determined to be distinct from the other performance obligations identified in the arrangement. If the license is bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether it is satisfied over time or at a point in time. If the performance obligation is satisfied over time, we utilize judgment to determine the appropriate method of measuring progress for purposes of recognizing revenue. Under all of our existing license and collaboration agreements, the license to functional intellectual property has been determined to be distinct from other performance obligations identified in the agreement.

        Evaluating the criteria for revenue recognition requires management's judgment to assess and determine: (i) the nature of performance obligations and whether they are distinct or should be combined with other performance obligations to determine whether the performance obligations are satisfied over time or at a point in time, (ii) an assessment of whether the achievement of milestone payments is highly probable, and (iii) the stand-alone selling price of each performance obligation identified in the contract using key assumptions which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

        Realization of our deferred tax assets is dependent upon the generation of future taxable income, the amount and timing of which are uncertain. We recognize deferred tax assets only to the extent that it is probable that future taxable profit will be available against which the deferred tax assets can be utilized. Such assessment is required on a jurisdiction by jurisdiction basis. Changes in future taxable income impact the utilization of recognized as well as unrecognized deferred tax assets. The recognition of deferred tax assets requires judgment and estimation by us and involves estimates based on certain assumptions in relation to future taxable income.

        Please refer to the notes to our audited consolidated financial statements as of, and for the years ended, December 31, 2018 and December 31, 2017 included elsewhere in this prospectus for a further description of other significant accounting estimates and assumptions used with respect to share-based compensation and research and development costs.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

        As a company with less than $1.07 billion in revenue during our last fiscal year, we qualify as an "emerging growth company," as defined in the JOBS Act. An emerging growth company may take

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advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:

    a requirement to include only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations disclosure; and

    an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act.

        We may choose to take advantage of some but not all of these reduced burdens, and therefore the information that we provide holders of shares and ADSs may be different than the information you might receive from other public companies in which you hold equity. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. We currently prepare our consolidated financial statements in accordance with IFRS as issued by the IASB, so we are unable to make use of the extended transition period. However, in the event that we convert to accounting principles generally accepted in the United States (which we do not currently intend to do) while we remain an emerging growth company, we have irrevocably elected to opt out of such extended transition period.

        We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We will cease to be an emerging growth company upon the earliest of the following:

    the last day of the first fiscal year in which our annual revenues were at least $1.07 billion;

    the last day of the fiscal year following the fifth anniversary of this offering;

    the date on which we have issued more than $1 billion of non-convertible debt securities over a three-year period; and

    the last day of the fiscal year during which we meet the following conditions: (i) the worldwide market value of our common equity securities held by non-affiliates as of our most recently completed second fiscal quarter is at least $700 million, (ii) we have been subject to U.S. public company reporting requirements for at least 12 months and (iii) we have filed at least one annual report as a U.S. public company.

        Upon the effectiveness of the registration statement of which this prospectus forms a part, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

    the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

    the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

    the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events.

        In addition, we will not be required to file annual reports and financial statements with the SEC as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, and are

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not required to comply with Regulation FD, which restricts the selective disclosure of material information.

        Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules for U.S. public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Even if we no longer qualify as an emerging growth company, so long as we remain a foreign private issuer, we will continue to be exempt from such compensation disclosures.

Internal Control Over Financial Reporting

        As we will become a public company listed on the Nasdaq Global Select Market in connection with this offering, the Sarbanes-Oxley Act will require, among other things, that we assess the effectiveness of our internal control over financial reporting at the end of each fiscal year. We anticipate being required to issue management's assessment of internal control over financial reporting pursuant to Section 404(a) of the Sarbanes-Oxley Act for the first time in connection with issuing our consolidated financial statements as of and for the year ending December 31, 2020.

        In connection with our financial statement preparation process for the year ended December 31, 2018, we have not identified material weaknesses in the design and operating effectiveness of our internal controls over financial reporting.

        We may, however, discover future deficiencies in our internal controls over financial reporting, including those identified through testing conducted by us pursuant to Section 404(a) of the Sarbanes-Oxley Act or subsequent testing by our independent registered public accounting firm. Such deficiencies may be deemed to be significant deficiencies or material weaknesses and may require changes to our consolidated financial statements or identify other areas for further attention or improvement.

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BUSINESS

Our Company

        We are an international biotechnology company specializing in antibody therapeutics for the treatment of cancer and other diseases. Our core purpose is to improve the lives of patients by creating and developing innovative antibody products. Our vision is to transform cancer treatment by launching our own proprietary product by 2025 and advancing our pipeline of differentiated and well-tolerated antibodies. We are building and expanding our late-stage development and commercial capabilities to allow us to bring our proprietary products to market in the future. Today, we have a well-diversified portfolio of products, product candidates and technologies. Our portfolio includes two marketed partnered products, daratumumab, marketed as DARZALEX for the treatment of certain indications of multiple myeloma, or MM, and ofatumumab, marketed as Arzerra for the treatment of certain indications of chronic lymphocytic leukemia, or CLL, in addition to a broad pipeline of differentiated product candidates. Our pipeline includes five proprietary product candidates in clinical development and approximately 20 proprietary and partnered pre-clinical programs, including two proprietary product candidates for which we have submitted or intend to submit an IND to the FDA and/or a CTA to the EMA in 2019. In addition to our proprietary clinical product candidates and our partners' ongoing label expansion studies for daratumumab and ofatumumab, our partners have ten additional product candidates in clinical development through collaboration agreements with us. Our portfolio also includes four proprietary antibody technologies that play a key role in building our product pipeline, enhancing our partnerships and generating revenue. We selectively enter into strategic alliances with other biotechnology and pharmaceutical companies that build our network in the biotechnology space and give us access to complementary novel technologies or products that move us closer to achieving our vision and fulfilling our core purpose.

Our Portfolio

        The following chart summarizes the disease indications and most advanced development status of our marketed products, each of the proprietary product candidates in our clinical pipeline and the most advanced product candidates in our pre-clinical pipeline.

GRAPHIC

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GRAPHIC


(1)
Pursuant to our development, manufacturing and commercialization agreement with Janssen, we receive tiered royalty payments of 12% to 20% based on Janssen's annual net product sales of daratumumab. See "—Our Products and Product Candidates—Daratumumab (DARZALEX)—Collaboration with Janssen" for more information about our agreement with Janssen.
(2)
DARZALEX has received marketing approval in combination with certain treatment regimens for frontline and relapsed/refractory, or R/R, MM, and as a monotherapy for heavily pre-treated MM, in a number of countries, including the United States and the European Union. See "—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma—Existing Marketing Approvals and Pending Regulatory Applications" for more information about existing marketing approvals for DARZALEX.
(3)
In addition to existing approvals for frontline MM in certain jurisdictions, Janssen is conducting studies of daratumumab for additional frontline MM indications, which differ from existing frontline approvals based on the combination treatment regimen, transplant-eligibility of patients and/or jurisdiction(s) of the study. See "—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma—Key Ongoing Trials for Additional MM Indications" for more information about these ongoing trials.
(4)
In addition to certain clinical studies specifically assessing the safety and efficacy of a subQ formulation of daratumumab for the treatment of certain MM indications, a subQ formulation of daratumumab is being used in a number of other studies of daratumumab for the treatment of frontline MM, R/R MM and other disease indications.
(5)
Pursuant to our agreement with Novartis, we are entitled to royalties of 20% of worldwide net sales of ofatumumab for the treatment of cancer and 10% of worldwide net sales of ofatumumab for non-cancer treatments. See "—Our Products and Product Candidates—Ofatumumab—Collaboration with Novartis" for more information about our agreement with Novartis.
(6)
Ofatumumab, marketed as Arzerra, has been approved for certain CLL indications in the United States, the European Union and a number of other countries. Due to low and decreasing global demand for Arzerra primarily related to increased competition in the CLL treatment space, on January 22, 2018, Novartis announced that it intends to transition Arzerra in non-U.S. markets from commercial availability to limited availability through managed access programs or alternative solutions for approved CLL indications where applicable and allowed by local regulators. In 2019, marketing authorizations for Arzerra were withdrawn in the European Union and certain other territories. We expect Arzerra to remain commercially available for approved CLL indications in the United States and Japan.

Marketed Products and Proposed Label Expansion

        Our lead product, daratumumab, marketed as DARZALEX for the treatment of certain multiple myeloma indications, is a human IgG1k monoclonal antibody, or mAb, that binds with high affinity to the CD38 molecule, which is highly expressed on the surface of MM cells. When first approved by the FDA in 2015, it was the first human CD38-targeting mAb to reach the market and the first mAb to receive FDA approval to treat multiple myeloma. DARZALEX is commercialized by Janssen, under an exclusive development, manufacturing and commercialization agreement we entered into in 2012. Pursuant to this agreement, we receive tiered royalty payments of 12% to 20% based on Janssen's

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annual net product sales and are eligible for certain additional payments in connection with development, regulatory and sales milestones. Janssen is fully responsible for developing and commercializing daratumumab and all costs associated therewith. Janssen has obtained regulatory approvals for DARZALEX for certain multiple myeloma indications in a number of countries, including the United States, the European Union and Japan. In addition, applications for label expansion in the United States, the European Union and Japan and for initial approval in China are currently pending with applicable regulators. Following the U.S. commercial launch of DARZALEX in 2015, DARZALEX achieved blockbuster sales status by reaching $1.2 billion of annual net sales in 2017, with Janssen's net sales of DARZALEX increasing to $2.0 billion in 2018. We recorded $90.0 million in milestone payments for daratumumab and DKK 1,708.1 million ($262.0 million) in royalties related to DARZALEX sales in 2018.

        The chart below illustrates daratumumab's significant impact and versatility as a combination treatment for certain indications of frontline multiple myeloma and relapsed/refractory multiple myeloma in four pivotal Phase III studies. Each study was a head-to-head study comparing daratumumab, or D, in combination with a standard MM treatment regimen versus the standard treatment alone.

    For frontline treatment of transplant-ineligible MM patients, the ALCYONE and MAIA studies compared daratumumab in combination with (i) bortezomib, melphalan and prednisone, or VMP, versus VMP alone in the ALCYONE study and (ii) lenalidomide and dexamethasone, or Rd, versus Rd alone in the MAIA study. The ALCYONE study supported the U.S. and EU regulatory approvals of DARZALEX in combination with VMP for frontline treatment of transplant-ineligible MM patients. The MAIA study supported the U.S. regulatory approval in June 2019 of DARZALEX in combination with Rd for frontline treatment of transplant-ineligible MM patients and Janssen's MAA to the EMA in March 2019 for the same indication.

    In the relapsed/refractory setting, the POLLUX and CASTOR studies compared daratumumab in combination with (i) Rd, versus Rd alone in the POLLUX study and (ii) bortezomib and dexamethasone, or Vd, versus Vd alone in the CASTOR study. The POLLUX and CASTOR studies supported the U.S., EU and Japanese regulatory approvals of DARZALEX in combination with Rd and Vd, respectively, for the treatment of relapsed/refractory MM.

        Data for each of these studies was presented at the American Society for Hematology's Annual Meeting, or ASH, in December 2018. Safety data and other details regarding each of these studies is

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outlined in "—Our Products and Product Candidates—Daratumumab (DARZALEX)—Daratumumab for the Treatment of Multiple Myeloma" below.

GRAPHIC


(1)
Includes CR + sCR in daratumumab arm versus control arm. CR = complete response, which refers to patients who achieve negative immunofixation on the serum and urine and disappearance of any soft tissue plasmacytomas and achieve less than or equal to 5% plasma cells in the bone marrow; sCR = stringent complete response, which is tested using more sensitive methods to detect monoclonal plasma cells, and is defined as patients who achieve CR and exhibit a normal free light chain ratio in the serum and absence of clonal cells in the bone marrow determined by either immunofluorescence or immunohistochemistry; in each case as defined by the International Myeloma Working Group, or IMWG.
(2)
MRD = minimal residual disease, which refers to the persistence of small numbers of myeloma cells that remain after therapy and contribute to relapse and disease progression; MRD negativity is defined as the absence of aberrant clonal plasma cells on bone marrow aspirate, ruled out by an assay with a minimum sensitivity of one in 105 nucleated cells or higher; MRD-neg rate refers to the proportion of patients with negative MRD test results, tested at 10-5 sensitivity, or one in 105 cells, from the time of suspected CR or sCR, in the case of the MAIA, POLLUX and CASTOR studies and confirmed CR/sCR in the case of the ALCYONE study, and tested periodically for a certain period after dosing. See study descriptions below for more details about MRD assessments in these studies.
(3)
Risk reduction in disease progression or death versus control arm. PFS = progression free survival

        Beyond the current labeled indications, Janssen is conducting a comprehensive clinical development program for daratumumab. This program includes multiple Phase III studies for the treatment of smoldering MM, or SMM, frontline MM, and relapsed/refractory, or R/R, MM, as well as key clinical studies for a subcutaneous, or subQ, formulation. In October 2018, we reported that Janssen's pivotal Phase III MAIA study of daratumumab in combination with Rd for frontline treatment of transplant-ineligible MM patients reached its primary endpoint of improving progression free survival, or PFS, at a pre-specified interim analysis, with a 44% reduction in the risk of progression or death in patients treated with daratumumab in combination with Rd compared to treatment with Rd alone and with a safety profile consistent with known safety profiles for daratumumab and Rd. In October 2018, we also reported topline results that the first part of Janssen's pivotal Phase III CASSIOPEIA study of daratumumab in combination with bortezomib, thalidomide and dexamethasone, or VTd, for frontline treatment of transplant-eligible MM patients met the primary endpoint of number of patients that achieved a stringent complete response, or sCR. Topline results for the first part of the CASSIOPEIA study showed that 28.9% of patients treated with daratumumab in combination with VTd achieved sCR, compared to 20.3% of patients who received VTd alone, with an odds ratio of 1.60 and with a safety profile consistent with known safety profiles for daratumumab and VTd. In June 2019, Janssen presented additional data for certain secondary endpoints of the CASSIOPEIA study at the American Society for Clinical Oncology annual meeting, or ASCO, reporting 18-month PFS rates of 92.7% in the daratumumab plus VTd arm, compared to 84.6% in the VTd arm, and post-induction MRD-negative rates of 34.6% in the daratumumab plus VTd arm, compared to 23.1% in the VTd arm. In March 2019, Janssen submitted an sBLA to the FDA and an MAA to the EMA based on the CASSIOPEIA study. In May 2019, the FDA granted priority review for the sBLA submission,

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setting a target date of September 26, 2019 to take a decision on daratumumab in this indication. In addition, in February 2019, we reported that Janssen's Phase III COLUMBA study comparing the subQ formulation of daratumumab to the IV formulation in patients with R/R MM met both co-primary endpoints of ORR and maximum trough concentration, or Ctrough, of daratumumab on day 1 of the third treatment cycle. Topline results showed ORR of 41.1% and Ctrough of 499 mg/mL for patients treated with subQ daratumumab compared with 37.1% and 463 mg/mL, respectively, in patients treated with IV daratumumab, in each case with a confidence interval of 95% and with no new safety signals compared with known daratumumab safety profiles. In June 2019, Janssen presented data at ASCO regarding certain additional endpoints of the study, reporting that the subQ and IV administration groups demonstrated similar results in the PFS, very good partial response, or VGPR, or better and CR or better categories. We expect Janssen to submit regulatory applications based on the COLUMBA study in 2019 and to release efficacy data for the Phase II GRIFFIN study for daratumumab in combination with bortezomib, lenalidomide and dexamethasone, or VRd, for frontline treatment of transplant-eligible MM patients. In addition to the ongoing studies of daratumumab for the treatment of MM, Janssen is conducting a number of studies to assess the use of daratumumab in the treatment of other malignant and pre-malignant diseases in which CD38 is expressed, including amyloidosis, acute lymphocytic leukemia and NKT-cell lymphoma. Building on our successful daratumumab collaboration, we entered into a new license and option agreement with Janssen in June 2019 to collaborate exclusively on a next-generation CD38 antibody product, HexaBody-CD38, incorporating our proprietary HexaBody technology.

        Ofatumumab is a human IgG1k mAb that targets an epitope on the CD20 molecule, which is found on the surface of B-cells, the type of cell which is believed to trigger the inflammatory process that leads to multiple sclerosis, or MS. Novartis is currently investigating a subQ formulation of ofatumumab for the treatment of relapsing MS, or RMS, in the Phase III ASCLEPIOS I and II clinical studies with over 1,800 patients in total, and has reported that it expects to complete these studies during 2019. Subject to study completion and achievement of positive results, Novartis has indicated that it plans to evaluate the potential for a regulatory filing soon thereafter. We believe that ofatumumab may potentially offer a number of competitive advantages in the MS treatment market compared to current B-cell therapies. In particular, if its efficacy and safety can be demonstrated in clinical trials, the low-dose subQ administration of ofatumumab currently in clinical testing could allow for more convenient and less disruptive dosing options for MS patients compared to IV-administered therapies. In addition, the Phase II MIRROR study assessing dose-response effects of ofatumumab on efficacy and safety outcomes in patients with RMS, published in May 2018, showed that treatment with ofatumumab resulted in rapid dose-dependent B-cell depletion, which correlated with efficacy outcomes observed in the study, with no new or unexpected safety findings. Ofatumumab has already been approved for the treatment of certain CLL indications in the United States and certain other countries and is currently commercialized by Novartis for such CLL indications under the name Arzerra. Due to low and decreasing global demand for Arzerra primarily related to increased competition from new entrants to the CLL treatment space over the past few years, Novartis announced in January 2018 that it intends to transition Arzerra from commercial availability to limited availability in non-U.S. markets through managed access programs or alternative solutions for approved CLL indications where applicable and allowed by local regulations. We expect Arzerra to remain commercially available for approved CLL indications in the United States and Japan. Pursuant to our agreement with Novartis, we are entitled to royalties of 20% of worldwide net sales of ofatumumab for the treatment of cancer and 10% of worldwide net sales of ofatumumab for non-cancer treatments. Novartis is fully responsible for all costs associated with developing and commercializing ofatumumab.

Our Proprietary Product Candidates

        We also have a strong pipeline of novel antibody-based product candidates for the treatment of solid tumors and hematological cancers, which are designed to address unmet medical needs and

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improve treatment outcomes for cancer patients. Our goal in building our pipeline is to retain at least 50% of product rights in selected programs for indications and in geographic areas where we believe we will be able to maximize their value; we consider such products to be "our own" proprietary products. We currently have five proprietary product candidates in clinical development:

    Tisotumab vedotin:  an antibody-drug conjugate, or ADC, created to target tissue factor, or TF, a protein involved in tumor signaling and angiogenesis. Tisotumab vedotin is in clinical development for the treatment of cervical cancer and certain other solid tumors. In March 2019, we presented data from a 55-patient expansion cohort of the innovaTV 201 Phase I/II trial at the SGO Annual Meeting, which indicated that treatment with tisotumab vedotin resulted in encouraging activity in patients with relapsed, recurrent and/or metastatic cervical cancer. Data assessed by an independent review committee showed a confirmed ORR of 22%, with 35% of patients having a confirmed or unconfirmed complete or PR. Median DoR, was 6.0 months and median PFS was 4.1 months. We are also evaluating tisotumab vedotin in five additional clinical studies, including the potentially registrational innovaTV 204 Phase II trial for the treatment of patients with recurrent or metastatic cervical cancer, Phase II trials for the treatment of patients with ovarian cancer and solid tumors and two Phase I/II trials for the treatment of patients with cervical cancer. Patient enrollment for the innovaTV 204 study was completed in March 2019. We are developing tisotumab vedotin in collaboration with Seattle Genetics under an agreement in which the companies share all future costs and profits for the product on a 50:50 basis.

    Enapotamab vedotin (HuMax-AXL-ADC):  an ADC created to target AXL, a unique tyrosine kinase receptor that is implicated in tumor cell proliferation, migration and invasion. Over-expression has been described in solid cancers, including lung, esophageal, ovarian, breast, cervical, thyroid, endometrial and pancreatic cancers. AXL is emerging as a marker in tumors with resistance to therapy (e.g., tyrosine kinase inhibitors, chemotherapy). In addition, over-expression of AXL is observed in advanced tumors with epithelial-mesenchymal transition, or EMT-like features. In May 2018, we launched a Phase I/II clinical trial of enapotamab vedotin for the treatment of multiple types of solid tumors, with several expansion cohorts currently ongoing. We expect to report initial efficacy analysis from the expansion cohort phase of this study in 2019. We have full development and commercialization rights for enapotamab vedotin.

    HexaBody-DR5/DR5:  an antibody therapeutic candidate created with our proprietary HexaBody technology that is composed of two non-competing HexaBody antibody molecules that are designed to target two distinct epitopes on death receptor 5, or DR5, a cell surface receptor that mediates a process called programmed cell death. In May 2018, we dosed the first patient in our Phase I/II clinical trial of HexaBody-DR5/DR5 for the treatment of solid tumors. We expect to report initial clinical data from this study in 2019. We have full development and commercialization rights for HexaBody-DR5/DR5.

    DuoBody-CD3xCD20:  a bispecific antibody created using our proprietary DuoBody technology that is designed to target CD3, which is expressed on all T-cell subtypes and CD20, a well-validated therapeutic target expressed in a majority of B-cell malignancies. In July 2018, we dosed the first patient in our Phase I/II clinical trial of a subQ formulation of DuoBody-CD3xCD20 for the treatment of B-cell malignancies. We expect to report initial clinical data from this study in 2019. We have full development and commercialization rights for DuoBody-CD3xCD20.

    DuoBody-PD-L1x4-1BB:  a bispecific antibody created using our proprietary DuoBody technology that is designed to target PD-L1 and 4-1BB to block the inhibitory PD-1/PD-L1 axis and simultaneously activate essential co-stimulatory activity via 4-1BB using an inert DuoBody antibody format. PD-L1 is a validated target that is expressed on tumor cells. 4-1BB is a trans-

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