After Soaring 3,000% in 5 Years, Genmab Tests Stock-Market Habit

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  • Shares snap ascent as analysts lower estimates for cancer drug
  • Price targets indicate that stock will rise again in 2018

Until this year, shareholders in Genmab A/S enjoyed half a decade of eye-popping returns.

But with the stock now heading for its first annual loss since 2011, the question is whether 2017 marks a tipping point. Analysts covering the stock say, No.

The share performance of the cancer-treatment maker has been semi-Biblical. Five bad years were followed by five good.

On Tuesday, Genmab shares rose as much as 1.7 percent, and traded 0.6 percent higher as of 3:11 p.m. in Copenhagen.

But the roughly 12 percent loss that stock investors are likely to suffer in 2017 will be followed by an almost 40 percent increase in 2018, according to the average price target of 21 analysts tracked by Bloomberg. In other words, a long-standing pattern of several years of similar share moves won’t be repeated, those estimates suggest.

Genmab is set to have a “transition year” as “2018 looks to be a good year again,” Andrew Carlsen, an analyst at ABG Sundal Collier in Copenhagen, said by phone. This year’s main problem has been excessive market expectations for the myeloma drug Darzalex, Genmab’s key product, he said.

“The market needs to get to terms with the pace at which the sales uptick for Darzalex will take place,” Carlsen said . “It’s a very young product -- only about to enter its third year after the launch -- and it’s much more complicated to module growth rates for new products compared to established ones.”

Genmab shares fell 11 percent over the two days after after the company on Dec. 11 gave directional guidance for 2018, saying milestone payments will be lower due to a “lumpy” year-to-year development. The success of Darzalex, developed with Johnson & Johnson’s Janssen unit, has been the main driver behind Genmab shares, which have gained more than 3,000 percent in the five years from 2011.

“Fundamentally, I don’t see any issues with the Darzalex growth rates,” Carlsen said, predicting global 2018 sales to exceed $2 billion. “I’m confident that Darzalex will establish itself as a standard of care product.”

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