The Anti-Biotech Biotech

I was grabbing coffee with my old Marine buddy Mike last week when he asked me about biotech stocks.

“John,” he said, “every time I buy one of these pharmaceutical companies, it’s like stepping on an IED. What am I missing?” I laughed because Mike’s not wrong.

The biotech sector has been a graveyard for retail investors who chase the next miracle drug story. But sometimes you find a company that’s built differently, and Genmab (GMAB) might just be one of those rare breeds, aka the anti-biotech biotech.

Most people don’t understand that Genmab isn’t just another biotech burning cash while praying for FDA approval. They’ve built something most companies in this space can only dream of – a royalty stream that prints money.

When Johnson & Johnson (JNJ) sells their blockbuster drug Darzalex, Genmab gets a cut. Not a small cut either – we’re talking about over $1 billion in royalties from that single partnership in the first half of 2025.

That’s real money hitting the bank account every quarter, not some pie-in-the-sky projection.

The company’s reports back this up, too. Total H1 2025 revenue hit $1.64 billion, up 19% year-over-year. Royalty income alone was $1.38 billion, jumping 27% year-over-year.

Operating profit came in at $548 million while they’re sitting on $2.9 billion in cash reserves. That cash pile deserves special attention because most biotechs are capital incinerators.

And Genmab? They’re generating half a billion in operating profit while maintaining nearly $3 billion in cash.

Now here’s where it gets interesting, and why I think patient investors have a real opportunity.

Genmab isn’t content just collecting royalty checks. They’re systematically building their own commercial empire.

Their self-commercialized drugs are still small compared to the royalty stream, but the growth rates tell a different story.

EPKINLY generated $211 million in H1 2025 sales, up 74% year-over-year. Tivdak brought in $78 million, up 30% year-over-year. These aren’t rounding errors anymore.

EPKINLY is already approved in over 60 countries, and here’s the kicker – it’s currently approved only for later-stage lymphoma patients. The FDA is reviewing it for earlier-stage use with a decision expected in November 2025.

If that approval comes through, we’re looking at a potential patient pool worth over $3 billion annually by 2030.

The smart money isn’t simply looking at what Genmab has today. They’re positioning for what’s coming down the pipeline.

Rina-S enters Phase III trials in late 2025 for ovarian, endometrial, and lung cancers, with first launch anticipated in 2027 and peak sales potential exceeding $2 billion.

Acasunlimab is advancing through Phase III for solid tumors, including lung cancer and melanoma, with market entry around 2027-28 and estimated annual sales potential of $1 billion.

These aren’t moonshot bets but late-stage programs with defined timelines and clear commercial pathways.

But let’s address the elephant in the room – patent expirations. Darzalex’s main patents start expiring toward the end of this decade.

In the U.S., the composition of matter patent extends until 2029, while European protection runs to about 2031. Some orphan drug exclusivities expire as early as 2026-2027.

This is exactly why Genmab’s transition strategy matters. They’re not sitting around waiting for the royalty gravy train to end but building their own revenue streams to replace and eventually exceed what they’re losing.

Here’s what needs to happen for this investment thesis to play out.

Near-term, we need to see EPKINLY’s FDA decision for earlier-stage use in November 2025, Rina-S Phase III initiation in late 2025, and continued growth in EPKINLY and Tivdak sales.

Medium-term execution over the next 2-3 years requires solid Rina-S trial data and regulatory submissions, positive Acasunlimab Phase III results, and proof that their commercial teams can actually sell these drugs effectively in key markets.

Long-term transition success over 3-5 years means self-commercialized revenue exceeding $2 billion annually, successful pipeline asset launches, and maintained profitability during the transition period.

Genmab trades at a forward EV/EBITDA of 10.68, below the broader biotech industry average of 12.27. That discount reflects market skepticism about their transition from royalty-heavy revenues to self-commercialization. I think that skepticism creates opportunity.

With $2.9 billion in cash, proven commercial partnerships, and a pipeline of late-stage assets, this isn’t a typical biotech risk profile.

Genmab isn’t the next meme stock or miracle cure story. It’s a profitable biotech with real revenue streams, transitioning to an even more valuable business model. The royalty base provides stability while they build out their commercial portfolio.

For those patients and willing to hold through the transition period, the risk-reward setup looks compelling.

You’re buying a profitable company with strong cash generation at a discount to peers, with multiple billion-dollar opportunities ahead.

That’s the kind of setup that would make even my cautious Marine buddy Mike consider taking a position, and in biotech, that’s saying something.