Company: GNMSF
Filing Date: 2025-02-12
Form Type: 20-F
Source: 0001558370-25-000846
Chunk: 170

Company: GENMAB A/S
Filing Date: 2025-02-12
Form: 20-F
Item: Item 16K
Chunk 170
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 ProfoundBio”) for USD 1.72 billion (DKK 11.8 billion) on May 21, 2024. The Company accounted for the acquisition as a business combination and, accordingly, has performed procedures to identify all assets and liabilities and allocated the purchase price to the assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition.

Intangible assets acquired primarily included the in-process research and development intangible assets (“ Acquired IPR& D assets”). The Company estimated the fair value of the Acquired IPR& D assets using an income approach. The fair value determination of the Acquired IPR& D assets required the Company to make significant estimates and assumptions related to the forecasted future cash flows, such as probabilities of technical and regulatory success, and the determination of the discount rates.

We identified the valuation of Acquired IPR& D assets for the ProfoundBio acquisition as a critical audit matter because of the high level of complexity and management judgement involved in determining the above outlined significant estimates and assumptions used by the Company to determine the fair value of these assets. This required a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of the Acquired IPR& D assets in the ProfoundBio acquisition included the following, among others:

  We tested the effectiveness of controls over the valuation of the Acquired IPR& D assets, including the Company’s controls over the significant estimates and assumptions related to the forecast...  

  We assessed the reasonableness of the Company’s probabilities of technical and regulatory success used in determination of the fair value of the Acquired IPR& D assets by comparing to internal ...  

Table of Contents

  We assessed the reasonableness of the Company’s forecasts of future cash flows used in determination of the fair value of the Acquired IPR& D assets by comparing the forecasts to historical res...  

  With the assistance of our valuation specialists, we evaluated the reasonableness of the discount rates by testing the source information and inputs underlying the determination of the discount...  

Revenue recognition of royalty revenue - Refer to Note 2.1 to the financial statements

Critical Audit Matter Description

The Company recognized royalty revenue, where revenue is recognized based on net sales by collaboration partners. The Company uses net sales provided by its collaboration partners as an input to their calculation of the