Analyst Conference Summary


Seattle Genetics

conference date: October 26, 2017 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2017 (third quarter, Q3)

Forward-looking statements

Overview: Good revenue growth, positive net income due to a boost from investment income.

Basic data (GAAP):

Revenue was $135.3 million, up 25% sequentially from $108.2 million, and up 27% from $106.3 million in the year-earlier quarter.

Net income was $50.0 million, up sequentially from negative $56.4 million, and up from negative $31.8 year-earlier.

EPS (earnings per share, diluted) were $0.34, up sequentially from negative $0.39 and up from negative $0.46 year-earlier.


For full year 2017, raised expected revenue from collaborations and licensing to $90 to $100 million. Rasied royalty revenue guidance to $60 to $65 milion. Also decreased range for R&D expense to $460 to $480 million.

Conference Highlights:

Clay Siegall, CEO said "We and our partner Astellas have initiated a pivotal phase 2 trial of enfortumab vedotin in metastatic urothelial cancer, and we and our partner Genmab plan to advance tisotumab vedotin into a pivotal phase 2 trial for recurrent or metastatic cervical cancer in the first half of 2018. We anticipate several additional milestones before the end of 2017, including a strong presence at the American Society of Hematology annual meeting in December highlighted by a presentation of our full ECHELON-1 data in frontline Hodgkin lymphoma.”

Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (relapsed HL and relapsed systemic ALCL) in the quarter were $79.2 million, up 7% sequentially from $74.3 million, and up 13% from $70.1 million year-earlier.

Collaboration and license revenue was $39.4 million, up sequentially from $21.5 million, and up from $24.0 million year-earlier.

Royalty revenue was $16.7 million, up sequentially from $12.4 million, and up from $12.2 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

Other income included a $78.7 million gain on investment in Immunomedics.

Share-based compensation was $47.9 million.

ECHELON-1 (frontline Hodgkin Lymphoma) Adcetris Phase 3 trial reported positive results. Full results will be reported at ASH. A supplemental BLA could be submitted before the end of 2017.

E-2 (ECHELON-2) enrollment for MTCL (mature T-cell lymphoma) should have data readouts in 2018.

A Supplemental Biologics License Application was submitted to the FDA in June based on the Adcetris ALCANZA Phase 3 trial, for patients with CD30-expressing cutaneous T-cell lymphoma (CTCL) positive results. See CTCL BLA press release. PDUFA date is December 16, 2017.

In collaboration with Bristol-Myers Squibb, a Phase 3 trial to test Adcetris with checkpoint inhibitor Opdivo (nivolumab) in relapsed or refractory HL (Hodgkin lymphoma) was initiated.

Enfortumab Vedotin (ASG-22ME) and ASG-15ME, in collaboration with Agensys/Astellas, demonstrated a 59% objective response rate in previously treated urothelial cancer patients in a Phase 1 trial. Astellas and SGEN initiated a Phase 2, pivotal trial in metastatic urothelial cancer. Also planning a metastatic urothelial cancer Phase 1b trial, in combination with checkpoint inhibitors.

Seattle Genetics will co-devlop tisotumab vedotin with Genmab, on a 50:50 basis, in solid cancers, following positive data from a Genmab solid tumor phase 1/2 trial. They now plan a pivotal Phase 2 trial in cervical cancer.

A Phase 1 trial of SEA-CD40 for solid tumors continues.

SGN-CD33A (Vadastuximab Talirine) for AML (acute myeloid leukemia) Phase 3 CASCADE trial for AML was discontinued, as were all other trials using the therapy.

SGN-CD19A or Denintuzumab Mafodotin: phase 2 trial in frontline diffuse large B-cell lymphoma (DLBCL) continued.

SGN-CD19B continued a Phase 1 trial for relapsed or refractory B-cell non-Hodgkin lymphoma.

SGN-LIV1A Phase 1 data was presented in December showing antitumor activity for triple-negative breast cancer. An expansion cohort is enrolling, with data to be presented in December. Plans a combination with tecentriq for triple-negative breast cancer, conducted by Roche. Added an agreement with Merck to try with Keytruda.

SGN-CD352A continued a Phase 1 trail for multiple myeloma.

SEA-CD40 is a novel immuno-oncology agent targeted to CD40 utilizing Seattle Genetics’ proprietary sugar-engineered antibody (SEA) technology to produce a non-fucosylated antibody. Planning a trial in combination with a checkpoint inhibitor.

SGN-CD123A continued a Phase 1 trial for relapsed/refractory AML. CD123 is expressed on leukemic stem cells, which have proven difficult to kill.

SGN-2FF continued a Phase 1 trial for relapsed or refractory solid tumors.

SGN-CD48A will start a Phase 1 trial in early 2018 for multiple myeloma.

See also Seattle Genetics pipeline.

Cash ended at $470.4 million, down sequentially from $473.0 million. There was no debt.

Total costs and expenses were $167.5 million, consisting of: cost of sales $9.0 million; cost of royalty revenue $5.2 million, R&D $113.6 million; selling, general and administrative expense $39.7 million. Resulting in a loss from operations of $32.2 million. Other income $82.2 million.




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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2017 William P. Meyers