Analyst Conference Summary


Seattle Genetics

conference date: April 26, 2018 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2018 (first quarter, Q1)

Forward-looking statements

Overview: Continues to ramp Adcetris and overall revenue while developing the pipeline. Still operating well in the red due to high R&D spend. Changed 2018 guidance. Acquiring Cascadian Therapeutics.

Basic data (GAAP):

Revenue was $140.6 million, up 8% sequentially from $129.6 million, and up 29% from $109.1 million in the year-earlier quarter.

Net income was negative $111.7 million, down sequentially from negative $59.2 million, and down from negative $60.0 million year-earlier.

EPS (earnings per share, diluted) were negative $0.73, down sequentially from negative $0.41 and down from negative $0.42 year-earlier.


Increased 2018 expense guidance to: R&D $530 to $580 million; SG&A $220 to $240 million; non-cash costs $95 to $105 million. this is mainly due to the Cascadian acquisition.

Q2 2018 Adcetris sales guidance lifted to $105 to $110 million. Sales guidance for the year has been withdrawn.

Conference Highlights:

Clay Siegall, CEO said "We delivered record Adcetris sales that were up 36 percent from the first quarter of 2017, received FDA approval for Adcetris in frontline advanced Hodgkin lymphoma, completed the acquisition of Cascadian Therapeutics and were granted FDA Breakthrough Therapy Designation for our late-stage program enfortumab vedotin in metastatic urothelial cancer. Looking ahead, we are on track to achieve several additional milestones this year, which include reporting data from our phase 3 ECHELON-2 trial of Adcetris, completing enrollment of urothelial cancer patients who have received both a platinum-based therapy and a CPI in the pivotal trial of enfortumab vedotin, and initiating a pivotal trial of tisotumab vedotin in cervical cancer."

Recently Seattle Genetics agreed to acquire Cascadia Therapeutics $614 million, with its pivotal-stage program of tucatinib for HER2-positive metastatic breast cancer. On February 5, 2018 Seattle Genetics raised $690 million with an equity offering. The acquisition closed in March.

Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (HL and relapsed systemic ALCL) in the quarter were $95.4 million, up 14% sequentially from $83.7 million, and up 36% from $70.3 million year-earlier. The label was expanded to include frontline Hodgkin Lymphoma.

Collaboration and license revenue was $29.6 million, up sequentially from $25.9 million, and up from $21.8 million year-earlier. An $8 million milestone from Abbvie contributed.

Royalty revenue was $15.7 million, down sequentially from $20.0 million, and down from $17.0 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations. Decrease was due to new accounting rules.

E-2 (ECHELON-2) enrollment for MTCL (mature T-cell lymphoma) should have Phase 3 data readouts in 2018.

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 ongoing. Earlier data announced was very positive.

Enfortumab Vedotin (ASG-22ME or EV) , in collaboration with Agensys/Astellas, is in a pivotal Phase 2 trial in metastatic urothelial cancer for patients who already failed a checkpoint inhibitor. A post-CPI setting trial is also planned, as are earlier lines of treatment and combination therapies. Enrollment is expected to complete in Q3 2018. Granted Breakthrough Therapy Designation. A second Phase 3 trial, EV-301 for patients who received prior CPI is planned for a start in 2018.

Seattle Genetics will co-develop tisotumab vedotin (TV) with Genmab, on a 50:50 basis. They now plan a pivotal Phase 2 trial in advanced cervical cancer to begin in 1H 2018. Other Phase 2 trials with tisotumab will try it as part of a combination regimen in front-line cervical cancer and as a monotherapy in other tumor types.

Tucatinib, an oral tyrosine kinase inhibitor, is in a global pivotal trial for HER2+ metastatic breast cancer. Should be fully enrolled in 2019. Acquired from Cascadian.

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

SGN-CD19A or Denintuzumab Mafodotin was discontinued, as were certain similar programs, to focus on more promising programs.

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 heavily pretreated 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.

Collaboration with Genentech/Roche phase 3 trial continued of polatuzumab vedotin for patients with diffuse large B-cell lymphoma.

Tisotumab Vedotin or TV will go into a pivotal Phase 2 trial for recurrent or metastatic cervical caner in the first half of 2018.

Ladiratuzumab Vedotin or LV began a 1b/2 trial for first-line metastatic triple negative breast cancer.

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 started a Phase 1 trial in for refractory multiple myeloma in Q1.

SGN-BCMA program should enter phase 1 in 2018.

Abbvie's ADC for glioblastoma is now in a Phase 3 trial.

See also Seattle Genetics pipeline.

Cash ended at $400 million, down sequentially from $413.2 million. There was no debt. In February raised $658 million with a stock option to finance the Cascadian acquisition.

Total costs and expenses were $234.4 million, consisting of: cost of sales $10.4 million; cost of royalty revenue $5.4 million, R&D $152.5 million; selling, general and administrative expense $66.2 million. Resulting in a loss from operations of $93.8 million. Other loss $17.9 million. Income tax $0 million.


E1 approval in March, did it help revenue in the quarter, was it stocking? Our drug is not warehoused. Our data came out at ASH in December, so there might have been some off label use before approval. Sales force was ready, doctors were ready at time of approval. We are pleased with the uptake so far. Payers are strongly aligned as long as on-label. Stage 2b is close to our label, we have received questions from doctors.

Basically, doctors are really happy with Adcetris as a new frontline option to ABBD.

Q2 guidance Adcetris assumptions? We now have 5 labels for Adcetris, the new label is very new, we do not break out by label type. Our guidance is already for a strong q/q sequential gain. We hope to issue annual sales guidance once we see more sales data.

Three-quarters of our patients are at community clinics or hospitals; our sales force has been educating them for years now.

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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 2018 William P. Meyers