Analyst Conference Summary


Seattle Genetics

conference date: July 26, 2018 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2018 (second quarter, Q2)

Forward-looking statements

Overview: Profitable quarter, but largely due to $107 million in "other" income.

Basic data (GAAP):

Revenue was $170.2 million, up 21% sequentially from $140.6 million, and up 57% from $108.2 million in the year-earlier quarter.

Net income was $76.3 million, up sequentially from negative $111.7 million, and up from negative $56.4 million year-earlier.

EPS (earnings per share, diluted) were $0.47, down sequentially from negative $0.73 and down from negative $0.39 year-earlier.


"For the third quarter of 2018, Seattle Genetics expects sales of ADCETRIS to be in the range of $130 million to $135 million. In addition, as a result of milestone achievements and other items that occurred in the first half of 2018, the company is increasing collaboration revenue guidance for the full year in 2018 to a range of $65 million to $75 million, compared to its previous guidance of $55 million to $65 million."

Conference Highlights:

Clay Siegall, CEO said "Looking ahead, we expect to report top-line results from the ADCETRIS phase 3 ECHELON-2 trial in frontline CD30-expressing mature T-cell lymphomas early in the fourth quarter that could be another driver of future growth. Our late-stage clinical pipeline comprises three programs in ongoing pivotal trials, including enfortumab vedotin which is positioned for top-line data in the first half of 2019 in metastatic urothelial cancer."

Product revenue increase represents first full quarter after Adcetris approval for Stage 3 or 4 Hodgkin lymphoma.

Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (Hodgkin Lymphoma and relapsed systemic ALCL) in the quarter were $122.4 million, up 28% sequentially from $95.4 million, and up 65% from $74.3 million year-earlier.

Collaboration and license revenue was $27.2 million, down sequentially from $29.6 million, and up from $21.5 million year-earlier.

Royalty revenue was $20.6 million, up sequentially from $15.7 million, and up from $12.4 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

Results included a gain of $105.5 million from holdings of Immunomedics.

E-2 (ECHELON-2) enrollment for MTCL (mature T-cell lymphoma) should have Phase 3 data readouts in Q4 2018.

E-1 (ECHELON-1) additional data in Hodgkin lymphoma, approved by FDA in March, were presented at ASCO in June.

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, completed enrollment for a cohort of 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. 40% objective response rate reported at ASCO for Phase 1. Granted Breakthrough Therapy Designation. A second Phase 3 trial, EV-301 for patients who received prior CPI, started in Q2 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 (HER2CLIMB) for HER2+ metastatic breast cancer. Should be fully enrolled in 2019. SGEN is evaluating expanding development to earlier lines of therapy, other cancers, and in combinations.

GlaxoSmithKline (GSK) yesterday outlined a broad development effort based on Seattle Genetics technology.

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 started a pivotal Phase 2 trial for recurrent or metastatic cervical cancer in Q2 2018, as well as a second Phase 2 trial against several types of solid cancers. Could support accelerated approval by FDA. It is being co-developed with Genmab.

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 $458 million, up sequentially from $400 million. An additonal $208 million was held as stock of Immunomedics (IMMU) and Unum. There was no debt.

Total costs and expenses were $200.5 million, consisting of: cost of sales $13.2 million; cost of royalty revenue $6.1 million, R&D $122.9 million; selling, general and administrative expense $58.9 million. Resulting in a loss from operations of $30.3 million. Other income $106.6 million. Income tax $0 million.


HL launch, physician feedback? Great feedback. Takes time, especially for academic doctors. Sales rose faster than expected. Will continue to grow by quarter, but not as fast. Will return to full-year guidance when we can.

E2 opportunity, CD30 prevalence? About 4000 CD40 expressers for Stage 3 and 4 HL.

E2, any difference in population from earlier trial? Very similar population, just a smaller number.

We do not believe our guidance is conservative. It takes time to build market share.

Timing of Tucatinib expansions? Colorectal, we have an investigator sponsored trial ongoing. Stay tuned for gastric cancer. We are moving Tucatinib from a trial to a broad program.

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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