Analyst Conference Summary


Seattle Genetics

conference date: April 25, 2019 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2019 (first quarter, Q1)

Forward-looking statements

Overview: Revenue continues rapid growth. Net loss decreased largely due to $40 million in other income.

Basic data (GAAP):

Revenue was $195.2 million up 12% sequentially from $174.5 million and up 39% from $140.6 million in the year-earlier quarter.

Net income was negative $13.3 million up sequentially from negative $119.8 million up from negative $111.7 million year-earlier.

EPS (earnings per share, diluted) were negative $0.08, up sequentially from negative $0.75, and up from negative $0.73 year-earlier.


Reiterated 2019 guidance except reduced R&D expense estimate to $600 to $650 million and SG&A expense to $280 to $310 million.

Conference Highlights:

Clay Siegall, CEO said "In the first quarter we achieved an important milestone toward becoming a multi-product oncology company with the announcement of positive topline results from the pivotal trial of enfortumab vedotin in patients with locally advanced or metastatic urothelial cancer, and we plan to submit an application for approval to the FDA in 2019. “We have also advanced our other late-stage programs, including reaching target enrollment in the HER2CLIMB pivotal trial of tucatinib in HER2-positive metastatic breast cancer. We expect to report topline results from HER2CLIMB in 2019."

In February 2019, Takeda received approval from the European Commission to extend the marketing authorization for Adcetris to include combination with AVD (Adriamycin, vinblastine and dacarbazine) in adult patients with previously untreated CD30-positive stage IV classical Hodgkin lymphoma. As a result, Seattle Genetics received a $30 million milestone payment from Takeda.

Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (Hodgkin Lymphoma and relapsed systemic ALCL) in the quarter were $135.0 million, up 2% sequentially from $132.1 million, and up 42% from $95.4 million year-earlier.

Collaboration and license revenue was $44.6 million down from $29.6 million year-earlier.

Royalty revenue was $15.6 million, down sequentially from $24.6 million, and from from $15.7 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

PTCL launch is going well in the US, seeking approvals in other nations. Believes NCCN guideline changes will help sales HL and nHL.

In November 2018, the U.S. Food and Drug Administration (FDA) approved Adcetris in combination with chemotherapy for adults with previously untreated systemic anaplastic large cell lymphoma (sALCL) or other CD30-expressing peripheral T-cell lymphomas (PTCL), including angioimmunoblastic T-cell lymphoma based on the successful outcome of the ECHELON-2 phase 3 clinical trial.

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): Seattle Genetics and Astellas reported positive top-line data in the first quarter of 2019 from the ongoing EV-201 pivotal trial evaluating EV in patients with locally advanced or metastatic urothelial cancer who previously received both platinum chemotherapy and a checkpoint inhibitor (PD-1 or PD-L1). Seattle Genetics now plans for a BLA submission under the FDA’s accelerated approval pathway in 2019.

Seattle Genetics is developing tisotumab vedotin (TV) with Genmab, on a 50:50 basis. Complete enrollment has been achieved in the pivotal innovaTV 204 trial evaluating TV in patients with recurrent and/or metastatic cervical cancer who have relapsed or progressed after standard of care treatment.

Tucatinib, an oral tyrosine kinase inhibitor, is in a global pivotal trial (HER2CLIMB) for HER2+ metastatic breast cancer. Seattle Genetics achieved enrollment of 480 patients with top-line data expected to be reported in 2019. Enrollment is continuing up to 600 patients, to support the analyses of key secondary endpoints, including overall survival as well as progression-free survival in patients with brain metastases. The company anticipates completing enrollment of the additional patients in mid-2019.

Depatuxizumab mafodotin (ABT-414) for glioblastoma Phase 3 data expected in 2019; collaboration with AbbVie.

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

Belantamib mafodotin (GSK2857916)for multiple myeloma, collaboration with GSK, regulatory submission is planned in 2H 2019.

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 continued of polatuzumab vedotin for patients with diffuse large B-cell lymphoma (DLBCL), with data submitted for regulatory approval in both the US and EU. PDUFA August 2019.

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-CD228A Phase 1 trials in solid tumors should start in 2019.

See also Seattle Genetics pipeline.

Cash ended at $418 million, down sequentially from $460 million. An additonal $152 million was held as stock of Immunomedics (IMMU) and Unum. There was no debt.

Total costs and expenses were $249 million, consisting of: cost of sales $8 million; cost of royalty revenue $2 million, R&D $158 million; selling, general and administrative expense $80 million. Resulting in a loss from operations of $54 million. Other income $40 million. Income tax benefit $0 million.


Adcetris sales dynamics? Patients and doctors depend on it. Q1 is typically soft for oncology products. April was strong. In frontline Adcetris is coming up against entrenched standards of care. NCCN changes should be important going forward.

Filing timeline for HER2CLIMB? Some of our filing strategy is confidential. Primary endpoint is the key.

Guidance to strong q/q Adcetris growth, where will it come from? We think Q1 was not unusual. We are not providing guidance by quarter. We think the new data is strong and we will hit the annual guidance. The NCCN guidelines were originally more restrictive than the label, now is much closer, allowing us to talk to doctors again. On the price increase in January, the growth in the quarter was volume based. Most business is limited to rate of inflation price increases (PHS part of business).

Adcetris plus dovolumab is just recently listed in the guidelines. The response rates are extremely good, encouraging using the combination rather than serially. This is particularly important for relapsed/refractory patients.

Bladder cancer gaiting factor? EV is a very important drug for us. Doctors want to be involved. We are working hard to get EV201 submitted. We have a very big development plan for it. We hope to submit it this year.

We don't break out Hodkins from PTCL revenue.

HER2 competition? Tucatinib is an oral TKI. We think we have a best in class TKI. Others are more potential combination approaches than direct competitors.

Argued against expansion based on new 2A wording? Believes wording really shifted 2A catagory into non-neuropathy. A lot of HL are in groups that are in pathways not in 2A. So expansion of 2A is a big difference, but it needs education of doctors.

Any plan to expand sales force to reach community doctors? We added 50% to sales force when we got frontline approval. We believe we now have the right sized sales force.

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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. This is journalism, not financial advice.

Copyright 2019 William P. Meyers