Analyst Conference Summary


Seattle Genetics

conference date: October 29, 2019 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2019 (third quarter, Q3)

Forward-looking statements


Basic data (GAAP):

Revenue was $213 million down 2% sequentially from $218 million and up 26% from $169 million in the year-earlier quarter.

Net income was negative $91.9 million, down sequentially from negative $72.9 million and down from $67.4 million year-earlier.

EPS (earnings per share, diluted) were negative $0.55, down sequentially from negative $0.49, and up from negative $0.42 year-earlier.


Increased full year 2019 revenue guidance: product sales $625 to $640 million, license agreements $110 to $125 million, royalties $90 to $95 million. But also increased expense guidance: R&D $690 to $715 million; SG&A $355 to $370 million.

Conference Highlights:

Clay Siegall, CEO said "The FDA granted Priority Review to the enfortumab vedotin Biologics License Application for patients with locally advanced or metastatic urothelial cancer, and we recently announced positive topline results from the pivotal HER2CLIMB trial of tucatinib in metastatic HER2-positive breast cancer. This progress is in addition to continued sales growth of Adcetris, driven by further adoption in frontline CD30-expressing peripheral T-cell lymphomas as well as frontline advanced Hodgkin lymphoma. We anticipate global sales of Adcetris to exceed $1.0 billion in 2019." Several INDs are planned for 2020.

In September 2019, the FDA accepted the BLA for enfortumab vedotin and granted priority review for patients with locally advanced or metastatic urothelial cancer who have received a PD-1/L1 inhibitor and who have received a platinum-containing chemotherapy . The FDA has set a target action (PDUFA) date of March 15, 2020. The US sales force is in place. Enfortumab vedotin is partnered with Astellas. Trials to expand the label are planned.

Adcetris (brentuximab vedotin) sales in the quarter were $167.6 million, up 5% sequentially from $159.0 million, and up 32% from $127.0 million year-earlier. PTCL launch is going well in the US, seeking approvals in other nations. Adcetris sales increase mainly due to the addition of the PTCL label.

Collaboration and license revenue was $18.4 million, down sequentially from $36.1 million, and down from $19.8 million year-earlier.

Royalty revenue was $27.3 million, up sequentially from $23.3 million, and from $22.7 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

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.

Seattle Genetics is developing tisotumab vedotin (TV) with Genmab, on a 50:50 basis. Completed enrollment 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. Topline data is expected in the first half of 2020.

Tucatinib, an oral tyrosine kinase inhibitor, had positive results in a global pivotal trial (HER2CLIMB) for HER2+ metastatic breast cancer. The trial met the primary endpoint of progression-free survival (PFS). The trial also met two key secondary endpoints at the prespecified interim analysis demonstrating improvement in overall survival and for patients with brain metastases at baseline, the tucatinib arm demonstrated superior PFS. Full data at San Antonio Breast Cancer Symposium; NDA in early 2020. Also reported positive Phase 2 data in colorectal cancer.

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.

In June 2019, the FDA approved Polivy (polatuzumab vedotin-piiq) an antibody-drug conjugate (ADC) targeting CD79b that utilizes Seattle Genetics’ technology. Polivy was developed and will be commercialized by Genentech, a member of the Roche Group. As a result, Seattle Genetics will receive a $5.0 million milestone payment and is eligible to receive royalties on worldwide net sales.

Ladiratuzumab Vedotin or LV continued 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 $870 million, up sequentially from $376 million. $549 million was generated by a common stock offering in July. There was no debt.

Total costs and expenses were $303 million, consisting of: cost of sales $9 million; cost of royalty revenue $2 million, R&D $196 million; selling, general and administrative expense $96 million. Resulting in a loss from operations of $90 million. Other loss $2 million. Income tax benefit $0 million.


LIV1 status? Continuing to develop, not ready for a Phase 3 trial yet.

EV + pembrolizumab? Duration is important when response rates are low.

CD30, CTCL, PTCL? Cannot say any patients are truly CD30 negative, but some patients are low. In some tests treading low CD30 still had an effect. It needs further study.

New payload systems, linkers? Newest ADC, 228, target expressed on solid tumors. Eight drugs per antibody molecule, with a different linker and stabilizer. We are excited about it. We want to remain the ADC leader, with safer but more potent drugs.

Tucatinib greater program? Breast cancer. We have a small data set for other cancers that had very strong data. Third line colorectal, HER2+, is planned, and would like to look at earlier lines. Also interested in gastric and other HER2+ tumors.

We are doing a lot of research on payloads. We can say there are differences, but we are not yet ready to reveal the results.

EV for muscle invasive bladder cancer? We just started a cohort of patients. We did go forward on good preclinical data.

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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