Analyst Conference Summary

Biotechnology

conference date: April 30, 2020 @ 1:30 PM Pacific Time
for quarter ending: March 31, 2020 (first quarter, Q1)

Forward-looking statements

Overview: Continues to ramp revenue y/y, but sequentially down.

Basic data (GAAP):

Revenue was $236 million down 19% sequentially from $290 million and up 21% from $195 million in the year-earlier quarter.

Net income was negative $168 million, down sequentially from $26 million and down from negative $13 million year-earlier.

EPS (earnings per share, diluted) were negative $0.98, down sequentially from $0.14, and down from negative $0.08 year-earlier.

Guidance:

Unchanged

Conference Highlights:

Clay Siegall, CEO said "We have had a remarkable start to 2020, delivering record product sales in the first quarter that are now coming from both Adcetris and Padcev. Notably, strong Padcev sales in the first full quarter of launch reflect the unmet need among patients with metastatic bladder cancer. With the recent approval of Tukysa for patients with metastatic HER2-positive breast cancer, we have now launched our third product just four months after our second. In addition, we are investing in potential label expansions in all three products to maximize their use to patients in need."

In April 2020, Tukysa (tucatinib) was approved by the FDA, in combination with trastuzumab and capecitabine, for the treatment of adult patients with advanced unresectable or metastatic HER2-positive breast cancer, including patients with brain metastases, who have received one or more prior anti-HER2-based regimens in the metastatic setting. Pleased by reception so far.

Adcetris (brentuximab vedotin) sales in the quarter were $164 million, up sequentially from $na million, and up 22% from $135 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. Also hopes to further expand the label.

Padcev (Enfortumab vedotin) revenue was $34.5 million, up from $0 million year-earlier. Approved for bladder cancer. In February 2020 positive updated results were reported in the Phase 1b/2 trial for urotherlial cancer. Also, received FDA Breakthrough Therapy designation when combined with Keytruda for unresectable urotherlial cancer. First patient dosed in Phase 3 trial for first-line urothelial cancer in April 2020.

Collaboration and license revenue was $16 million, down sequentially from $na million, and down from $45 million year-earlier.

Royalty revenue was $20 million, up sequentially from $na million, and from $16 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.

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 late in Q2 or early in Q3 2020.

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

A Phase 1 trial of SEA-CD40 for pancreatic continues.

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

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 2019 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.

SGN-CD30C is getting ready for the clinic, may improve on Adcetris.

Ladiratuzumab vedotin is in Phase 2 for triple negative breast cancer.

See also Seattle Genetics pipeline.

Cash ended at $800 million, down sequentially from $868 million. There was no debt.

Total costs and expenses were $347 million, consisting of: cost of sales $29 million; R&D $195 million; selling, general and administrative expense $122 million. Resulting in a loss from operations of $112 million. Other loss $56 million. Income tax benefit $0 million.

Q&A:

Drivers for Padcev launch? Delighted with first full quarter of sales, exceeded our expectations. But visibility is poor now. Bladder cancer did not have a lot of good therapy.

COVID-19 impact? There could be some from patients unable to come in, but we don't know.

Tisotumab vedotin delay? No, it may slip a bit, no implication from that.

In muscle invasive bladder cancer, by joining the Merck trial, we have been able to leapfrog forward. It is an ongoing trial we are joining.

We do not see there being a biomarker that will predict responses for bladder cancer.

The combination of Padcev with Keytruda data was spectacular, that is why we are doing a global trial and an expedited trial.

CD30C? We want to continue to innovate. We know a lot about the target. If we can do better than Adcetris, that will help patients. For years we made different versions without seeing any improvement. We think CD30C could be an improvement based on preclinical results.

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