Analyst Conference Summary

Biotechnology

conference date: July 30, 2020 @ 1:30 PM Pacific Time
for quarter ending: June 30, 2020 (second quarter, Q2)

Forward-looking statements

Overview:

Basic data (GAAP):

Revenue was $278 million up 18% sequentially from $236 million and up 28% from $218 million in the year-earlier quarter.

Net income was negative $21 million, down sequentially from $168 million and down from negative $79 million year-earlier.

EPS (earnings per share, diluted) were negative $0.12, down sequentially from $0.98, and down from negative $0.49 year-earlier.

Guidance:

Previous guidance except added $215 to $235 million revenue in 2020 from Padcev and increased R&D budget to $860 to $950 million. Also indicated cost of sales will be $185 to $204 million.

Conference Highlights:

Clay Siegall, CEO said "We generated record product sales of $240.5 million in the second quarter driven by Adcetris, Padcev and now a third commercial product, Tukysa, following the FDA approval in mid-April for metastatic HER2-positive breast cancer. We successfully launched Tukysa in the United States and are building our international capabilities to support global launches. Our total revenues are on track to exceed $1 billion in 2020."

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 $241 million, up sequentially from $164 million, and up 52% from $159 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 $57 million, up sequentially from $35 million and 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. First patient dosed in Phase 3 trial for first-line urothelial cancer in April 2020. Will test in other solid tumors. Partnered with Astellas.

Tukysa revenue was $16 million. It was the first quarter of revenue. In April 2020, Tukysa 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. In Q3 is preparing for ex-US launch.

Collaboration and license revenue was $6 million, down sequentially from $16 million, and down from $36 million year-earlier.

Royalty revenue was $31 million, up sequentially from $20 million, and from $23 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

Tisotumab vedotin Phase 2, single arm trial for R/R cervical cancer reported positive results with a 24% ORR. 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.

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

In June 2020, began the Phase 1 trial of SEA-TGT, an anti-TIGIT antibody for patients with solid tumors and lymphomas. SEA-TGT employs the Company's proprietary Sugar Engineered Antibody (SEA) technology.

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

The first patient was dosed in a phase 1 clinical trial evaluating SGN-B6A, an antibody-drug conjugate (ADC) targeting integrin beta-6, which is overexpressed in a variety of solid tumors and has been shown to be a negative prognostic indicator across a diverse range of cancers.

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.

See also Seattle Genetics pipeline.

Cash ended at $896 million, up sequentially from $800 million. $175 million cash in Q2 was from sale of investment in ImmunoMedics. There was no debt.

Total costs and expenses were $372 million, consisting of: cost of sales $48 million; R&D $198 million; selling, general and administrative expense $126 million. Resulting in a loss from operations of $94 million. Other income $73 million.

Q&A:

Tukysa launch? It is early in the launch, we are pleased by the uptake. Promoting our data in both community and academic settings.

Padcev guidance? Early in a strong launch. 35% to 55% growth rate in guidance in 2H, not quite as high as Q1 to Q2.

TV positive data, gaiting factors to filing? We will be putting out more data. We are actively working with regulators towards a submission. We think the R/R cervical cancer market is just the begining for TV.

Tukysa in earlier lines of cancer to prevent brain metastasis? We are seeing signifant enthusiasm from doctors, promoting to the label. The ASCO data is remarkable and indicates a prevention outcome.

Muscle-invasive bladder cancer trial? EV103 cohorts were signal finding. We have such strong activity with Padcev plus Keytruda to move to rapid development in this indication. We have basically already moved into a Phase 3 trial. Our goal is to be the standard of care within our label.

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