Analyst Conference Summary

Biotechnology

conference date: February 11, 2021 @ 1:30 PM Pacific Time
for quarter ending: December 30, 2020 (fourth quarter, Q4)

Forward-looking statements

Overview:

Basic data (GAAP):

Revenue was $601 million way down sequentially from $1.06 billion and also up from $290 million in the year-earlier quarter.

Net income was $167 million, up sequentially from $636 million and up from $25 million year-earlier.

EPS (earnings per share, diluted) were $0.90, up sequentially from $3.50, and up from $0.14 year-earlier.

Guidance:

Expects full year 2021 revenue between $1.43 and $1.495 billion. Cost of sales $270 to $300 million. R&D $900 to $1,000 million. SG&A $650 to $725 million. Share based compensation $225 to $245 million.

Conference Highlights:

Clay Siegall, CEO said "In 2020, we generated record product revenues of more than $1 billion driven by successful launches of Padcev and Tukysa, as well as continued growth of Adcetris. These strong results are in addition to several significant business, regulatory and development accomplishments during the year. Looking ahead, we are focused on maximizing the global potential of our approved medicines, advancing our late-stage programs towards securing approvals of new products, and expanding our innovative early-stage pipeline. In collaboration with our partner Genmab we submitted a BLA for tisotumab vedotin to the FDA, positioning it to be our fourth commercial product. We are on track for several other milestones across our pipeline over the course of 2021, and are in a strong financial position to continue executing against our goals."

Note the wild swings from quarter to quarter are mainly due to collaboration revenue. Adcetris sales have been negatively impacted by the pandemic reducing diagnosis.

In September 2020, Seagen and Merck entered into an agreement to jointly develop and equally share future costs and profits worldwide for Ladiratuzumab Vedotin. Merck made an upfront payment to Seagen of $600 million. In October 2020 Merck made a $1.0 billion equity investment in 5.0 million shares of Seagen at $200 per share. In addition, Seagen is eligible for progress-dependent milestone payments of up to $2.6 billion. [shares outstanding now 174 million]

Adcetris (brentuximab vedotin) 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. Royalties mainly reflect Adcetris sales by Takeda in 67 non-U.S. nations.

Padcev is approved for bladder cancer. Full results from the phase 3 EV-301 trial and the second cohort of the pivotal phase 2 EV-201 trial for advanced or metastatic urothelial cancer will be presented at the 2021 American Society of Clinical Oncology's Genitourinary Cancers Symposium (ASCO-GU) being held February 11-13. Partnered with Astellas.

Tukysa first revenue was in Q2 2020. In Q4 2020 received a positive CHMP opinion. 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 September 2020, Seagen granted Merck an exclusive license to commercialize in Asia, the Middle East and Latin America and other regions outside of the U.S., Canada and Europe.

In September 2020, Seagen and Astellas announced that Padcev alone improved overall survival compared to chemotherapy in patients with locally advanced or metastatic urothelial cancer who were previously treated with platinum-based chemotherapy and a PD-1/L1 inhibitor. The trial was stopped early due to efficacy at the planned interim analysis. Data from EV-301 will be submitted for presentation at an upcoming scientific congress. The results will be submitted to the FDA as the confirmatory trial following accelerated approval in 2019, and EV-301 is also intended to support global registrations.

Several Seagen programs will be featured in presentations at the SITC Annual Meeting 2020, taking place virtually November 9-14, 2020. Abstracts encompass preclinical findings on the ADCs Adcetris, TV and LV, as well as antibody programs SEA-TGT and SEA-CD40.

In January 2021, the first patient was dosed in a phase 1 trial of SGN-STNV, a novel antibody-drug conjugate (ADC) targeting Sialyl Thomsen-nouveau (STN). STN is highly expressed across multiple solid tumors

Tisotumab vedotin BLA submitted to the FDA seeking accelerated approval of tisotumab vedotin for the treatment of patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. Results from the innovaTV 204 trial formed the basis of the submission. In partnership with Genmab, on a 50:50 basis.

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.

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

See also Seattle Genetics pipeline.

Cash ended at $2.7 billion, up sequentially from $1.72 billion. There was no debt. $1.0 billion was from an equity investment by Merck.

Total costs and expenses were $436 million, consisting of: cost of sales $62 million; R&D $216 million; selling, general and administrative expense $158 million. Resulting in income from operations of $165 million. Other income $1 million. $1 million income tax benefit.

Q&A selective summary:

Guidance, geographic expansion in? We launched Padcev and Tukysa despite the pandemic. PD1 move to front line expands Padcev addressable market.

Padcev first line opportunity? Data is remarkable, despite single-arm 45 subject trial. Don't expect ORR to be a problem. Durability and PFS are remarkable so far.

Pandemic headwind in guidance? Diagnosis could be affected, it has been a headwind, the salesforce adapted well. We are seeing about a 15% reduction in diagnosis for adcetris, the newer drugs are harder to quantify.

Padcev real world cycles per patient, annualized cost, rash? Cost in relapsed setting net 90K per patient. We advised about skin rashes, the antibody can bind to many tissue types. Usually mild, sometimes more severe rash. OS benefit is high, so rash rarely interferes with therapy.

Cohort 2 is an older, frailer population. They get PD1 firstline. Padecev has good outcomes for this population for metastatic urothelia cancer. It is a small but meaningful number of patients.

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