Analyst Conference Summary

Biotechnology

conference date: February 15, 2023 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2022 (fourth quarter, Q4)

Forward-looking statements

Overview: Revenue growing quickly but still deep in the red.

Basic data (GAAP):

Revenue was $528 million, up 4% sequentially from $510 million and up 23% from $430 million in the year-earlier quarter.

Net income was negative $148 million, up sequentially from negative $191 million and up from negative $174 million year-earlier.

EPS (earnings per share, diluted) were negative $0.80, up sequentially from negative $1.03, and up from negative $0.95 year-earlier.

Guidance:

For the full year 2023, expects product sales between $1.925 and $2.0 billion. Total revenue $2.14 to $2.24 billion. Royalties $170 to $185 million. Collaboration revenue $45 to $55 million. Cost of sales $420 to $470 million. R&D 41.425 to $1.524 billion. SG&A $880 to 930 million. Share based comp $330 to $375 million.

Conference Highlights:

David Epstein, Seagen CEO, said "We delivered total revenue of nearly $2 billion in 2022, reflecting 25 percent growth compared to 2021 driven by strong demand for our portfolio of approved products. We made excellent progress in growing our four marketed brands. Importantly, the FDA is currently reviewing our supplemental regulatory submission under the accelerated approval program for Padcev as first-line treatment for cisplatin-ineligible patients with advanced urothelial cancer, which has the potential to be a meaningful growth driver for the brand. We anticipate multiple key data and regulatory catalysts in 2023." Seagen is hoping to leverage vedotin ADC combinations with PD1 antibodies to improve patient responses.

In December 2022, the FDA accepted the sBLA for Padcev plus Keytruda for first-line urothelial cancer. The PDUFA date is April 21, 2023. The same combination for locally advanced urothelial cancer completed enrollment in its Phase 3 trial in November.

In January 2023, the FDA granted Tukysa + trastuzumab accelerated approval for RAS wild, HER2+ colorectal cancer following chemotherapy.

In November 2022, Adcetris received FDA approval pediatric patients 2 years and older with previously untreated high-risk classical Hodgkin lymphoma.

In January 2023, began dosing Phase 1 trial of SGN-BB228, a CD228x4-1BB bispecific molecule, in advanced melanoma and other solid tumors.

In Q1 2023 Adcetris was added to the national reimbursement list in Japan.

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

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

Seagen will have 18 clinical programs by the end of 2023.

See also Seagen pipeline.

Cash ended at $1.74 billion, down sequentially from $1.76 billion.

Total costs and expenses were $682 million, consisting of: cost of sales $108 million; R&D $358 million; selling, general and administrative expense $216 million. Resulting in income from operations of negative $154 million. Other income $10 million. $4 million income tax.

Seagen full year 2023 results were: revenue $1.96 billion; GAAP net loss $610 million; GAAP EPS loss $3.30.

Q&A selective summary:

Padcev first half data readout, bladder cancer? Building a bladder cancer franchise, moving to earlier lines of therapy. Muscle type is far larger than our current approval. When put in the bladder it shows no systemic exposure. Exposing directly to tumor had exciting possibilities. We are starting with an unresponsive population that has already failed therapy. So still in exploratory phase.

Cohort K, thoughts on ramp if approval in that setting? Once we see the label update, we will see revenue in this setting, and will update guidance.

Padcev potential growth in US in existing indications? Will grow, but at a slower rate. Big opportunities are in earlier lines of therapy.

HER2+ breast competitive landscape? The breast cancer market is dynamic. HER2+ medicine gets durable responses. There is an opportunity to come in behind in HER2 with a different payload. Tukysa, as a small molecule, has an opportunity combined with other drugs. But it is a difficult market to forecast.

B6A program? SGGN-B6A is shaping up to become a transformative asset, based on early cohorts. We will start sharing data later this year. Could be a blockbuster if it works for NSCLC. We need to invest in trials that capture that upside.

When we do get to profitability, we expect it will not be minor profits, but sustantial profits. So we continue to invest heavily in our pipeline. We could get profitable sooner by cutting research, but it would be a lower level of profitability.

We are working on new payloads and linkers.

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