conference date: October 29, 2015 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2015 (third quarter, Q3)
Overview: Increased guidance. Pipeline development is robust.
Basic data (GAAP):
Revenue was $84.1 million, up 9% sequentially from $77.1 million, and up 11% from $75.9 million in the year-earlier quarter.
Net income was negative $26.4 million, up sequentially from negative $47.5 million, and down from negative $15.6 year-earlier.
EPS (earnings per share, diluted) were negative $0.21, up sequentially from negative $0.38 and down from negative $0.13 year-earlier.
2015 Adcetris revenue expectations increased to $218 to $223 million.
Working on building Adcetris into a blockbuster for CD30 positive cancers. A label extension was approved by the FDA in the quarter.
Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (relapsed HL and relapsed systemic ALCL) in the quarter were a record $59.1 million, up 7% sequentially from $55.1 million, and up 23% from $48.2 million year-earlier.
Collaboration and license revenue was $15.3 million, up 6% sequentially from $14.4 million, and down 22% from $19.5 million year-earlier.
Royalty revenue was $9.7 million, up 28% sequentially from $7.6 million, and up 20% from $8.1 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 57 non-U.S. nations.
Adcetris for classical Hodgkin Lymphoma (HL) in consolidation settings was approved by the FDA based on the AETHERA trial.
ECHELON-1 (frontline HL) and ECHELON-2 (mature T-cell lymphoma) Phase 3 trials are now under an amended SPA from the FDA, with enrollment completed in E-1. E-2 enrollment should complete in 2016, with data readouts in 2017 and 2018.
ALCANZA Phase 3 trial for patients with CD30-expressing cutaneous T-cell lymphoma (CTCL) who have received prior systemic therapy completed enrollment.
A Phase 2 trial of Adcetris for systemic lupus erythematosus was initiated.
In collaboration with Bristol-Myers Squibb, SGEN initiated a Phase 1 / 2 trials to test Adcetris with checkpoint inhibitor Opdivo (nivolumab) in relapsed or refractory HL and in B-cell and T-cell non-Hodgkin lymphomas.
A Phase 1 trial of SEA-CD40 for solid tumors continues.
SGN-CD33A for AML (acute myeloid leukemia) continued a phase 1b trial for newly diagnosed AML, with additional data due out later this year. Additional indications for 33A are planned. Presentations will be made at ASH.
SGN-CD19A for second line DLBCL Phase 2 trial started, using Rituxan with or without CD19A. Another SGN-CD19A phase 2 trial for relapses or refractory DLBCL in combination with a salvage treatment was initiated. A frontline DLBCL trial is also planned for 2016.
The AbbVie collaboration was extended to Seattle Genetics PBD dimer and EC-mAb technologies. AbbVie made a milestone payment after an auristatin ADC Phase 1 trial for solid tumors was initiated.
Other trials to extend the Adcetris label are underway. Other ADCs (antibody-drug conjugates) are also under development, including SGN-LIV1A for breast cancer.
A combination trial with Opdivo (nivolumab) in HL and non-Hodgkin lymphoma is planned.
Seattle Genetics is now developing ADCs for immunological diseases and is also looking for further ways to expand the ADC platform.
Preclinical programs were also discussed on the call.
Adcetris and other data, including preclinical data, will be presented at ASH, December 5-9.
See also Seattle Genetics pipeline.
Cash ended at $736.5 million, up sequentially from $250.0 million after a net $526.6 million common stock offering in September. There was no debt.
Total costs and expenses were $110.6 million, consisting of: cost of sales $6.6 million; cost of royalty revenue $3.5 million, R&D $70.8 million; selling, general and administrative expense $29.7 million. Resulting in a loss from operations of $26.5 million. Other income near zero.
Expense of $28.7 million is attributable to non-cash share based compensation.
Breakout of Adcetris sales? We feel great about this quarter. Our on label business took a while to build to high market penetration rates. With the new label it will again take time to get to a high market share. Outside the label we are hearing about growth, but we do not promote outside the label. This is where physicians identify CD30 positive disease.
SGN-CD33A registration strategy? We are encouraged by the data and look forward to ASH. We amended our Phase 1 trial to add 24 unfit patients with a hypomethylating agent. We are considering this drug for all frontline AML patients, bother the fit (7+3) and unfit (usually older). We have shown strong anti-leukemic activity. We are also looking at MDS. We can't comment on discussions with regulators.
CD19A differences with CD19B? CD19 is a great target for lymphoma. The main difference is in the payload. A has MMAF and B has the PBD dimer. 19A has a lot of good Phase 1 data and is being advanced. With its more potent payload 19B could be used in different settings.
License partners timeline to get to clinical trials? We have about a dozen ADC deals, mostly structured as out-licenses. Potential is for $4 billion in milestones and then royalties. Several are already in Phase 2 trials. Announcements from the programs are controlled by our partners. It is a nice source of non-dilutive capital for the company.
Is 19A in a crowded space, how will you compete? It is a competitive space, but in DLBCL space a lot of patients succumb to the disease. CD19 is a superb target and we have really good single agent data with relatively low toxicity. Our Phase 2 trial designs are really exciting. Adding a potent direct payload to standard of care may be able to cure more patients.
Triple negative patients are difficult to treat. So if we can address that, we would be delighted.
Might you stratify breast cancer by levels of expression? LIV-1 trial, almost all metastatic breast cancer expresses it. We look at expression throughout development.
Duration response to new label extension? We saw the average duration of 12 cycles in the trial. In the earlier label patients, it is too early to tell if it will change minds. In our earlier trials Adcetris was used for 8 cycles, but in care it is typically used for 6 cyles.
Seattle Genetics main Openicon page
Analyst Conference Summaries Main Page