conference date: April 28, 2016 @ 1:30 PM Pacific Time
for quarter ending: March 30, 2016 (first quarter, Q1)
Overview: Adcetris revenue ramping nicely. Still in the red.
Basic data (GAAP):
Revenue was $111.2 million, up 19% sequentially from $93.5 million, and up 35% from $82.2 million in the year-earlier quarter.
Net income was negative $20.5 million, up sequentially from negative $24.9 million, and up from negative $21.7 year-earlier.
EPS (earnings per share, diluted) were negative $0.15, up sequentially from negative $0.18 and up from negative $0.17 year-earlier.
Expects Adcetris net sales in the U.S. and Canada of $255 to $275 million for the full year 2016.
Record revenue quarter was boosted by a $20 million milestone payment. Adcetris sales declined sequentially, likely due to fewer potential patients having opertions in Q4. Also there had been distributor inventory build in Q4. Sales increased as the quarter progressed. The discount also increased on average due to the mix of accounts.
Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (relapsed HL and relapsed systemic ALCL) in the quarter were $58.6 million, down 7% sequentially from $63.0 million, and up 20% from $48.9 million year-earlier. In the quarter Seattle Genetics achieved a $20 million milestone payment from Takeda for surpassing $200 million in sales, and was recognized as royalties in the quarter. Recently received marketing approvals in Russia and Egypt. Now available in 64 countries.
Collaboration and license revenue was $20.2 million, up 13% sequentially from $17.9 million, and down 9% from $22.2 million year-earlier.
Royalty revenue was $32.3 million, up 156% sequentially from $12.6 million, and up 194% from $11.0 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 63 non-U.S. nations. The royalty rate has gone up following the $200 million milestone. But royalties will decline in Q2.
ECHELON-1 (frontline HL) and ECHELON-2 (mature T-cell lymphoma) Adcetris Phase 3 trials are now under an amended SPA from the FDA, with enrollment completed in E-1 and possible data readout in late 2017 to mid 2018. E-2 enrollment should complete in 2016, with data readouts in 2017 and 2018.
"There are more than 70 ongoing clinical trials being conducted globally with Adcetris."
ALCANZA Phase 3 trial, for patients with CD30-expressing cutaneous T-cell lymphoma (CTCL) who have received prior systemic therapy, completed enrollment in Q4. Top line data is expected in Q3 2016. Plans for commercial sales are being made. Working on a test for CD30.
In collaboration with Bristol-Myers Squibb, a Phase 1 / 2 trial to test Adcetris with checkpoint inhibitor Opdivo (nivolumab) in relapsed or refractory HL and in B-cell and T-cell non-Hodgkin lymphomas continued to enroll patients.
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. In Q4 a Phase 1/2 trial started for 33A as monotherapy for AML as a pre-conditioning regimen prior to stem cell transplants and for maintenance after the transplants. An MDS trial will also start in the near future. The Phase 3 trial for AML could start in Q3. And other trials in patient subsets are ongoing or planned.
SGN-CD19A for second line DLBCL Phase 2 trial started in Q4, using Rituxan with or without CD19A. Another SGN-CD19A phase 2 trial for relapses or refractory DLBCL in combination with a salvage treatment continued. A Phase 2 frontline DLBCL trial is also planned for 2016.
SGN-CD19B started a Phase 1 trial for relapsed or refractory B-cell non-Hodgkin lymphoma.
SGN-LIV1A interim Phase 1 data demonstrated activity in heavily pretreated patients with triple negative breast cancer. Additional patients are being enrolled. Positive preclinical data was reported at AACR.
ASG15ME and ASG22ME programs will present Phase 1 data at ASCO. These are a 50% co-ownership with Astellas and target solid cancers. The data so far is mainly in bladder cancer, for a substantial number of patients.
Seattle Genetics also expanded its linker molecules to enable ADCs to be engineered with previously inaccessible cytotoxic payloads.
Other trials to extend the Adcetris label are underway. Other ADCs (antibody-drug conjugates) are also under development, including SGN-LIV1A for breast cancer.
Seattle Genetics is now developing ADCs for immunological diseases and is also looking for further ways to expand the ADC platform.
Has some preclinical data showing ADCs may work well in combination with checkpoint inhibitors.
See also Seattle Genetics pipeline.
Cash ended at $691.7 million, down sequentially from $712.7 million. There was no debt.
Total costs and expenses were $132.2 million, consisting of: cost of sales $5.9 million; cost of royalty revenue $3.6 million, R&D $92.9 million; selling, general and administrative expense $29.7 million. Resulting in a loss from operations of $21.0 million. Other income $0.5 million.
Opened the European office.
Adcetris sales post label expansion? The launch has gone great. Keep in mind that Q4 was very strong, there were seasonal factors. We are confidence in full year guidance. We are 8 months in to the label expansion. It has a duration of up to 16 cycles. We have had no payer resistance.
Phase 2 timeline for 33A? We are focused on getting Phase 3 going for 33A. The data is encouraging with HMAs. 65% CRCRI rate with low mortality at 30 and 60 days and good safety. Phase 3 will be in older newly diagnosed AML patients. There will be more data presented in June, then more data later in the year for fit patients.
CD33 plans to file for breakthrough designation; competition? We don't comment on regulatory action before we can announce it. We saw the venetaclac (sp?) data at ASH. We thought it was interesting. We think 33A is very competitive with that.
New ADC painloads, toxicity? We are looking broadly at ADC technology including payloads, linkers, and targets. PDB dimer applicability will depend on the data.
Auristatin based ADC immunological cell deaths? Preclinical data shows these payloads have potential to be synergistic with checkpoint inhibitors. We are excited to see what the data will be. We are looking at many endpoints in the trials to understand immune system issues.
What drives duration for Adcetris? Trial allowed for up to 16 cycles. Market research suggests doctors and patients are willing to receive Adcetris for that length of time in both consolidation and relapsed/refractory settings.
If ECHELON-1 (frontline HL) is positive, how big could the market be? There are about 9500 patients in U.S., same in EU. Standard of care is 40 years old. We see the opportunity is large, but the trial is with advanced patients and has an SPA. So it is about a billion dollar opportunity. The goal is to cure a lot more patients.
33A difference from Mylotarg? Mostly physicians were not happy Mylotarg was taken off the market. 33A is better designed, including a stable linker. Mylotarg had a very short half-life, which caused the side effects. The leukemia doctors are excited about 33A. Mylotarg has had no bearing in our talks with the FDA.
We believe there are about 1000 CD30 positive CTCL patients annually in the U.S., but some are treated early and we would have a narrow label at first.
SEA40 program? It is not an ADC, but an engineered sugar antibody. The AACR data from the ongoing trial has been about cytokines, but we will publish more data soon. There is a lot of enthusiasm about CD40 as a target.
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