conference date: February 9, 2017 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2016 (fourth quarter, Q4)
Overview: Adcetris sales up 12% y/y; pipeline development continues.
Note: the day after this conference Seattle Genetics announced it would be buying the Phase 1/2 cancer therapy Sacituzumab Govitecan (IMMU-132) for $250 million upfront plus up to $1.7 billion in milestone payments and double digit royalties from Immunomedics (IMMU). This is not included in the guidance below. See the Seattle Genetics IMMU-132 press release for details.
Basic data (GAAP):
Revenue was $105.3 million, down 1% sequentially from $106.3 million, and up 13% from $93.5 million in the year-earlier quarter.
Net income was negative $55.1 million, down sequentially from negative $31.8 million, and down from negative $24.9 year-earlier.
EPS (earnings per share, diluted) were negative $0.39, down sequentially from negative $0.23 and down from negative $0.18 year-earlier.
For the full year 2017:
Adcetris net product sales of $280 to $300 million. Collaboration and license revenue $75 to $90 million, and royalty revenue of $50 to $55 million. Giving a rather wide total revenue range of $405 to $445 million.
R&D expense $460 to $500 million. SG&A $160 to $170 million. Cost of sales 10 to 12% of Adcetris product sales. $80 to $90 million share-based compensation expense.
Clay Siegall, CEO said "We are now positioned for several near term Phase 3 catalysts that could establish Adcetris as the foundation of therapy for CD30 expressing lymphomas."
Adcetris (brentuximab vedotin) sales for CD30-positive malignancies (relapsed HL and relapsed systemic ALCL) in the quarter were $70.8 million, up 1% sequentially from $70.1 million, and up 12% from $63.0 million year-earlier. Preparing for commercial expansion of label to CTCL, but it is a rare disease.
Collaboration and license revenue was $20.8 million, down sequentially from $24.0 million, and up from $17.9 million year-earlier.
Royalty revenue was $13.7 million, up sequentially from $12.2 million, and up from $12.6 million year-earlier. Royalties mainly reflect Adcetris sales by Takeda in 65 non-U.S. nations.
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 possible data readout for E-1, which is fully enrolled, in late 2017. E-2 enrollment for MTCL should have data readouts in 2018. The goal is to change the standard of care in both indications.
Adcetris ALCANZA Phase 3 trial, for patients with CD30-expressing cutaneous T-cell lymphoma (CTCL) who have received prior systemic therapy data was presented at ASH in December. The trial met its primary endpoint with high statistical significance.
Adcetris was granted Breakthrough Therapy Designation in November for "CD30-expressing mycosis fungoides and primary cutaneous anaplastic large cell lymphoma who require systemic therapy and have received one prior systemic therapy. These represent the most common subtypes of CTCL. Based on discussions with the FDA following the BTD, the company now plans to incorporate additional data from investigator-sponsored trials into the planned supplemental Biologics License Application (BLA) to support the potential for a broader label in CTCL. As a result, submission of the supplemental BLA is now planned for mid-2017."
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.
Enfortumab Vedotin (ASG-22ME) and ASG-15ME, in collaboration with Agensys/Astellas, demonstrated a 59% objective response rate in previously treated urothelial cancer patients in a Phase 1 trial. Astellas and SGEN are planning regulatory discussions for registrational trials, including possible combinations with checkpoint inhibitors.
A Phase 1 trial of SEA-CD40 for solid tumors continues, first clinical data was presented at SITC in November.
SGN-CD33A (Vadastuximab Talirine) for AML (acute myeloid leukemia) continued a phase 1b trial for newly diagnosed AML, with additional data due out later this year. A Phase 1/2 trial continued for 33A as monotherapy for AML as a pre-conditioning regimen prior to stem cell transplants and for maintenance after the transplants. The Phase 3 CASCADE trial for AML continued. And other trials in patient subsets are ongoing or planned, including for MDS. Four oral presentations will be made at ASH. But "In December 2016, the FDA placed a full or partial clinical hold on several early-stage trials of vadastuximab talirine in AML. The clinical hold was initiated to evaluate the potential risk of hepatotoxicity in patients who were treated with vadastuximab talirine and received an allogeneic stem cell transplant. The company is working with the FDA to determine whether there is any association between hepatotoxicity and treatment with vadastuximab talirine and to resolve the clinical hold." The hold does not apply to the CASCADE trial. There is a phase 1 trial for MDS as well.
SGN-CD19A or Denintuzumab Mafodotin: phase 2 trial in frontline diffuse large B-cell lymphoma (DLBCL) continued.
SGN-CD19B continued a Phase 1 trial for relapsed or refractory B-cell non-Hodgkin lymphoma.
SGN-LIV1A Phase 1 data was presented in December showing antitumor activity for triple-negative breast cancer. An expansion cohort is enrolling.
SGN-CD352A started a Phase 1 trail for multiple myeloma.
SEA-CD40 Phase 1 data was be reported at SITC in November. "SEA-CD40 is a novel immuno-oncology agent targeted to CD40 utilizing Seattle Genetics’ proprietary sugar-engineered antibody (SEA) technology to produce a non-fucosylated antibody."
SGN-CD123A continued a Phase 1 trial for relapsed/refractory AML. CD123 is expressed on leukemic stem cells, which have proven difficult to kill.
SGN-2FF initiated a Phase 1 trial for relapsed or refractory solid tumors.
Seattle Genetics received a milestone payment for its ADC collaboration with AbbVie.
See also Seattle Genetics pipeline.
Cash ended at $619 million, down sequentially from $632 million. There was no debt.
Total costs and expenses were $161 million, consisting of: cost of sales $8 million; cost of royalty revenue $4 million, R&D $108 million; selling, general and administrative expense $41 million. Resulting in a loss from operations of $56 million. Other income $1 million.
Full year 2016 revenue was $265.8 million, with GAAP net loss of $140 million and EPS negative $1.00.
Slowing of growth of Adcetris U.S. sales? Q4 showed record revenue. Guidance is for 5% up in 2017. The future growth is post results of E1 and E2. Our guidance for 2017 did not include any possible E1 data.
33A safety investigation color? We remain excited about the 33A program, and 2 trials are ongoing. We are working with the FDA towards a resolution, can't comment beyond that.
33A CASCADE accrual? Enrollment has been as expected. There is no shortage of AML patients in need of treatment.
E2 population opportunity? PTCL has about 5000 patients, and a lot have CD30 expression. The study is fully enrolled, patients are treated for up to 6 months. Results due in 2018. The Phase 1b follow up data at ASH showed a strong, long-term benefit.
The size of the CTCL market for us will depend on the actual label. There are about new 2000 U.S. patients per year, and about 1000 that are CD30 positive. The prevelance is about 10,000 patients in the U.S.
We have already done some preliminary work with Adcetris and checkpoint inhibitors with good results. There are reasons to think that ASG-22ME would also combine well.
LIV1, why not move forward rather than expanding the current trial? We are still in the process of choosing the right dose to move forward. We think the data is exciting.
Peak Adcetris share and duration? We think we are at about a steady state for duration. We are at a strong market share, we could go a little higher.
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