Analyst Conference Summary

Biotechnology

conference date: October 29, 2020 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2020 (third quarter, Q3)

Forward-looking statements

Overview: Continuing rapid revenue growth. $725 million upfront payment from Merck.

Basic data (GAAP):

Revenue was $1.06 billion way up sequentially from $278 million and also up from $213 million in the year-earlier quarter.

Net income was $636 million, up sequentially from negative $21 million and up from negative $91 million year-earlier.

EPS (earnings per share, diluted) were $3.50, up sequentially from negative $0.12, and up from negative $0.55 year-earlier.

Guidance:

Conference Highlights:

Clay Siegall, CEO said "Our third quarter and year-to-date strong financial performance was driven by product sales across our diverse portfolio of three marketed products as well as the positive financial impact of our recent collaborations with Merck on ladiratuzumab vedotin and Tuksya. We plan to report clinical and preclinical data across our programs at several medical meetings during the remainder of 2020. In addition, we are pursuing multiple regulatory submissions, including our Tuksya MAA that is under review by the EMA, a planned tisotumab vedotin BLA in the U.S. and global marketing applications for Padcev. "

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. In February 2020 positive updated results were reported in the Phase 1b/2 trial for urotherlial cancer. First patient dosed in Phase 3 trial for first-line urothelial cancer in April 2020. Will test in other solid tumors. Partnered with Astellas.

Tukysa first revenue was in Q2 2020. 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. Seagen received an upfront payment of $125 million and is eligible for progress-dependent milestones of up to $65 million as well as tiered royalties on sales of Tukysa in Merck's territory.

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 August 2020, Seagen achieved two milestones totaling $26 million under its ADC collaboration with GSK, triggered by FDA and EMA approval of Blenrep (belantamab mafodotin) for multiple myeloma.

Tisotumab vedotin Phase 2, single arm trial for R/R cervical cancer reported positive results in September 2020 with a 24% ORR. Seattle Genetics is developing tisotumab vedotin (TV) with Genmab, on a 50:50 basis. Completed enrollment in the pivotal innovaTV 204 trial evaluating TV in patients with recurrent and/or metastatic cervical cancer who have relapsed or progressed after standard of care treatment.

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.

The first patient was dosed in a phase 1 clinical trial evaluating SGN-B6A, an antibody-drug conjugate (ADC) targeting integrin beta-6, which is overexpressed in a variety of solid tumors and has been shown to be a negative prognostic indicator across a diverse range of cancers.

SGN-LIV1A Phase 1 data was presented in December 2019 showing antitumor activity for heavily pretreated triple-negative breast cancer. An expansion cohort is enrolling, with data to be presented in December. Plans a combination with tecentriq for triple-negative breast cancer, conducted by Roche. Added an agreement with Merck to try with Keytruda.

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

See also Seattle Genetics pipeline.

Cash ended at $1.72 billion, up sequentially from $896 million. There was no debt.

Total costs and expenses were $423 million, consisting of: cost of sales $78 million; R&D $218 million; selling, general and administrative expense $128 million. Resulting in income from operations of $638 million. Other income $1 million. $3 million income taxes.

Q&A selective summary:

Adcetris market dynamics, sales decline? Cancer care is being affected by the pandemic. Less patients are starting, less new lymphoma diagnosis. We hope that changes soon. We may have held or grown market share. Our worry is patients delaying and presenting with later stages of disease.

Padcev launch? Adoption has been rapid, it is not unusual to see growth slow at this point. We look forward to label expansion. Do not think there is warehousing.

Tukysa launch color? Good so far, both community and academic settings. Seeing use for breast cancer and brain metastases.

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