Analyst Conference Summary

Biotechnology

conference date: February 9, 2022 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2021 (fourth quarter, Q4)

Forward-looking statements

Overview: Total revenue down y/y, despite product and royalty revenue strong growth.

Basic data (GAAP):

Revenue was $430 million, up 1% sequentially from $424 million and down 29% from $601 million in the year-earlier quarter.

Net income was negative $174 million, up sequentially from negative $294 million and down from $167 million year-earlier.

EPS (earnings per share, diluted) were negative $0.95, up sequentially from negative $1.61, and down from $0.90 year-earlier.

Guidance:

Expects full year 2022 product sales of $1.48 to $1.545 billion and total revenue of $1.665 to $1.745 billion. Cost of sales $380 to $420 million; RnD $1.2 to $1.3 billion; SGA $780 to $860 million. Share compensation $280 to $310 million.

Conference Highlights:

Clay Siegall, CEO said "We expect to achieve many milestones in 2022, including important clinical data readouts, global regulatory and commercial progress, and advances across our pipeline. We are well-positioned with significant financial strength and an expanded geographic footprint to continue executing upon our strategy."

Tidvak for cervical cancer was approved in September 2021 and had first revenue in Q4 2021. In partnership with Genmab, on a 50:50 basis. Initial Phase 2 data from a basked of solid bumors trial will be presented later in February 2022.

Collaboration revenue dropped dramatically y/y, resulting in lower total revenue.

Tukysa is still ramping in new nations.

Adcetris for newly diagnosed advanced hodgkin lymphoma reported postive Phase 3 data in February 2022. In December 2021 Phase 2 data with nivolumab, doxorubicin and dacacarbazine for stage III/IV Hodgkin lymphoma showed an 88% complete response rate.

In October 2022 Padcev completed enrollment of cohort K for first-line metastatic urothelial cancer, with results expected that could support accelerated registration, due in late 2022. Cohort H for muscle-invasive bladder cancer will be reported at ASCO GU Feb. 17-19.

Tuksya completed enrollment in September 2021 for Phase 2 metastatic colorectal cancer. Results expected in 2022. Will start a Phase 3 maintenance trial for HER2-positive breast cancer in Q1 2022.

Padcev regulatory process was paused in EU in Q1 2022 due to severe skin reactions. But that is a known, so working with regulators.

In January 2022, the Company initiated phase 1 clinical trials of two novel ADCs, SGN-PDL1V and SGN-B7H4V, for advanced solid tumors.

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.

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

See also Seagen pipeline.

Cash ended at $2.2 billion, down sequentially from $2.4 billion. There was no debt.

Total costs and expenses were $602 million, consisting of: cost of sales $87 million; R&D $304 million; selling, general and administrative expense $211 million. Resulting in income from operations of negative $172 million. Other expense $5 million. $2 million income tax benefit.

Full year 2021 product $1.4 billon, royalties $150 million, total revenue $1.57 billion. Net loss $674 million or $3.70 per share.

Q&A selective summary:

Guidance for product revenue, is it conservative, why is it near flat? Building brands take time. Protuct Revenue guidance 7 to 12% growth, so that is not flat. Tukysa revenue guidance is flat to down, that is in a evolving market. Later in the year we will have a regulatory submission with possible label expansion in 2023.

Daichi litigation developments? Arbitration reopened for additional evidence. Decision could occur after end of Q1. Confidential while pending. We believe our case is strong.

Price assumptions for 2022? We expect volume growth. We are not commenting on price increases today.

Tukysa off label (breast cancer) share loss, have you seen? Expect an impact in 2022 due to new data, but that is already reflected in guidance.

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