Seattle Genetics, Inc. Making the Most of It (and Then Some)

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Seattle Genetics (SGEN) might only have one drug on the market for now, but it's making the most of it, with sales continuing to grow, and the losses continuing to grow smaller.

Seattle Genetics results: The raw numbers

Data source: Company press release.

What happened with Seattle Genetics this quarter?

• Sales of Adcetris in the U.S. and Canada were up 20% year over year in the second quarter, to $66.2 million.
• Royalties, mostly from Takeda's sales of Adcetris outside of the U.S. and Canada, increased 21%, to $9.2 million.
• The remaining $20 million of revenue came from milestone payments from its partners.
• This month, Adcetris was approved in Europe for Hodgkin lymphoma at increased risk of relapse or progression following autologous stem cell transplant, its third approval in the EU.
• With more than $650 million in the bank, the biotech has plenty of cash to fund its operations.

What management had to say

In addition to selling Adcetris to more patients, Seattle Genetics can increase Adcetris sales by having patients on the drug for longer. Clay Siegall, Seattle Genetics' president and CEO, noted that the new indication -- referred to as the "AETHERA setting," after the clinical-trial name -- results in more cycles on Adcetris than the six cycles that late-stage patients typically take.

"In the AETHERA setting -- consolidation setting -- our clinical trial averaged about 12 cycles, and it is too early yet for us to get real good numbers on this, but it is certainly longer than what we are seeing in the relapsed refractory state; but we just don't have numbers yet to provide specifics," Siegall said.

Bristol-Myers Squibb's (BMY -0.87%) Opdivo gained FDA approval for Hodgkin lymphoma in May, but Siegall said Bristol-Myers Squibb wasn't cutting into Seattle Genetics' sales because Opdivo was primarily being used after Adcetris. "Together with our five-year data and the doctors being very comfortable with it -- and without any issues of warnings going on to transplant, which you have with PD1s -- I think we are in very good shape," Siegall said diplomatically, because Bristol-Myers Squibb is a partner, testing Opdivo in combination with Adcetris in multiple indications.

Looking forward

In addition to further expansion into the consolidation setting, Seattle Genetics has opportunities to expand sales into other indications if ongoing clinical trials are successful. The first of those, called the ALCANZA trial, in patients with CD30-expressing cutaneous T-cell lymphoma (CTCL), is scheduled to read out this quarter. It's not a huge opportunity because there are only about 1,000 patients diagnosed annually in the U.S., and some doctors are already using the drug to treat CTCL off label.

The bigger opportunity will come when the phase 3 ECHELON-1 trial testing Adcetris as a first-line treatment for Hodgkin lymphoma reads out sometime between next year and the middle of 2018. The exact date isn't known yet, because it depends on how long it takes for patients to progress.

Seattle Genetics is also running a trial called ECHELON-2 in frontline mature T-cell lymphoma (MTCL) that will complete enrollment this year, and should read out data in the 2017 to 2018 time frame.

Let's not forget that Seattle Genetics isn't a one-trick pony; it has a pipeline, including vadastuximab talirine, which used to go by its code name SGN-CD33A, which is being tested in a phase 3 trial in patients with acute myeloid leukemia. The trial is still enrolling patients, so a completion date isn't known yet.