November 8, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of antibody-drug conjugate research firm Seattle Genetics (Nasdaq: SGEN ) tumbled as much as 14% today after the company reported disappointing third-quarter results and receiving an analyst downgrade.
So what: For the quarter, Seattle Genetics reported robust revenue growth of 141% to $49.8 million and a loss of $0.12 per share. Relative to Wall Street's expectations, it came in $0.02 ahead of EPS estimates, but fell shy of the $52.8 million consensus. Of specific interest were sales of Adcetris -- Seattle Genetics' only FDA-approved drug for the treatment of Hodgkin's lymphoma and systemic anaplastic large cell lymphoma -- which came in below many Wall Street analysts forecasts at $33.7 million. Although Seattle Genetics forecast full-year revenue of $132 million-$137 million for Adcetris, it nonetheless prompted Cantor Fitzgerald to lower its rating on the company to "sell" from "hold" and to reduce its price target to $20 from $30.
Now what: As for me, I'm incredibly optimistic about the potential for Adcetris and the 12 other clinical-stage drugs currently in Seattle Genetics' pipeline. Earlier this week, ImmunoGen (Nasdaq: IMGN ) and collaborative partner Roche (NASDAQOTH: RHHBY ) announced that their HER2-positive breast cancer treatment, T-DM1, has received priority review status by the Food and Drug Administration which should set up Seattle Genetics' studies for priority review assuming they meet their endpoint. The FDA has expressed a willingness to expedite review status on ADC treatments which leads me to believe it could be the future of cancer treatments. Clearly, Seattle Genetics has a ways to go before it's regularly profitable, but for those of you with a passion for biotech investing, I'd consider doing your research and using today's drop as a possible entry point.
Craving more input? Start by adding Seattle Genetics to your free and personalized watchlist so you can keep up on the latest news with the company.