Seattle Genetics (SGEN) releases earnings on Thursday after the bell. Here are three things you should pay attention to as the company reports its first-quarter earnings.
Beat and raise?
As part of its fourth quarter earnings release, Seattle Genetics guided for sales of its lymphoma drug Adcetris sales in the range of $200 million to $210 million this year, which is a year-over-year increase of 15%. That's not horrible growth, but it's less than the 23% year-over-year increase seen between 2013 and 2104.
Seattle Genetics is notorious for sandbagging its guidance -- as notorious as a company that's only had a drug on the market for about four years can be -- so it will be interesting to see if Adcetris sales are high enough to give the company confidence to raise guidance after the first-quarter earnings. Last year, the biotech raised guidance at the second- and third-quarter earnings call -- and then ended up beating that number -- so don't take a lack of a raise as a sign of weakness.
Expanding Adcetris
To get to profitability, Seattle Genetics needs to expand Adcetris' indication beyond the current indication in which patients need to have failed at least one other treatment -- and in some cases, multiple treatments -- before the drug is used.
The company is seeking approval for "post-transplant consolidation treatment of Hodgkin lymphoma patients at high risk of relapse or progression." Consolidation treatment is used right after an autologous stem-cell transplant to delay or eliminate relapse or progression, so Seattle Genetics will get to treat patients earlier in their disease progression.
We probably won't get any new data for that treatment setting on the conference call; the positive data from the phase 3 trial was presented at the American Society of Hematology meeting last December, and published in a peer-reviewed article last month. Treatment with Adcetris nearly doubled the time it took for the cancer to return, from 24 months for the placebo group to 43 months for patients who received Adcetris.
Earlier this month, Seattle Genetics announced that the FDA had accepted its application to approve Adcetris to treat patients in the earlier setting, and gave the drug a priority review with a target date of August 18. Recently, the oncology division at the FDA has been making decisions well ahead of the target date for many cancer treatments, so listen for management's color on how the review with the FDA is going.
Pipeline and collaborators
A lot of focus is given to Adcetris because it's on the market, but Seattle Genetics' pipeline drugs, and the drugs being developed by its collaborators using its antibody drug conjugate, or ADC technology, are important to the biotech's long-term success.
Look for an update on its most advanced pipeline candidate, SGN-CD19A, which is scheduled to start a phase 2 trial this year. The company hopes to get permission from the FDA to run clinical trials on two new compounds soon, so hopefully there's an update on exactly what those compounds will target and treat; Seattle Genetics has only characterized them as "one ADC and one immuno-oncology agent."
On the collaborator front, look for an update on how much money the company will generate in milestone payments this year. Having collaborators advance compounds obviously makes Seattle Genetics more valuable, but the real benefit to shareholders is the milestone payments that provide cash to reduce the biotech's burn rate, or do additional clinical trials at the same burn rate.
