Seattle Genetics (SGEN) reported "record" sales in the second quarter for its only drug, Adcetris.

But "record" is all relative, as the sales in the U.S. and Canada only amounted to $55 million. With the solid but far from blockbuster sales, management raised guidance by $10 million on either end of the range and now expects Adcetris sales for the year to come in the range of $210 million to $220 million.

Royalties from Takeda's sales of Adcetris outside the U.S. and Canada added another $7.6 million and Seattle Genetics booked another $14 million in revenue from collaboration and licensing agreements. Added together the $77 million in revenue couldn't even cover Seattle Genetics' research and development bill of $85 million. All told Seattle Genetics lost $47.5 million in the second quarter.

Using sales from a first approved drug to offset some of a biotech's expenses as it ramps up sales is par for the course, but after having Adcetris on the market for nearly four years, it's clearly time for Seattle Genetics to accelerate sales.

Fortunately, that opportunity is right around the corner in the form of an expanded label for Adcetris. By Aug. 18, the Food and Drug Administration is expected to rule on the use of Adcetris as a posttransplant consolidation treatment for Hodgkin lymphoma patients at high risk of relapse or progression.

If the FDA agrees, and that seems likely given the data, Adcetris  will be used right after an autologous stem cell transplant if the doctor feels the patient is at high risk of the lymphoma coming back. Adcetris is currently only approved for Hodgkin lymphoma patients after they fail an autologous stem cell transplant or if a transplant isn't possible (and then they have to fail two other cocktail treatments). Getting to the patients earlier in their disease progression should increase sales.

Expanding further
Seattle Genetics is testing Adcetris as early as it can go in front-line Hodgkin's lymphoma in a phase 3 trial called Echelon-1 that is set to complete enrollment this year. The trial will test Adcetris against the standard of care, a cocktail of chemotherapy drugs called ABVD. The patients that get Adcetris will also get a related cocktail called AVD because the B, which stands for bleomycin, can cause lung toxicity when combined with Adcetris. If the Adcetris cocktail works better than the ABVD, doctors certainly won't miss bleomycin, since it's fairly toxic on its own.

This year, the biotech is also looking to complete enrollment in a second phase 3 trial, dubbed Alcanza, which is testing Adcetris against a chemotherapy in patients with CD30-positive mature t-cell lymphomas.

Expanding sales of Adcetris is a good move as it gives Seattle Genetics lots of shots on goal with a drug that's already shown clinical activity. In addition to the Echelon-1 and Alcanza trials, Seattle Genetics is testing the drug in four other settings that are further behind and has plans to start trials in three other settings.

But eventually Seattle Genetics is going to have to develop another drug on its own. The closest one to market is SGN-CD19A, which Seattle Genetics plans to test in a phase 2 trial in second-line diffuse large B-cell lymphoma.

Hopefully by the time SGN-CD19A makes it to market, enough of the Adcetris trials will be positive that sales will have expanded enough to get Seattle Genetics to profitability.