Clinical Trial Positive! Shares Just Barely

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Seattle Genetics (Nasdaq: SGEN  ) is two for two in recent weeks. After demonstrating its ability to tackle Hodgkin's lymphoma, the development-stage drugmaker announced another positive trial for brentuximab vedotin (SGN-35) yesterday -- this time in anaplastic large cell lymphoma patients.

Brentuximab vedotin elicited a response in 86% of the 58 ALCL patients. We don't know how long the median response rate was because many of the patients are still responding, but it appears it'll be longer than six months because that's where the median follow-up currently stands. That's not bad for patients who failed earlier treatment or couldn't take the medication in the first place.

So if the results were so great and the first trial sent shares up more than 17%, how come shares barely budged yesterday, up just 0.2%? Expectations, my dear Fool, expectations.

Remember the first results came after Seattle Genetics' lintuzumab failed its clinical trial in acute myeloid leukemia. All hopes lay on brentuximab vedotin before the first trial was released, but a positive result on the second trial was somewhat expected.

The first trial was also a confirmation that the company's antibody-drug conjugate technology works. Since Seattle Genetics has licensed the technology to numerous companies -- Bayer, Celldex Therapeutics (Nasdaq: CLDX  ) , Daiichi Sankyo, Genentech, GlaxoSmithKline (NYSE: GSK  ) , AstraZeneca (NYSE: AZN  ) , Takeda, and Progenics Pharmaceuticals (Nasdaq: PGNX  ) -- proof in a pivotal trial is a good sign that royalties might be coming down the line.

Most importantly, the difference in going from zero to one approved drug is a lot bigger than going from one indication to two. Once the drug is on the market, a drugmaker is only allowed to market it for the approved indication, but doctors can generally prescribe it for anything they want. So-called off-label prescriptions can result in substantial sales, especially in the time between when a drug is shown to work in a clinical trial and when it's approved for the indication.

An approval -- any approval -- is important because Seattle Genetics will almost certainly go after patients earlier in their disease progression. Having brentuximab vedotin already on the market will help it go up directly against drugs such as Roche and Biogen Idec's (Nasdaq: BIIB  ) Rituxan rather than being used after them.

Think of it as a how-not-to-do-it guide: Dan Dzombak breaks down the top five ways to lose money investing.

GlaxoSmithKline is a Motley Fool Global Gains recommendation. Investing internationally doesn't have to be scary and it can certainly be profitable. Click here to grab a 30-day trial subscription to the newsletter where you'll see all of our current picks for a global economy.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of GlaxoSmithKline. The Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1329379, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:55:43 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,218.36 49.09 0.27%
S&P 500 2,142.99 -0.17 -0.01%
NASD 5,271.70 -11.70 -0.22%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 11:39 AM
AZN $29.67 Down -0.12 -0.40%
AstraZeneca CAPS Rating: ****
BIIB $295.43 Up +9.43 +3.30%
Biogen CAPS Rating: *****
CLDX $3.28 Up +0.02 +0.46%
Celldex Therapeuti… CAPS Rating: ****
GSK $40.37 Up +0.05 +0.11%
GlaxoSmithKline CAPS Rating: ***
PGNX $5.20 Up +0.01 +0.19%
Progenics Pharmace… CAPS Rating: ****
SGEN $50.21 Down -0.17 -0.34%
Seattle Genetics CAPS Rating: ****