Seattle Genetics (SGEN) Q3 2021 Earnings Call Transcript

Seattle Genetics (SGEN)
Q3 2021 Earnings Call
Oct 28, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the Seagen third quarter 2021 financial results conference call. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Peggy Pinkston, vice president of investor relations. Please go ahead.

Peg Pinkston -- Vice President, Investor Relations

Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to Seagen's third quarter 2021 financial results conference call. This afternoon, we issued a press release with our results and the press release and supporting slides are available on our website in the investors section, events and presentations page. Speakers on today's call will be Clay Siegall, president and chief executive officer; Todd Simpson, chief financial officer; Chip Romp, executive vice president, Commercial, U.S.

; and Roger Dansey, chief medical officer. Following our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour and so ask that you limit yourself to one question to give everyone an opportunity to participate in Q&A during our call today. Today's conference call will include forward-looking statements regarding future or anticipated events and results, including the company's 2021 financial outlook, anticipate [Audio gap] including data readouts, regulatory submissions and approvals.

Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause difference include the difficulty in forecasting sales, revenues and expenses, impacts related to the COVID-19 pandemic and the uncertainty associated with the pharmaceutical development and regulatory approval process. More information about the risks and uncertainties faced by Seagen is contained under the caption risk factors included in the company's quarterly report on Form 10-Q for the quarter ended June 30, 2021, filed with the Securities and Exchange Commission and the company's subsequent reports filed with the SEC. And now I'll turn the call over to Clay.

Clay Siegall -- President and Chief Executive Officer

Thank you, Peg. Good afternoon, everybody, and welcome to our third quarter call. We look forward to providing updates today on recent commercial, regulatory and clinical achievements. We reported net product sales of approximately $1 billion for the year to date and $366 million for the third quarter, reflecting growth across our expanded portfolio of approved medicines.

We continue to demonstrate robust financial strength fueled by product sales, royalties and multiple strategic collaborations. Our strong balance sheet allows us to advance and expand our pipeline both internally and through external business development efforts that you will hear more about shortly. Our first strategic priority is to maximize the global potential of our products through exceptional commercial execution, clinical development and strategic partnerships. We've expanded our commercial portfolio from one product to four in less than two years, which is a remarkable achievement by our team.

Last month, FDA granted accelerated approval to tisotumab vedotin, or TIVDAK, a tissue factor-targeted antibody drug conjugate, which we are codeveloping with our partner, Genmab. TIVDAK is the first and only FDA-approved ADC for patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. Upon its accelerated approval in September, TIVDAK became Seagen's fourth commercial product and marks an important milestone for women with recurrent or metastatic cervical cancer. We are focused on strong commercial execution and early launch feedback has been positive.

We are also conducting a broad clinical development program intended to expand TIVDAK's future potential and support global regulatory applications. Although the initial indication represents a modest market, we have already presented promising data investigating TIVDAK in combination with other therapies in earlier lines of cervical cancer, which may represent important clinical advancements and much larger market opportunities. TUKYSA, our best-in-class HER2 tyrosine kinase inhibitor has become an important option for the treatment of second and later-line HER2-positive breast cancer patients with and without brain metastasis. TUKYSA is approved in 36 countries.

And in addition to the U.S., we have commercially launched in Germany, France, Switzerland and Austria. One and a half years after U.S. approval, we are pleased with TUKYSA's, uptake, healthcare provider feedback and inclusion in key treatment guidelines. We continue to engage with European authorities to secure broader reimbursement for TUKYSA, which could take up to two years, depending on the country.

Our strategic collaboration with Merck will help further accelerate TUKYSA's global reach in regions outside of the U.S., Canada and Europe. We believe TUKYSA has broad potential in HER2 cancers. And to that end, we recently completed enrollment in the Phase II MOUNTAINEER trial in advanced HER2-positive metastatic colorectal cancer, which could potentially support registration under FDA's accelerated approval pathway. TUKYSA broad clinical development program also includes evaluation in HER2-positive breast cancer, gastric cancer and other HER2 amplified or mutant tumors.

PADCEV is a first-in-class ADC that has quickly become standard of care in previously treated metastatic urothelial cancer. Earlier this year, FDA granted PADCEV a second indication, making it the first and only FDA-approved therapy for patients with locally advanced or metastatic urothelial cancer who have received immunotherapy and cannot receive cisplatin. PADCEV also received regular U.S. approval, enabling us to the impressive overall survival data, a key benefit.

We have also been able to leverage with ADCETRIS and TUKYSA. Outside of the U.S., PADCEV recently received approval in Japan, and we and our partner, Astellas, continue to make progress with global regulatory submissions across Europe, Asia Pacific and the Americas. We have positioned PADCEV strategically to benefit from changing urothelial cancer market dynamics, and we are advancing a robust clinical development program. Notably, we recently completed enrollment in Cohort K of the EV-103 trial evaluating PADCEV in combination with KEYTRUDA as first-line treatment in patients with metastatic urothelial cancer who are unable to receive cisplatin-based chemotherapy.

The results of this cohort could potentially support registration under FDA's accelerated approval pathway. Lastly, ADCETRIS, the foundation of care in multiple CD30-expressing lymphomas is commercially available in 76 countries, along with our partner, Takeda, and is a key part of our core business. A decade after approval, ADCETRIS maintained solid performance with record quarterly sales and will be featured in multiple abstracts at ASH in December. We continue to progress a comprehensive clinical development program to maximize ADCETRIS' potential to benefit patients.

Our second strategic priority is to advance our programs toward securing approvals for new products. In August, we added a late-stage asset to our pipeline through an important license agreement with RemeGen for dacitimab vedotin or DV outside of RemeGen's territory of Asia, excluding Japan and Singapore. DV is a novel ADC and that is active across a broad range of HER2-expressing solid tumors and is being developed as monotherapy and in combination with PD-1 inhibitors. DV has already received conditional approval in China for third-line gastric cancer and their National Medical Products Administration accepted the supplemental biologics license application for second and later lines of metastatic urothelial cancer.

The deal represents a strong strategic fit as it harnesses our ADC technology, expertise, development experience and our expanded global infrastructure. These elements will help to maximize DV's potential value and global reach. We believe DV is an important and differentiated asset, and Roger will go into further detail. Our third strategic priority is to expand our deep and diverse early stage pipeline through innovation, encompassing ADCs, immuno-oncology agents, corporate development and strategic partnerships.

Importantly, we are submitting at least two INDs for additional ADCs, including those targeting B7-H4 and PD-L1, further bolstering our early stage pipeline. Across our early and late-stage pipeline, we are advancing 13 programs in a range of solid tumors and hematologic malignancies, including four novel programs that are expected to enter the clinic next year. Next, I'll turn the call over to Todd, who will discuss our financial results. Then Chip will provide an update on our commercial performance.

After that, Roger will provide further detail on our clinical development activities and pipeline. Todd?

Todd Simpson -- Chief Financial Officer

Thanks, Clay, and thanks to everyone for joining us on the call this afternoon. Our financial results reflect significant advances made across the business. Today, I'll summarize our financial results for the third quarter and year to date and then discuss our outlook for the remainder of 2021. Total revenues were $424 million in the third quarter and $1.145 billion for the year to date in 2021.

Product sales totaled $366 million in the third quarter, representing 37% growth over the third quarter of last year. This was driven by growth in product sales across our portfolio. In addition, third quarter results for PADCEV included $7 million in sales to another company for a combination clinical trial that they are conducting. Given the growing interest in the use of our drugs in combination settings, we are pleased to see this and wanted to highlight the impact on PADCEV sales growth this quarter.

Lastly, TIVDAK was launched late in the quarter, bringing a fourth product to our commercial portfolio. Royalty revenues were $41 million in the third quarter and $105 million for the year to date in 2021. Growth over 2020 reflected increasing sales of ADCETRIS by Takeda as well as higher royalties on sales of Polivy by Roche and BLENREP by GSK. Collaboration revenues were $17 million in the third quarter and $24 million for the year to date in 2021.

This included product cost of sales and royalties for each of our brands, the PADCEV gross profit share to Astellas, and noncash amortization of acquired technology costs for TUKYSA. R&D expenses were $459 million in the third quarter and $924 million for the year to date in 2021. These are increases over 2020 as third quarter expenses included the $200 million upfront payment due to RemeGen for the licensing of disitumab vedotin as well as continued investment across our early and late-stage pipeline. SG&A expenses were $180 million in the third quarter and $505 million for the year to date in 2021.

These are increases over 2020, reflecting investments to support ongoing TUKYSA launches across Europe and more recently, the launch of TIVDAK in the U.S. I'll now provide several updates to our financial outlook for the remainder of 2021, beginning with product sales. We are increasing our 2021 product sales guidance for all three brands. ADCETRIS sales are now expected to be in the range of $700 million to $710 million, PADCEV in the range of $330 million to $335 million and TUKYSA in the range of $315 million to $325 million.

Chip will provide more context on market dynamics later. We are increasing our 2021 guidance for royalty revenues to a range of $140 million to $150 million, primarily reflecting stronger sales of ADCETRIS by Takeda in its territory. And lastly, we are increasing our 2021 collaboration revenue guidance to a range of $25 million to $30 million. Turning now to expenses.

We are increasing R&D expense guidance to $1.19 billion to $1.24 billion, primarily as the result of the $200 million upfront amount due under the RemeGen collaboration. We are also increasing our cost of sales guidance to a range of $295 million to $315 million, primarily reflecting higher sales of PADCEV. And lastly, we are narrowing our SG&A guidance to $675 million to $725 million. Noncash expense guidance remains underchanged.

We ended the quarter with $2.4 billion in cash and investments. This does not reflect the $200 million payment to RemeGen made in the fourth quarter. Our financial strength allows us to continue investing in our pipeline and business, and we're pleased with the progress so far this year. Now I'll turn the call over to Chip for an overview of our commercial performance.

Chip Romp -- Executive Vice President, Commercial U.S.

Thank you, Todd. Performance across the commercial portfolio was strong in Q3. ADCETRIS, PADCEV and TUKYSA, all delivered growth in the quarter. And we are pleased with the approval and launch of TIVDAK, our fourth product.

ADCETRIS third quarter sales were $185 million, a 13% increase over Q3 2020. We continue to focus on the landmark five-year ECHELON-1 progression-free survival data in frontline Hodgkin lymphoma. These are meaningful data to physicians and patients and solidify the ADCETRIS regimen as the best option for frontline Stage three or four patients. August marked the 10-year anniversary of the first ADCETRIS approval, and I would like to thank the dedicated commercial teams that work diligently to ensure this important product gets to appropriate patients.

Moving on to PADCEV. Third quarter sales were $95 million, a 54% increase over the third quarter of 2020. Physician adoption of checkpoint inhibitors for post-platinum maintenance continues to increase, and this has generated more addressable patients for PADCEV. We are also promoting to the additional indication for patients who are ineligible for cisplatin containing chemotherapy and continue to see incremental uptake.

Transitioning to TUKYSA. Third quarter sales were $87 million, representing a 104% increase over the third quarter of 2020. This marks our fifth consecutive quarter of sequential growth with contributions from the U.S. and Europe.

In patients with brain mets, TUKYSA is the most utilized product in second and later lines in the U.S. With uptake, the demonstrated overall survival benefit from the HER2CLIMB trial, along with favorable clinical guidelines gives us confidence as we seek reimbursement in additional European countries. Finally, we are excited that TIVDAK has launched, and we are pleased with early reaction, continuing to work closely with our partner, Genmab. We are utilizing our well-established support [Audio gap] navigate TIVDAK's eye care requirements.

TIVDAK provides an important new medicine for patients in the second and third-line setting, where previous options have typically offered low objective response rates and poor outcomes on TIVDAK as we get further into the launch. Now I'll turn the call over to Roger.

Roger Dansey -- Chief Medical Officer

Thank you, Chip, and good afternoon, everyone. I'm happy to share recent clinical development updates for our approved medicines and our pipeline. I'll begin my remarks with TIVDAK, which is approved for the treatment of adult patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. Approval was based upon data from the innovative 204 trial as well as other supported studies.

A global Phase III trial in cervical cancer, innovaTV 301 is currently enrolling a similar population and is intended to serve as the confirmatory trial in the United States and to support global regulatory applications. Our next goal is to bring TIVDAK into earlier lines of metastatic or recurrent cervical cancer. And for that purpose, we are conducting the innovaTV 205 trial in the first and second line setting. Combination data from innovaTV 205 were recently presented at ESMO.

The combination of TIVDAK and carboplatin in the first-line setting resulted in a confirmed overall response rate of 55% with a complete response of 12% and the duration of response of 8.3 months. In the second-line setting, the combination of TIVDAK and KEYTRUDA resulted in an ORR of 38% with a median DOR of 13.8 months. We are encouraged by these data which will inform a TIVDAK-based combination approach for frontline cervical cancer. In addition, the recent accelerated approval of KEYTRUDA in the first-line setting further defines the treatment landscape in which a TIVDAK combination will need to be tested.

Turning now to TUKYSA. In the evolving HER2 treatment landscape, we continue to progress our broad development program in breast and GI malignancies as well as other solid tumors. In breast cancer, the Phase III trial, HER2CLIMB-02 is evaluating TUKYSA plus KADCYLA versus KADCYLA alone in the first and second line metastatic setting. As a reminder, this trial is enrolling patients with active brain metastases with similar eligibility to HER2 client.

In high-risk adjuvant breast cancer, enrollment continues in the randomized COMPASS HER2 RD trial, which is being run by the Alliance Cooperative Group. This study is evaluating to TUKYSA plus KADCYLA versus KADCYLA alone. In GI cancers, as Clay mentioned, we have completed enrollment in MOUNTAINEER, which is assessing TUKYSA and Herceptin as treatment for patients with advanced HER2-positive colorectal cancer. We anticipate results next year.

And if the data are compelling, MOUNTAINEER could potentially support accelerated approval in the United States. Additional studies are evaluating TUKYSA in combination with oxaliplatin-based chemotherapy in first-line GI cancers as well as in a basket trial for solid tumors with HER2 alterations. Finally, we are conducting a study of TUKYSA in combination with in HER2 for HER2-positive breast cancer. I will turn now to PADCEV, where we remain focused on moving into earlier lines of urothelial cancer.

In the first-line metastatic setting, we have completed enrollment of EV-103 Cohort K, which is testing the combination of PADCEV and KEYTRUDA as treatment for patients who are ineligible for cisplatin therapy. This trial is intended to support an application for accelerated approval in the United States, and we expect to report top line results in 2022. We are also enrolling patients into the Phase III EV-302 global trial, which includes both cisplatin eligible and ineligible patients and is assessing PADCEV plus KEYTRUDA compared to platinum-containing chemotherapy. EV-302 is intended to be a confirmatory trial as well as supporting global marketing applications.

In muscle invasive bladder cancer, we, together with Astellas and Merck are advancing 2 Phase III trials, both of which are testing PADCEV in combination with KEYTRUDA. The KEYNOTE-B15 or EV304 trial is enrolling cisplatin-eligible patients. And the KEYNOTE-905 or EV-303 trial is enrolling cisplatin ineligible patients. Additionally, we have now opened the EV-104 trial of single-agent PADCEV in non-muscle invasive bladder cancer.

In this study, PADCEV administered intravesically in BCG nonresponsive patients. Nectin-4 is highly expressed in this disease state and preclinical data support this as a potential opportunity for PADCEV. We are also evaluating PATV a basket trial of high Nectin-4 expressing solid tumors, including lung, breast, head and neck, gastric and esophageal cancer. This study is enrolling, and we await initial data to inform our next steps.

Now on to ADCETRIS. At the upcoming ASH meeting in December, we expect to have several presentations. Notably, we plan to present data for the first time from an ongoing Phase II study assessing ADCETRIS in combination with nivolumab, adriamycin and dacarbazine as frontline treatment for advanced Hodgkin lymphoma. We continue to advance our clinical development program, including ECHELON-3, the Phase III trial in relapsed disuse large B-cell lymphoma, which compares ADCETRIS plus REVLIMID and RITUXAN to REVLIMID and RITUXAN.

Our newest entry into late-stage development is acitimab vedotin, which has already received conditional approval as monotherapy in China for gastric cancer, the antibody, which has a high affinity for HER2 and block signaling also demonstrates enhanced internalization when compared with trastuzumab. This is an important characteristic for an antibody drug conjugate. The ADC also delivers our proprietary vedotin payload the same as in our three commercial ADCs. Initial data in metastatic urothelial cancer was impressive and has already garnered breakthrough therapy designation from the FDA.

Additionally, PD-1 inhibitor combination data we presented at ASCO this year, demonstrating high response rates, and these will also inform our clinical development plans. We are in active discussions with the FDA on our urothelial cancer development strategy. With regard to breast cancer, our partner RemeGen has generated initial encouraging monotherapy data in HER2 low breast cancer, and we are evaluating the potential here for future development. Turning now to ladiratuzumab vedotin, or LV, which is being developed with our partner, Merck.

At ESMO this year, we presented initial efficacy data with a weekly dosing regimen of LV in patients with triple-negative breast cancer. Data demonstrated that weekly LV results in a confirmed ORR of 28% in the second and third-line setting. We continue to evaluate the optimal dose and schedule of LV, both as monotherapy and in combination with KEYTRUDA to optimize efficacy and safety. I'd like to now briefly mention our early stage pipeline.

We are advancing seven programs in Phase I clinical trials across a range of solid tumors and hematologic malignancies, including the ADC's SGN-CD228A, B6A and STMV. We expect IND submissions for at least two more novel ADC programs this year, targeting B7-H4 and PD-L1. At SITC in November, we will present posters on these programs, which will highlight robust antitumor activity in preclinical models. We also have four effector function-enhanced antibodies, utilizing our SEA technology, including SEA-CD40, CD70, BCMA and TIGIT.

Later this year at ASH, we will be disclosing initial results of SEA-BCMA in subjects with relapsed or refractory multiple myeloma. With regard to SEA-CD40, as previously discussed, we completed enrollment of a cohort of patients with pancreatic cancer. We expect to report clinical data from this cohort early next year. We have also initiated a basket trial to assess SEA-CD40 in other solid tumors, including melanoma and non-small cell lung cancer.

In closing, we continue to reach important development milestones and make meaningful progress with our pipeline, and we look forward to providing you with further updates on future calls. I'll hand the call now back to Clay.

Clay Siegall -- President and Chief Executive Officer

Thank you, Roger. Seagen has a resilient core business and solid foundation, which fuels our ability to continue expanding and evolving our capabilities, technology and business. Throughout this year, we have achieved multiple important milestones. We have a strong portfolio of approved medicines and a proven commercial engine, which allows us to compete in the global marketplace.

We have robust clinical development capabilities and a deep pipeline of tomorrow's potential first and best-in-class therapies. Strategic partnerships, our international infrastructure and substantial financial power enables our ability to develop, advance and launch exceptional oncology therapies. The future for Seagen is exciting, and we remain passionate and committed to improving the lives of cancer patients worldwide. Operator, please open the line for Q&A.

Questions & Answers:

Operator

[Operator instructions] And our first question will come from Geoff Meacham of Bank of America. Please go ahead.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

It's Aspen on for Geoff. Thanks for the question. Maybe one for Clay and one for Chip. First off, Clay, now that you have your fourth approved product in the portfolio, maybe talk about how you're thinking about the balance of investing and keeping that early pipeline engine running while also moving toward a sustained profitability.

And then on the TUKYSA launch OUS, maybe just help us understand what the reimbursement pathway looks like over the next three to six months or maybe 12 months even as you guys secure different geographies into you.

Clay Siegall -- President and Chief Executive Officer

Thanks for the questions. OK. First of all, we do have four products now. We've had three products approved in the last two years.

We're very proud of the products we have that really make a difference in patients' lives. We continue to invest strongly in our late-stage, mid-stage and early stage products. We just submitted two INDs recently that Roger mentioned. We will continue to push forward there.

We intend to be profitable. We're not giving guidance today on when we're profitable, but it's something that's important to us but it's also important to us to continue to build our pipeline. We're working together with our board of directors on the future of Seagen and where we're going. And also working with some of our biggest investors who continue to encourage us to make great medicines and move on, and this is the time to do that.

We are investing heavily in our pipeline. So that is where it is now. But please note, we do intend to be profitable, and we could be profitable now by basically not working on our pipeline, not expanding our products. But that we don't think is the right way to build a big profitable, self-sustaining organization that makes a huge difference in patients' lives.

So we're pursuing that. Now as far as TIVDAK and reimbursement, Chip, do you want to talk a little bit about the initial -- I'm sorry?

Chip Romp -- Executive Vice President, Commercial U.S.

TUKYSA.

Clay Siegall -- President and Chief Executive Officer

TUKYSA. I thought he was asking -- sorry, TUKYSA. Sorry. Go ahead.

Chip Romp -- Executive Vice President, Commercial U.S.

Sure. So as far as the ex U.S. goes, launches continue with strong uptake in Germany and France. We're working through the [ snow ] process for the next countries that are in line.

We're in price negotiations with several of them. So as we move forward, we look forward to expanding the footprint of reach for the product.

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Great. Thanks.

Operator

Next question comes from Corey Kasimov of JPMorgan. Please go ahead.

Unknown speaker

Great. Hi. This one for Corey. Maybe just one on the updated revenue guide here.

The new numbers seem to imply a sequential downturn in product revenues in Q4. Is that just a little services on your end? Or are there other market dynamics that we should be thinking about as we head into Q4 here? Thank you.

Clay Siegall -- President and Chief Executive Officer

So thanks for the question. First of all, we are very pleased with our quarterly and year-to-date performance. Our net product sales were up 37% year over year in third quarter of '21. So that's great.

We have great products that make a difference in patients' lives. We have increased not our three initial products, TIVDAK has two, two new for guidance right now. But we also increased our other revenue metrics, which is royalties and partnering. So all five of our revenue metrics, we increased.

Our focus is on the long game. Making a difference in patients' lives, expanding our labels, maximizing the potential and reach of our drugs. Going worldwide, we're investing in going into a much bigger footprint globally to help more patients. And we believe that this is going to make the company stronger in the not-too-distant future.

We're going to take some investment to do that. And we're really excited about that. As far as thinking about the fourth quarter, Todd, do you want to give a little color on to that?

Todd Simpson -- Chief Financial Officer

Yes. So you mentioned are we trying to be conservative? We're actually trying to just be as accurate as we can. We recognize that COVID continues to create a lot of just uncertainties. And our drug sales fluctuate quarter to quarter.

So with that in mind, what we've always tried to do is just do the best job we can on annual guidance, and we look forward to giving our 2022 guidance on the next quarterly call. But as Clay mentioned, we're really pleased with how the year has gone. Second and third quarter, in particular, were very strong. And as a result, we did a modest up guide in our product sales guidance today, and we're really pleased with how we're doing.

Thank you.

Operator

The next question comes from Salveen Richter of Goldman Sachs. Please go ahead.

Salveen Richter -- Goldman Sachs -- Analyst

Good afternoon. Thanks for taking my questions. Could you just comment on any granularity on the TIVDAK launch at this point? And then just time line updates of what we should expect next on the TIGIT and LV programs?

Clay Siegall -- President and Chief Executive Officer

Sure. So we are really excited about getting TIVDAK on the market. And it's early, but really good feedback. Chip, would you like to talk a little bit about what's it like out there in the field and with commercial fee?

Chip Romp -- Executive Vice President, Commercial U.S.

Sure. We're really pleased with the initial reactions we've had for oncologists. We look forward to continuing to work closely with our partner, Genmab. Physicians are excited about having the option of TIVDAK.

It represents the first and only FDA-approved AUC in the metastatic cervical cancer setting.

Clay Siegall -- President and Chief Executive Officer

And then switching to your second question. So let's start with the one at a time. So TIGIT is a product we're really excited about. It's in clinical trials.

We think it's differentiated from the other TIGITs out there because of our SEA technology. And that's in trials and LV is also in a number of trials. Roger, could you comment a little bit about TIGIT and where we are and what we're thinking and then at LV.

Roger Dansey -- Chief Medical Officer

Sure. Thanks, Clay. So with regards to TIGIT, we understand the environment around us. There are lots of other companies working on the TIGIT program for good reason because the early proof of concept is there.

So we understand that time is of the essence. We also need to essentially develop TIGITs in the way that we can. If we are differentiated clinically and be able to demonstrate that. So I can just say we're working hard on the TIGIT program.

We're not ready for prime time yet, but we are moving along expeditiously. With regard to LV. As you know, we have presented multiple data sets now that LV is an active drug. Now both of the monotherapy and in combination, and we're continuing to work hard with our partners, Merck, to see if we can optimize dose and schedule and then move it into a pivotal trial.

But we're not there yet. Again, stay tuned for more data as the program unfolds.

Salveen Richter -- Goldman Sachs -- Analyst

Thank you.

Operator

The next question comes from Michael Schmidt of Guggenheim Securities. Please go ahead.

Unknown speaker

Hi. This is [inaudible] on for Michael. Thanks for taking our questions and congratulations on the impressive results of this quarter. We have a question on TUKYSA.

Now that in HER2 reported positive results in second-line breast cancer, do you think this will drive the HER2CLIMB-02 study toward enrolling more patients with brain mets? And what proportion of patients do you expect to have brain mets in that study? And perhaps a related question to this. on the Phase II study of TUKYSA plus in HER2, what are you specifically looking at in that study? And what could be the potential next step? Thank you.

Clay Siegall -- President and Chief Executive Officer

So thanks for the questions. Two good questions on TUKYSA. Roger, can you start with the brain mets question concerning HER2CLIMB. Yes.

And then the next one on HER2 plus TUKYSA.

Roger Dansey -- Chief Medical Officer

Right. So with regard to our development program. As you know, we've demonstrated remarkable treatment effects in patients with brain metastases, such a high unmet need. And also, as we know, two positive metastatic breast cancer does have a high frequency of brain met up to 50% of patients will develop brain mets through their disease course.

And so it's expected that a program such as HER2CLIMB,, HER2CLIMB-02, where we are allowing patients with active brain mets to enroll will, in fact, roll enroll a decent proportion of patients with brain metastases. We can't share with you any of the information on HER2CLIMB-02 as it is. But just in principle, a drug like TUKYSA will be attractive for patients with brain metastases. With regard to HER2, from a sort of development perspective, the two most interesting drugs in the HER2 breast cancer space right now, TUKYSA and in HER2.

From a mechanistic perspective, combining an ADC like in HER2, together with TUKYSA , makes complete sense. As you can see in our development program, we've done that. We've had that same approach with KADCYLA. So we're looking forward.

We're still in the process of enrolling. We're looking forward to what those results may produce. And of course, if those results are compelling, we will need to think through what next steps there could be. But again, we wouldn't disclose any of that at this point.

We're still in the process of data generation.

Unknown speaker

That's very helpful.

Operator

Next question comes from Kennen MacKay of RBC Capital Markets. Please go ahead.

Ken MacKay -- RBC Capital Markets -- Analyst

Thanks for taking the question. Congrats on the Q3 performance. I had another question on the guidance. Maybe for Todd, just on the increased guide for royalty revenues, I was wondering if you could help us with sort of where we should think about that coming from.

Potentially is that coming from Polivy and the label there or whether it's something else? And then just maybe going back to the PADCEV guide. After really a quite impressive quarter, 15% quarter-over-quarter growth, just wondering if you could help us understand what dynamics could be related to then be expecting a decline in Q4 here or whether there's any seasonality. Again, just trying to understand the dynamics. Congrats again on the Q3 performance.

Todd Simpson -- Chief Financial Officer

Thanks, Ken. So good questions. Let me start with the royalty up guide. As I think I mentioned earlier, the principal reason for that is related to Takeda sales of ADCETRIS, stronger than what we had thought of a year ago when we set our guidance.

So we're delighted to see that ADCETRIS is doing so well in Takeda's territories. And then you mentioned Polivy and Genmab. Those two are starting to contribute to royalties. They're obviously lower in amount than the Takeda royalties.

But it's great to see the benefit that both these drugs probably Polivy in particular, and the way that looks like it's moving forward now in the front line. So we're really happy with that. And then on the PADCEV guide. Yes, I mentioned also that we had a clinical supply order from another company.

I wanted to call that out in the remarks I made earlier because while it is $7 million and not that significant to the overall picture, it nevertheless was a pretty meaningful driver of growth in Q3. We did see also commercial growth. So I wanted to point that out. And as we look into Q4, it's a situation where PADCEV has rapidly become a standard of care.

We've now got both the Cohort 1 and the Cohort 2 labels. We're super happy with where we are, but there's uncertainty and quarterly fluctuations. So we've just tried to do the best we can across the board actually with all of our guidance. But PADCEV as well.

Ken MacKay -- RBC Capital Markets -- Analyst

Thanks for that. I appreciate it.

Operator

The next question comes from Boris Peaker of Cowen. Please go ahead.

Boris Peaker -- Cowen and Company -- Analyst

Great. My question is on the Daiichi litigation. I was just wondering if you could comment specifically maybe on the timing of the arbitration, but also second scenario is since there's a lawsuit in the trial starting next April, just curious what would happen if you win the arbitration but then lose the lawsuit on the patent litigation. Would they still owe you royalties on in HER2 in that scenario?

Clay Siegall -- President and Chief Executive Officer

So Boris, thanks for the question on Daiichi Sankyo legal issues. So first of all, as per our guidance, we have said that we believe there will be the arbitration and the retired federal judge in the arbitration will announce the findings from that upward the end of the year. And so that's something we have been public about. And you're right, there is a patent infringement case that we brought forward, which is being heard in April.

So you are correct on both of those. As far as really one reading or another, that's basically something we wouldn't comment on. It's an interworking legal system and we have a great legal team. We think we have a great case in both regards, both for the arbitration, which is based on our contract that we had with Daiichi Sankyo.

And based on the patent infringement based on issued patent that we have on our technology. So they're different cases. They're not the same. And we feel like we have a great case for both.

So we're looking forward. The most important thing for us is to develop drugs and make a difference in cancer patients' lives. I don't go away from that. But we work with a lot of other companies.

And when we work with a company, and we do deals with them, we expect to if they're using our technology, we expect to be their partner. And so that's where this is.

Boris Peaker -- Cowen and Company -- Analyst

Got it. And maybe let me ask a follow-up question not related to the litigation. But I was just curious, with the strong data that we recently saw for in HER2 versus KADCYLA in breast cancer. How does that impact your development strategy particularly the recently licensed HER2-ADC from RemeGen?

Clay Siegall -- President and Chief Executive Officer

Thanks for that. The product from RemeGen is really interesting. It internalizes very rapidly. Keep in mind that whether the original HER2 ADC KADCYLA and HER2, they both use the same antibody component, which is trastuzumab, which we know as Herceptin.

And that molecule internalizes, but it's kind of middle of the road internalization. The antibody used in RC48, which is what we licensed from RemeGen, that was a unique antibody and it was selected based on incredibly rapid internalization. And one of the things that we've been able to see based on what RemeGen did with their data, which we did a lot of diligence on, was its impact on HER2-low patients. And that's a big area.

In fact, it's bigger area than HER2-high. And so we think this rapid internalization could be something really exciting. They have data. I mean they're approved in gastric cancer in China.

We have breakthrough designation for urothelial cancer in the U.S. with the FDA. And certainly, the data they have in HER2 low breast cancer and other HER2 low tumors is very interesting. They even have data in combination with checkpoint inhibitors, which is not surprising to us since with our other ADCs, they use vedotin.

We see very nice activity with checkpoint inhibitors, such as KEYTRUDA. So we think, all in all, we have a very nice profile there. And yes, HER2 is a good drug. It's an important drug.

And on behalf of cancer patients, we love when we see new drugs. This is great. That's our goal. That's been my passion and goal for my whole career.

So I think that there's a lot of room for cancer patients who have different types of therapies. Roger, do you want to add anything to that?

Roger Dansey -- Chief Medical Officer

I think we're in a fortunate position in that we have a highly valuable and active small molecule TKI in TUKYSA , which is in the HER2 space. We now have a HER2-directed antibody with properties that we think are very interesting. And we have the external environment, which includes drugs like KADCYLA, which we're combining with and in HER2, which we're exploring in combination with TUKYSA . So there are lots of possibilities for us going forward.

We are not changing our TUKYSA development program as it is right now, but what are the next steps with regard to things like disitumab vedotin in combination with TUKYSA in HER2 in combination with TUKYSA. I think all of those things are on the table for exploration going forward.

Boris Peaker -- Cowen and Company -- Analyst

Thank you very much.

Operator

Next question comes from Gena Wang of Barclays. Please go ahead.

Gena Wang -- Barclays -- Analyst

Thank you for taking my questions. So maybe to just follow the IP arbitration. Just want to make sure, Clay. So would the timing still be focus you? And how would you share that information with investors? And then also another question regarding RemeGen's the TV compound.

Just wondering how is the data comparison efficacy safety, especially, say, in HER2-low compared to, say, ANCHOR2, the ADC profile?

Clay Siegall -- President and Chief Executive Officer

Sure. Well, I'll try to take the first part of the question about the arbitration. And then I'll turn it over to Roger to talk about his view of the differences in safety between RC48 and the vedotins versus in HER2. So on the arbitration.

We feel that we're confident based on where we sit and based on hearing from our internal and external counsel that there'll be a resolution of some type in the arbitration case, not in the patent infringement case, which starts in April, but in the arbitration case prior to the end of the year. And that's something that I think would be shared with the investors. We've probably put out some sort of press release or something like that on it. We look forward to that.

Once again, we think we have a strong case. We've been going at this now for some time and look forward to getting it resolved. Roger, on the safety?

Roger Dansey -- Chief Medical Officer

Sure. With regard to the sort of the clinical profile. The data that RemeGen has generated to date looks pretty impressive. It's not that dissimilar from an HER2.

And I think we, obviously, Seagen need to generate our own data with the population defined as the HER2-low and determine what our next steps are. But we see this as a really meaningful opportunity. And it may not necessarily be limited to breast cancer. With regards to the efforts that the HER2-low program in China has generated, we will obviously also leverage as much as possible data from China to supplement whatever efforts you make in the United States.

Thank you.

Operator

Next question comes from Andy Hsieh of William Blair. Please go ahead.

Andy Hsieh -- William Blair -- Analyst

Great. Thanks for taking my questions. Congratulations on the feed and rate quarter. I have a question about the EV-104 study that you kind of availed today.

So in terms of the intravesical administration and pat, curious how you think about the dosing since when we usually think about that as in a systemic sense. And also for the maintenance phase, also curious about your thinking about stopping dosing at month 10 to 11 versus maybe a longer treatment duration.

Clay Siegall -- President and Chief Executive Officer

Andy, thank you for those questions. Roger, do you want to take those?

Roger Dansey -- Chief Medical Officer

Sure. Thanks, Andy. So yes, we're excited. The nonmuscle invasive data cancer opportunity prepared could be very meaningful.

Just to remind you, at least in our hands, preclinically, when we introduce PADCEV into the bladder and not expose systemically, we really expect that the safety profile will look more favorable than systemic therapy. Obviously, we have to generate the dose in humans, but the preclinical package supports that. So very little systemic exposure. With regard to dose, it's a great question.

The trial has just begun. We are using the current commercially available PADCEV image, and we're hoping that we will be able to define an efficacious dose using that current formulation. That's certainly in our plan. With regard to beyond the initial sort of induction through to maintenance, Andy, I think when we share details of the trial itself to things like poster presentations, I think that will be a good time to address some of those points.

But obviously, we're just beginning, so understanding all the way through what our eventual plan may look like is a little difficult at this point to predict

Operator

The next question comes from Jay Olson of Oppenheimer. Please go ahead.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

Hi guys. Congrats on the quarter. Can you talk about your first-line combination strategy that you're planning for TIVDAK? And also, when should we expect to see some data for TIVDAK and other tumor types?

Clay Siegall -- President and Chief Executive Officer

So thank you for the words about our court. We are really excited about TIVDAK. We presented some combination data in two different ways at ESMO and certainly going to earlier lines is very important for us. Roger, do you want to talk a little bit about that?

Roger Dansey -- Chief Medical Officer

Yes. So frontline cervical cancer, the standard of care is a combination chemotherapy with or without bevacizumab. The recent reveal of KEYTRUDA as an addition to that combination adds another layer of drug but actually produces a much better outcome. So when you think about how to move into a frontline space and create a regimen that is competitive, that is potentially better than the various current standards of care, we see with TIVDAK as the sort of backbone of that regimen.

We believe combining it with chemotherapy, certainly based on the carboplatin subject combination we've seen will be an important element. We also believe that pembrolizumab will be an important element. And we need -- we've shown already the doublets. We need to go further.

We need to put into the clinic and test what we would consider to be the final regimen that would be included in a frontline study. And that's exactly what we're doing now.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

Great. Thank you. And other tumor types?

Roger Dansey -- Chief Medical Officer

With regard to other tumor types, yes, we are working on a plan to present data publicly at an appropriate time.

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

OK. Great. Thank you.

Operator

Next question comes from Zhiqiang Shu of Berenberg. Please go ahead.

Zhiqiang Shu -- Berenberg Capital Markets -- Analyst

Thank you. Congrats on the quarter as well. I'd like to ask about the SEA-BCMA program that you're going to present at ASH. What are we going to see at this initial data presentation? And I guess can you comment on the market opportunity for this drug? Thanks very much.

Clay Siegall -- President and Chief Executive Officer

Yes. So first of all, on the market opportunity, this is in an area that is mainly targeted to multimyeloma. It's a substantive market. There's great drugs out there like REVLIMID and Velcade and antibodies CD38 and other drugs.

So there really is good different therapies out there. But the disease is certainly not cured where it sits. These are therapies that have extended the life of patients. But in MM, there really is still always room for great drugs to come in, especially ones that have very low safety signals.

And like what we would expect with SEA-BCMA. Roger, could you talk a little bit about the drug and what our thoughts on there? And obviously, as far as ASH goes, until we present, we're not going to -- it's not appropriate to talk about the presentation. But Roger could give you a little color on.

Roger Dansey -- Chief Medical Officer

Sure. So the clinical trial program with the SEA-BCMA has been running for a little while now, and we've been evaluating it as a monotherapy. And we've been looking at various ways of dosing it. We've been evaluating it in combination with dexamethasone, which is essentially an almost sort of mandatory combination drug in multiple myeloma.

And so it's that type of data in late-line myeloma patients that we will be presenting. And we obviously, at this point, we believe that the data is mature enough and meaningful enough that it's time for us to produce this in a public forum. So we're looking forward to presenting the BCMA initial data, it is initial data, at ASH this year.

Zhiqiang Shu -- Berenberg Capital Markets -- Analyst

Great. Thank s very much.

Operator

The next question comes from Ren Benjamin of JMP Securities. Please go ahead.

Ren Benjamin -- JMP Securities-- Analyst

Good afternoon guys. Thanks for taking the questions and congrats on a great quarter. Clay, I guess I'd love to just learn a little bit more about dacetuzumab vedotin and the urothelial data to date. Can you just remind us of that? And how should we be thinking about the development plan of this new asset kind of going forward? Are you guys only going to be focusing on kind of low HER2 expressing tumors or is bladder cancer? Or do you see a potential option? And how do we think about Nectin-4 expression versus HER2? And how the two drugs might ultimately work together.

Clay Siegall -- President and Chief Executive Officer

Sure. So we have not laid out the entire plan at this point for dacetuzumab vedotin or DV. But you're touching on a lot of the important things that we considered where we due diligence, where we would put it in. And now we have a very big plan that we've been hatching and building up.

So I don't think you won't have to wait long to really hear everything. But clearly, we're looking at bladder cancer where there's already breakthrough designation. Clearly, we're looking at HER2-low breast cancer, where there's a big slug of data. And also, we can't look past gastric cancer.

I mean it's an important cancer. It's already approved in China. So there's a lot of different possibilities for this drug. And I think we are very -- which is well positioned to take this forward and make it into a real product that could get out on a global scale, not just in China right now.

So Roger, do you want to comment more about the question?

Roger Dansey -- Chief Medical Officer

Yes. With regard to urothelial cancer, the data that's been generated by RemeGen is really impressive. Bear in mind that this is a HER2 defined population, which is something that will need some work in data cancer because it isn't a population that has sort of up to this point, been readily identified. But a biomarker-driven population of HER2-high expressers and perhaps the HER2-low group in data cancer is the population we're interested in.

And as Clay mentioned, essentially, as this drug comes into our hands, we'll look at all the opportunities in HER2 disease, whether it's traditional amplification or overexpression or HER2-low. So I think all possibilities are on the table. But our initial focus is on urothelial cancer and on HER2-low breast cancer.

Ren Benjamin -- JMP Securities-- Analyst

And just as a follow up, Roger. Do you have a sense as to the potential overlap between that expression of HER2 expression on Nectin-4? Or are they kind of maybe a little bit exclusive?

Roger Dansey -- Chief Medical Officer

Yes. Nectin-4 expression, we see as sort of ubiquitous. HER2 expression is obviously more limited. I think the epidemiology of urothelial cancer is less well defined, and that's something that we need to work on.

And I think when we have a clear and accurate view of the distribution of traditional HER2-high versus HER2-low in bladder cancer or urothelial cancer, we'll bring that forward. But it is not the whole population. Obviously, it is a biomarker defined group of patients.

Ren Benjamin -- JMP Securities-- Analyst

Perfect. Thanks for taking the questions and congrats.

Operator

The next question comes from Joe Catanzaro of Piper Sandler. Please go ahead.

Joe Catanzaro -- Piper Sandler -- Analyst

Hi guys. Thanks so much for taking my question. Just maybe one quick one for me. So Roger, you had mentioned a new basket combination trial for CCD40.

Wondering if you could elaborate a little bit on that and maybe how your experience in pancreatic cancer and the combination you're looking at there informed your decision to start this trial. Thanks.

Roger Dansey -- Chief Medical Officer

Sure. It's a great question. I think we believe strongly in the scientific hypothesis, which is the combination of an agonist, a CD40 agonist together with agents that injure and kill cancer cells and potentially also as well together with PD-1 inhibitors that relieve the exhausted T-cell population. That as a scientific construct test, we think, is really interesting.

Obviously, pancreatic cancer is our first foray into that. pancreatic cancer, as you well know, is not an easy disease to treat. It is, I guess, traditionally considered to be less immune responses than other tumors. And that's why we're taking the basket trial further into diseases where, in fact, immunotherapy has already proven to work.

So we think it makes sense to continue to test this approach in other tumors as well. So that's why we're opening up this basket trial, which will include diseases like non-small cell lung cancer and melanoma.

Joe Catanzaro -- Piper Sandler -- Analyst

OK. Perfect. Thanks for taking my question.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Peg Pinkston -- Vice President, Investor Relations

OK. Thank you, operator. And thanks, everybody, for participating in our call today. Have a good rest of your day.

Operator

[Operator signoff]

Duration: 77 minutes

Call participants:

Peg Pinkston -- Vice President, Investor Relations

Clay Siegall -- President and Chief Executive Officer

Todd Simpson -- Chief Financial Officer

Chip Romp -- Executive Vice President, Commercial U.S.

Roger Dansey -- Chief Medical Officer

Aspen Mori -- Bank of America Merrill Lynch -- Analyst

Unknown speaker

Salveen Richter -- Goldman Sachs -- Analyst

Ken MacKay -- RBC Capital Markets -- Analyst

Boris Peaker -- Cowen and Company -- Analyst

Gena Wang -- Barclays -- Analyst

Andy Hsieh -- William Blair -- Analyst

Jay Olson -- Oppenheimer & Co. Inc. -- Analyst

Zhiqiang Shu -- Berenberg Capital Markets -- Analyst

Ren Benjamin -- JMP Securities-- Analyst

Joe Catanzaro -- Piper Sandler -- Analyst

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