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Seattle Genetics (SGEN) reported third-quarter earnings on Thursday, but while the biotech's lead drug has been on the market for half a decade, it still remains largely a pipeline story. You have to skim down to the fourth subhead of the press release to get to the quarterly sales numbers.

Seattle Genetics results: The raw numbers


Q3 2016 Actuals

Q3 2015 Actuals

Growth (YOY)


$106.3 million

$84.1 million


(Loss) from operations

$32.4 million

$26.5 million


(Loss) per share




Data source: Company press release. YOY = year over year.

What happened with Seattle Genetics this quarter?

  • Adcetris sales were up 19% year over year in the U.S. and Canada, where Seattle Genetics sells the drug, thanks to continuing use of the cancer drug as a consolidation treatment for Hodgkin lymphoma patients at high risk of relapse following transplant.
  • Royalty revenue from Takeda's international sales of Adcetris and payments from other collaborators for licensing its antibody drug conjugate technology made up the rest of the overall revenue growth.
  • In August, Seattle Genetics reported positive top-line data from a phase 3 trial testing Adcetris in cutaneous T-cell lymphoma. The biotech expects to submit a marketing application for the expanded approval in the first half of next year.
    • Earlier this month, Seattle Genetics and partner Astellas reported promising data from enfortumab vedotin, or ASG-22ME, in urothelial cancer. Rather than trying to compete with immuno-oncology drugs such as Bristol-Myers Squibb's (BMY 0.36%) Opdivo, which have already shown good results in some patients with urothelial cancer, the companies are going after the 80% or so of patients who don't respond to Opdivo or other drugs in the same class.

What management had to say

Jonathan Drachman, Seattle Genetics' chief medical officer and EVP of R&D, said the following on the conference call:

We have decided to discontinue further development of SGN-CD70A. This anti-CD70 ADC was evaluated in a phase 1 trial for non-Hodgkin lymphoma and renal cell carcinoma. While treatment resulted in objective responses, these data did not meet our criteria for advancing to later-stage development within our robust portfolio.

While some investors will see this as a negative, the fact that Seattle Genetics has so many opportunities that it can shelve a drug with a modest effect should be viewed as a good thing. Many small biotechs have taken less-than-stellar drugs into mid-stage trials simply because the other option was to shut down and go home.

The use of Adcetris in patients with cutaneous T-cell lymphoma is already in the NCCN guidelines based on earlier clinical trials, but Darren Cline, Seattle Genetics EVP of commercial, pointed out that

... having the label will give us, the commercial team, the opportunity to really focus in on who those treating physicians are and be able to raise awareness of the data set, identify the patients, and really talk about the data that we have.

In other words, after Adcetris is officially approved for cutaneous T-cell lymphoma, the marketing team can go to work driving sales beyond the current off-label sales.

Looking forward

Management tightened its revenue guidance for Adcetris sales in the U.S. and Canada to $260 million to $270 million, shaving a little off of both sides of the $255 million to $275 million range given in February.

Still, the current sales of Adcetris will have little bearing on Seattle Genetics' value in a few years. For that, investors have to look to the pipeline, and they won't have to wait too long since the American Society of Hematology (ASH) meeting is coming up in a little over a month.

Seattle Genetics plans to present the full data for the aforementioned trial testing Adcetris in patients with cutaneous T-cell lymphoma at ASH as well as more than 10 other presentations of Adcetris data. Early phase 1 data combining Adcetris and Bristol-Myers Squibb's Opdivo should be interesting since Opdivo has also been shown to work in Hodgkin lymphoma.

The combination of Adcetris and Opdivo opens up a lot of options for further approvals of Adcetris. Seattle Genetics and Bristol-Myers Squibb are also testing the combination in relapsed and refractory non-Hodgkin lymphoma and recently starred a trial in front-line older Hodgkin lymphoma patients who can't tolerate chemotherapy.

Most importantly, but still about a year away, investors will get data from the ECHELON-1 trial testing Adcetris plus chemotherapy as a treatment for newly diagnosed advanced Hodgkin lymphoma patients. Moving into the first-line setting could boost sales of Adcetris substantially. The guidance for the data release is technically "during 2017," but since the previous guidance was "2017 to mid-2018 time frame," it seems safe to assume the data will come in the later part of the year.