Seattle Genetics (SGEN) reported second-quarter revenue and earnings numbers, but the conference call focused mostly on potential near-term revenue growth for the biotech's one approved drug, Adcetris, with one expanded indication under review at the FDA and another to be there shortly.
Seattle Genetics results: The raw numbers
|
Metric |
Q2 2017 |
Q2 2016 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$108.2 million |
$95.4 million |
13.4% |
|
Income from operations |
($59.4 million) |
($33.4 million) |
N/A |
|
Earnings per share |
($0.39) |
($0.23) |
N/A |
Data source: Seattle Genetics.
What happened with Seattle Genetics this quarter?
- Sales of Adcetris in the U.S. and Canada, where Seattle Genetics is responsible for sales, increased 12% year over year.
- Royalty revenue, mostly from Takeda's sales of Adcetris elsewhere, increased 35%.
- Seattle Genetics recently submitted a supplemental marketing application to be able to sell Adcetris for cutaneous T-cell lymphoma, based on the positive ALCANZA phase 3 trial and two phase 2 trials run by independent investigators.
- The results of ECHELON-1 were positive albeit with a small magnitude of improvement in patients with Hodgkin lymphoma who haven't been previously treated compared to the standard chemotherapy regimen, which seems to worry investors a little. The biotech plans to submit a marketing application to treat the first-line Hodgkin lymphoma patients by the end of the year.
- On the downside, Seattle Genetics stopped a phase 3 trial testing vadastuximab talirine, which has a checkered past, after more acute myeloid leukemia patients taking the trial died compared to the control group.
Image source: Getty Images.
What management had to say
"Based on our review of pooled, blinded PFS events in the E2 trial, we have observed a lower rate of progression events compared with our projections. We plan to interact with FDA about the potential to unblind the trial prior to reaching the prespecified number of events. Based on the length of patient follow-up, we believe the trial data will be mature in 2018 and continue to expect to report E2 data next year." -- Seattle Genetics CEO and chairman Clay Siegall
There are a lot of terms in that quote, so let's break them down:
Blinded: The company doesn't know which drug the patients in the trial were treated with.
PFS: Progression-free survival, a measure of efficacy based on how long it takes a patient to progress or die -- whichever comes first -- while being treated.
E2: ECHELON-2, a clinical trial testing Adcetris in patients with mature T-cell lymphoma who haven't been previously been treated.
So to translate: Patients aren't progressing or dying as fast as expected, which is good news for patients and hopefully good news for Seattle Genetics if it's the patients being treated with Adcetris who are the ones responding better than expected, but we don't know for sure since the company is blinded. Since the trial is set up to end when a certain number of progression/deaths occur in both treatment arms combined, the trial is taking longer to complete than expected, so management plans to ask the FDA for permission to look at the data earlier.
Looking forward
Management increased 2017 guidance for ADCETRIS sales in the U.S. and Canada to a range of $290 million to $310 million. Not bad, but far from a blockbuster, which will only come from successful approval based on the ECHELON-1 trial. Investors will get a full look at that data at the American Society of Hematology meeting in December.
Beyond the aforementioned plan to get ECHELON-2 data earlier, Seattle Genetics has other clinical trial data coming. It recently started a phase 3 trial with Bristol-Myers Squibb testing Adcetris plus Bristol's Opdivo in relapsed or refractory Hodgkin lymphoma patients. And enfortumab vedotin, which is partnered with Astellas, will enter a phase 2 trial in metastatic urothelial cancer that management thinks should be enough to gain accelerated approval from the FDA if the trial is successful.
