It takes a lot to impress Seattle Genetics' (SGEN) investors these days.

Sales of the biotech's only approved drug, Adcetris, jumped 58% in the fourth quarter to $132.1 million, coming in at the upper end of management's guidance of $128 million to $133 million. And the company expects 2019 Adcetris sales in the U.S. and Canada to increase 28% to 34% over last year. Combined with sales from its partner Takeda, Adcetris sales could exceed $1 billion worldwide this year.

And yet investors sent shares down as much as 13.6% today, although at 2:26 p.m. EST, shares were only down 11.4%. Of course even with today's decline, shares are still up more than 14% year to date, so today's move could simply be investors taking profits.

Seattle Genetics results: The raw numbers


Q4 2018

Q4 2017

Year-Over-Year Change


$174.5 million

$129.6 million


Income from operations

($90.3 million)

($45.0 million)


Earnings per share




Data source: Seattle Genetics.

What happened with Seattle Genetics this quarter?

  • The aforementioned jump in sales of Adcetris was largely due to the approval for front-line Hodgkin lymphoma.
  • In addition to the U.S. and Canada sales where Seattle Genetics markets the drug, fourth-quarter royalty revenue from sales of Adcetris by Seattle Genetics' partner Takeda increased to $24.6 million compared to $20 million in the year-ago quarter.
  • In November, the Food and Drug Administration approved Adcetris for peripheral T-cell lymphoma (PTCL). While there may have been some PTCL sales late in the quarter, the holidays and a big meeting about blood cancer at the beginning of December may have delayed the start of treatment for PTCL patients.
  • The GAAP decrease was larger, in part, due to the lower value of shares of Immunomedics that Seattle Genetics holds.
Doctor talking to a patient in an exam room

Image source: Getty Images.

What management had to say

Clay Siegall, Seattle Genetics' chairman, president, and CEO, talked about the quick approval for Adcetris to treat patients with PTCL: "The PTCL approval came 11 days after submission under the FDA's real-time oncology review pilot program. This is a testament to the strength of data, close collaboration with FDA, and our commitment to bringing Adcetris to patients in need."

While Seattle Genetics has made inroads into front-line treatment of Hodgkin lymphoma, Siegall reiterated that the company still has work to do to convince doctors who have been using the old standard of care, a chemotherapy cocktail called ABVD, to use Adcetris, given the positive data from the Echelon 1 (E1) study:

There's docs that take it on right away, and then there's other docs that need to be convinced, and we're doing that. And there's still some docs that just say: "Hey, no, I've been using ABVD for decades. This is what I want to do." But we are not giving up, and we're working with them. And we're showing them the benefits of using the E1 regimen, and the data is with us. It's better data. It's better for the patients. And so we think that if we continue up and continue our efforts, we'll get everybody. It's just going to take a little bit of time.

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Looking forward

Management is looking for 2019 revenue of $790 million to $840 million, with Adcetris sales contributing $610 million to $640 million, an increase of 28% to 34% over last year. Royalty revenue is expected to fall in the range of $85 million to $90 million with the remaining revenue coming from research collaborations.

Takeda is still waiting on a European approval in front-line Hodgkin lymphoma, and plans to submit the data to get it approved for PTCL to European regulators later this year, which should drive royalty revenue higher in 2020 and beyond.

On the pipeline front, Seattle Genetics could have two drugs ready for submission to the FDA this year. The company and its partner Astellas plan to report data from a clinical trial of enfortumab vedotin in metastatic urothelial cancer this quarter. And Seattle Genetics also expects data later this year from another late-stage compound, tucatinib, in a study called Her2climb that's testing the drug in patients with metastatic breast cancer.

In addition to its internal pipeline, Seattle Genetics has also out-licensed its antibody-drug conjugate technology to other companies, including Genentech (a part of Roche Holdings), which has submitted its blood cancer drug polatuzumab vedotin to U.S. and EU regulators. If it's approved, Seattle Genetics will get royalties on sales of the drug.