Seattle Genetics (NASDAQ:SGEN) continued its solid year-over-year increases in revenue as the biotech takes advantage of recent approvals that expanded the use of Adcetris into frontline Hodgkin lymphoma and peripheral T-cell lymphoma.

Seattle Genetics results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Change

Revenue

$195.2 million

$140.6 million

39%

Income from operations

($53.6 million)

($93.8 million)

N/A

Earnings per share

($0.08)

($0.73)

N/A

Data source: Seattle Genetics.

What happened with Seattle Genetics this quarter?

  • Most of Seattle Genetics' revenue comes from U.S. and Canadian sales of blood cancer drug Adcetris, which increased 42% year over year.
  • Outside those countries, sales by Seattle Genetics' partner Takeda were up year over year, but Takeda was responsible for third-party royalty obligations, some of which expired in 2018, so royalty revenue was basically flat year over year. Of course, without the third-party obligations to pay, Seattle Genetics' cost of royalty revenues decreased year over year, so the amount flowing to the bottom line increased.
  • Collaboration and licensing revenue increased year over year, thanks to a $30 million milestone payment from Takeda for the EU approval of Adcetris for frontline Hodgkin lymphoma.
  • On the pipeline front, Seattle Genetics and its partner Astellas reported positive data from a clinical trial testing enfortumab vedotin in metastatic urothelial cancer. Investors will get to see the full data at the American Society of Clinical Oncology (ASCO) annual meeting in early June.
  • The earnings-per-share number benefited from an uptick in the value of the shares of Immunomedics that Seattle Genetics owns.
Doctor with her hand on the shoulder of a patinet

Image source: Getty Images.

What management had to say

Seattle Genetics' CEO, Clay Siegall, laid out plans to ramp up sales of Adcetris for frontline Hodgkin lymphoma:

We are intensifying our efforts to increase Hodgkin lymphoma patient awareness notably through digital patient outreach. Upon diagnosis, we know that many patients spend a significant amount of time online researching the disease and treatment options. This information allows patients to understand the role that Adcetris could have as they discuss treatment options with their physician. We believe raising awareness among patients is important because many physicians see only a few Hodgkin lymphoma patients per year.

Sales of Adcetris in the U.S. and Canada were basically flat quarter over quarter, but Siegall said that's typical of many oncology drugs after the December holidays and noted that sales ramped as the quarter went on. Ultimately, he advised:

I wouldn't get too wrapped up in it. I mean we did not provide quarterly guidance. We provided an annual guidance that we feel that we can hit, and we feel that the growth is tracking well.

Looking forward

While the company maintained management's guidance for 2019 Adcetris sales, it upped expectations for spending on research and development and on sales, general, and administrative expenses as it prepares to get enfortumab vedotin approved and launched. Don't expect the company to turn profitable soon.

In addition to the potential approval of enfortumab vedotin, Seattle Genetics has a stake in polatuzumab vedotin from Genentech (a part of Roche Holdings), which should get a decision from the FDA in August. GlaxoSmithKline is also planning on submitting belantamab mafodotin, which uses Seattle Genetics' antibody-drug-conjugate technology, in the second half of this year. If approved, Seattle Genetics will get royalties on sales of both drugs.

And on the pipeline front, look for data later this year from the Her2climb study testing tucatinib in patients with metastatic breast cancer as well as late-stage data from a partnered drug, depatuxizumab mafodotin, being developed by AbbVie in patients with glioblastoma.