After a slow start to 2019, Seattle Genetics (NASDAQ:SGEN) picked up the pace in the second quarter, with doctors increasing their use of Adcetris early in the treatment paradigm for various types of lymphoma.

Seattle Genetics results: The raw numbers


Q2 2019

Q2 2018

Year-Over-Year Change


$218 million

$170 million


Income from operations

($38.7 million)

($30.3 million)


Earnings per share




Data source: Seattle Genetics.

What happened with Seattle Genetics this quarter?

  • Sales of Adcetris in the U.S. and Canada jumped 30% year over year as the drug continues to make gains in treating peripheral T-cell lymphoma as well as frontline Hodgkin lymphoma.
  • Royalty revenue, which primarily comes from sales of Adcetris by Takeda in other countries, jumped 13% year over year.
  • Collaboration revenue was up 33% thanks to $12.5 million in milestone payments for Takeda gaining additional approvals of Adcetris in frontline Hodgkin lymphoma, and for the approval of Polivy by Roche's Genentech unit. Polivy uses Seattle Genetics' antibody-drug conjugate technology, and the company will get royalties from the drug in future quarters.
  • Earlier this month, Seattle Genetics and Astellas Pharma submitted the marketing application for enfortumab vedotin as a treatment for urothelial cancer to the Food and Drug Administration. It's not the largest market -- especially considering that it'll be approved to treat late-stage patients -- but the FDA approval will result in some sales while the duo test it in additional types of cancer.
  • The profit in the year-ago quarter came from a $105 million increase in values of stock holdings, while mark-to-market accounting required the company to book an investment loss of $40.5 million in the most recent quarter.
Doctor with hand on patient's shoulder

Image source: Getty Images.

What management had to say

Clay Siegall, Seattle Genetics' president, CEO, and chairman, explained how following the progression-free survival (PFS) in frontline Hodgkin lymphoma patients for longer has helped drive sales: "Going from the two-year data that we produced when we first got approval to the 37-month data that came out with PFS -- I think that caught a lot of doctors' attention. And so, they looked at this, they saw it, and they were more comforted by that."

Given the great quarter, multiple analysts asked why the company wasn't raising Adcetris' sales guidance for 2019. Siegall's response was the equivalent of a shoulder shrug emoji:

I know we had a bunch of questions on guidance, it's hard to really give guidance on this. We're in uncharted territory in frontline Hodgkin, in frontline PTCL, and the data we have is great. The age data is great, doctors are rallying to this, and we're out there trying to do the best we can by patients. And what I would say is, stay tuned on this, and we'll provide you with whatever data and follow up that we can when it's appropriate.

In Siegall's defense, most biotechs don't give guidance during a drug's initial launch, but Seattle Genetics previously gave Adcetris guidance when the drug was growing slower in the initial indications it was approved for. The company either had to not give guidance during this second growth phase or throw out conservative numbers it's confident it can hit.

Unfortunately, neither option is very satisfying to investors and analysts.

Looking forward

While Adcetris' guidance didn't change, management did increase expectations for collaboration and licensing agreements to a range of $110 million to $125 million, up from $95 million to $110 million. On the expenses side, management is looking to spend more on selling, general, and administrative expenses as it hires a sales force to launch enfortumab vedotin.

On the pipeline front, look for data from the Her2climb clinical trial of tucatinib in patients with metastatic breast cancer this year. And in the first half of next year, Seattle Genetics and partner Genmab will get data from a clinical trial testing tisotumab vedotin in patients with late-stage cervical cancer. If positive, both studies should be enough to gain FDA approval for the respective drugs.

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