Please ensure Javascript is enabled for purposes of website accessibility

Seattle Genetics Smashes Wall Street Estimates in Q4, but Its 2020 Guidance Disappoints

By Keith Speights – Feb 7, 2020 at 6:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales continue to soar for the biotech's lead cancer drug.

You couldn't ask for a much better story for Seattle Genetics (SGEN 0.06%) last year. Its shares soared 102% in 2019 thanks to a couple of encouraging clinical updates. Investors' fervor has cooled off so far in 2020, though.

Seattle Genetics announced its 2019 fourth-quarter and full-year results after the market closed on Thursday. Did the biotech give a reason for investors to resume cheering? Here are the highlights from Seattle Genetics' Q4 update.

Scientist looking through a microscope

Image source: Getty Images.

By the numbers

Seattle Genetics announced Q4 revenue of $289.8 million, a 66% jump from the $174.5 million reported in the same quarter of the previous year. This result was also much higher than the average analysts' revenue estimate of $224.5 million.

The company announced net income of $25.8 million, or $0.14 per share, in the fourth quarter based on generally accepted accounting principles (GAAP). That represented a big improvement from a loss of $119.8 million, or $0.75 per share, in the prior-year period. Analysts were expecting the biotech to report an adjusted net loss in Q4 of $0.45 per share.

Seattle Genetics ended the fourth quarter with cash, cash equivalents, and investments of $868.3 million. 

Behind the numbers

Lymphoma drug Adcetris performed very well in the fourth quarter, with net sales jumping 26% year over year to $166.2 million. This growth was driven primarily by increased use of the drug in front-line CD-30-expressing peripheral T-cell lymphoma.

Seattle Genetics also won FDA approval for Padcev in treating urothelial cancer on Dec. 18. With just a couple of weeks on the market, the drug generated net sales of $0.2 million.

The main growth driver for Seattle Genetics in Q4, though, was its increased royalty revenue. The biotech reported Q4 royalty revenue of $72.3 million, nearly triple the $24.6 million made in the prior-year period. Takeda paid Seattle Genetics $40 million in a milestone payment triggered by annual net sales of Adcetris that exceeded $400 million in the Japanese drugmaker's territory.

Seattle Genetics also received a nice bump from its collaboration and license agreements. Revenue in the fourth quarter from these agreements totaled $51.1 million, up from $17.8 million in the same quarter of 2018. This solid increase stemmed primarily from a milestone payment from GlaxoSmithKline and an upfront payment from BeiGene.

Looking ahead

Seattle Genetics expects Adcetris net product sales of $675 million to $700 million in full year 2020. The company also projects 2020 royalty revenues of between $105 million and $115 million, with collaboration and license agreement revenue between $30 million and $50 million.

However, the consensus analysts' revenue estimate for 2020 is $1.1 billion. Seattle Genetics' shares fell in after-hours trading on Thursday, as investors appeared to be disappointed with the company's guidance.

The main thing to look forward to with biotech stocks like Seattle Genetics is pipeline progress. CEO Clay Siegall said the company is "well positioned to bring a third product to market with the tucatinib marketing applications in the United States, Europe, and other countries for patients with metastatic HER2-positive breast cancer." In addition, Seattle Genetics and its partner, Genmab, should report top-line data in the first half of this year from a pivotal clinical study evaluating tisotumab vedotin in treating cervical cancer.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Seattle Genetics. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Seagen Inc. Stock Quote
Seagen Inc.
SGEN
$135.35 (0.06%) $0.08
GSK Stock Quote
GSK
GSK
$28.66 (-0.56%) $0.16
BeiGene Stock Quote
BeiGene
BGNE
$138.56 (5.13%) $6.76
Takeda Pharmaceutical Company Limited Stock Quote
Takeda Pharmaceutical Company Limited
TAK
$12.80 (-0.08%) $0.01
Genmab A/S Stock Quote
Genmab A/S
GMAB
$31.82 (0.95%) $0.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.