Seattle Genetics (SGEN +0.00%) rounded out 2014 with revenue a hair above the guidance it gave last quarter. For the year, the biotech registered $178.2 million in sales of its blood cancer drug Adcetris in the U.S. and Canada, just above the $177 million upper end of guidance given on its third-quarter call.
Of course, beating guidance is all relative. This time last year, Seattle Genetics was guiding for Adcetris sales of $155 million to $165 million in 2014. That's a beat of 11% at the midpoint.
In addition to the company's direct sales, Seattle Genetics also received $40 million in 2014 from partner Takeda Pharmaceutical for royalties and a sales-based milestone where the Japanese pharma sells Adcetris. That's more than double the $17.8 million in royalties Seattle Genetics received last year.
Of course, Seattle Genetics also spent more during the year. Research and development expenses are still the biotech's largest expense, making up 80.5% of total revenue. All told, the company lost $76 million in 2014, up from just under $63 million in the prior year. With $313 million in cash, cash equivalents, and investments in the bank, the biotech has plenty of runway to get to profitability.
This year, Seattle Genetics is looking for Adcetris sales in the range of $200 million to $210 million. That's only a year-over-year increase of 15% -- smaller than the 23% increase from 2013 to 2014 -- but given the trouncing of last year's guidance, there's a good chance the guidance is conservative.
To get to profitability, Seattle Genetics needs to capture a larger portion of Hodgkin lymphoma patients. Adcetris is currently only approved for Hodgkin lymphoma patients if they fail an autologous stem cell transplant or if they're not candidates for the transplant and failed at least two multi-agent chemotherapy regimens. But that could change soon as the company plans to apply for FDA approval this quarter to use Adcetris as a consolidation therapy for HL patients at high risk of relapse immediately after ASCT.
Consolidation therapy is used to kill any remaining cancer cells that may be left. The patient may or may not actually need the therapy, but since it's hard for doctors to know whether there are cancer cells remaining from the initial treatment, they'll give the drug to all patients -- in this case, all patients who are at high risk of relapse -- and Seattle Genetics benefits from treating the patients who wouldn't have relapsed.
Seattle Genetics is also trying to zoom to the front of the class as a first-line treatment for Hodgkin lymphoma. A phase 3 trial, dubbed ECHELON-1, is still ongoing, but data from a phase 1 trial started a few years ago suggests the drug should help early stage patients. After three years, all the patients in the phase 1 trial are still alive, and 92% haven't seen their cancer return.
And there's opportunity for Adcetris in other blood cancers. The drug is currently approved as a second-line treatment for systemic anaplastic large cell lymphoma. Besides the aforementioned first-line Hodgkin lymphoma, Seattle Genetics has two phase 3 trials testing Adcetris in T-cell lymphoma, and data from earlier-stage trials in diffuse large B-cell lymphoma look promising.
Seattle Genetics is staving off potential competition from the immune checkpoint inhibitors -- which have shown solid, albeit early, data in blood cancers -- by striking a deal with Bristol-Myers Squibb (BMY 0.17%) to test its checkpoint inhibitor Opdivo in combination with Adcetris.
Beyond Adcetris, look for Seattle Genetics' pipeline to move along in 2015, including starting a phase 2 trial for SGN-CD19A in diffuse large B-cell lymphoma and a phase 1 trial of SEA-CD40 for solid tumors and bringing two new drug candidates into the clinic.
