Seattle Genetics Reports First Quarter 2019 Financial Results

April 25, 2019 Off By BusinessWire

-ADCETRIS^® (Brentuximab Vedotin) Net Sales in U.S.
and Canada Were $135.0 Million in the First Quarter, an Increase of 42
Percent Over the First Quarter of 2018-

-Positive Topline Results from Pivotal Trial of Enfortumab Vedotin in
Locally Advanced or Metastatic Urothelial Cancer Support Planned 2019
Submission of Biologics License Application-

-Target Enrollment Reached in HER2CLIMB Pivotal Trial of Tucatinib in
HER2-Positive Metastatic Breast Cancer; Topline Results Expected in 2019-

-Conference Call Today at 4:30 p.m. ET-

BOTHELL, Wash.–(BUSINESS WIRE)–Seattle Genetics, Inc. (Nasdaq:SGEN) today reported financial results
for the first quarter ended March 31, 2019. The company also highlighted
ADCETRIS (brentuximab vedotin) commercialization and clinical
development accomplishments and progress with its late-stage clinical
programs for cancer.

“In the first quarter we achieved an important milestone toward becoming
a multi-product oncology company with the announcement of positive
topline results from the pivotal trial of enfortumab vedotin in patients
with locally advanced or metastatic urothelial cancer, and we plan to
submit an application for approval to the FDA in 2019,” said Clay
Siegall, Ph.D., President and Chief Executive Officer of Seattle
Genetics. “We continue to execute on expanding ADCETRIS use in the two
frontline indications, and maintain our 2019 net sales guidance of $610
million to $640 million in the U.S. and Canada. We have also advanced
our other late-stage programs, including reaching target enrollment in
the HER2CLIMB pivotal trial of tucatinib in HER2-positive metastatic
breast cancer. We expect to report topline results from HER2CLIMB in
2019.”

ADCETRIS and Late-Stage Pipeline Highlights

ADCETRIS Ex-U.S. Regulatory Activities in Frontline Hodgkin
Lymphoma: In February 2019, Takeda received approval from
the European Commission to extend the marketing authorization for
ADCETRIS to include ADCETRIS in combination with AVD (Adriamycin^®,
vinblastine and dacarbazine) in adult patients with previously
untreated CD30-positive stage IV classical Hodgkin lymphoma. As a
result, Seattle Genetics received a $30 million milestone payment from
Takeda.
Enfortumab Vedotin (EV) Pivotal Trial Positive Topline Results;
Data Selected for Oral Presentation at the American Society of
Clinical Oncology (ASCO) 2019 Annual Meeting: In March 2019,
Seattle Genetics and Astellas announced positive topline results from
the first cohort of the EV-201 clinical trial that enrolled 128
patients with locally advanced or metastatic urothelial cancer who
previously received both platinum chemotherapy and a PD-1 or PD-L1
inhibitor. Results showed a 44 percent objective response rate per
blinded independent central review. The duration of response was
consistent with that recently reported in the previous phase 1 study
(EV-101). The most common treatment-related adverse events included
fatigue, alopecia, decreased appetite, rash and peripheral neuropathy.
The companies plan to submit a Biologics License Application under the
U.S. Food and Drug Administration’s (FDA) accelerated approval pathway
in 2019.
Tucatinib HER2CLIMB Pivotal Trial Update: Seattle Genetics
previously announced enrollment of 480 patients in the HER2CLIMB trial
to enable analysis of the primary endpoint of progression-free
survival (PFS), with topline data expected to be reported in 2019. In
April 2019, Seattle Genetics achieved enrollment of 120 additional
patients in HER2CLIMB to reach the target enrollment of 600 patients
to support the analyses of key secondary endpoints, including overall
survival as well as PFS in patients with brain metastases.
Tisotumab Vedotin (TV) innovaTV 204 Pivotal Trial Update: In
March 2019, Seattle Genetics and Genmab completed enrollment in the
innovaTV 204 pivotal trial evaluating TV in patients with recurrent
and/or metastatic cervical cancer who have relapsed or progressed
after standard of care treatment. The trial is designed to support a
potential regulatory submission under the FDA’s accelerated approval
pathway.

FIRST QUARTER 2019 FINANCIAL RESULTS

Revenues: Total revenues in the first quarter ended March 31,
2019 increased to $195.2 million, compared to $140.6 million for the
same period in 2018. Revenues are comprised of the following three
components:

Net Product Sales: ADCETRIS net sales for the U.S. and Canada
in the first quarter were $135.0 million, a 42 percent increase over
net sales of $95.4 million in the first quarter of 2018.
Royalty Revenues: Royalty revenues in the first quarter were
$15.6 million, compared to $15.7 million in the first quarter of 2018.
Royalty revenues are primarily driven by sales of ADCETRIS outside the
U.S. and Canada by Takeda. First quarter 2019 net sales of ADCETRIS in
Takeda’s territories increased over the comparable period in 2018;
however, royalty revenues for the period in 2018 included additional
amounts attributable to Takeda’s portion of certain third-party
royalty obligations that expired at the end of 2018.
Collaboration and License Agreement Revenues: Amounts earned
under the company’s ADCETRIS and ADC collaborations were $44.6 million
in the first quarter of 2019, compared to $29.6 million for the same
period in 2018. Collaboration revenues for the first quarter of 2019
included the earned portion of a $30.0 million milestone from Takeda
triggered by European Commission approval of ADCETRIS in combination
with AVD in adult patients with previously untreated CD30-positive
stage IV classical Hodgkin lymphoma.

Research and Development (R&D) Expenses: R&D expenses in the
first quarter were $158.3 million, compared to $152.5 million in the
first quarter of 2018. The increase reflects additional investment in
the company’s late-stage pipeline including EV, tucatinib and TV.

Selling, General and Administrative (SG&A) Expenses: SG&A
expenses in the first quarter were $80.3 million, compared to $66.2
million in the first quarter of 2018. The increase was primarily
attributed to costs to support commercialization efforts related to
frontline ADCETRIS indications, the company’s late-stage programs and
higher infrastructure costs to support the company’s continued growth.

Non-cash, share-based compensation cost for the first three months of
2019 was $25.7 million, compared to $16.8 million for the same period in
2018.

Net Loss

Net loss for the first quarter of 2019 was $13.3 million, or $0.08 per
diluted share, compared to a net loss of $111.7 million, or $0.73 per
diluted share, for the first quarter of 2018. Net loss in the first
quarter of 2019 included a non-cash net investment gain of $38.1 million
associated with Seattle Genetics’ common stock holdings in Immunomedics,
which are marked-to-market.

Cash and Investments

As of March 31, 2019, cash and investments were $418.3 million. In
addition, the company held stock investments, primarily in Immunomedics
common stock, valued at $151.9 million.

2019 FINANCIAL OUTLOOK

The company’s 2019 financial guidance is detailed below, including
updates to its expectations for R&D and SG&A expenses driven primarily
by positive results from the EV-201 pivotal trial.


	Current	Previous
Revenues
ADCETRIS net product sales	$610 million to $640 million	Unchanged
Collaboration and license agreement revenues	$95 million to $110 million	Unchanged
Royalty revenues	$85 million to $90 million	Unchanged
Operating Expenses and other costs
R&D expenses	$650 million to $700 million	$600 million to $650 million
SG&A expenses	$300 million to $335 million	$280 million to $310 million
Cost of sales	5 percent to 6 percent	Unchanged
Cost of royalty revenues	Low single-digit percent on ex-US sales	Unchanged
Non-cash costs (primarily attributable to share based compensation)	$135 million to $145 million	Unchanged

Conference Call Details

Seattle Genetics’ management will host a conference call and webcast
with supporting slides to discuss its first quarter 2019 financial
results and provide an update on business activities. The event will be
held today at 1:30 p.m. Pacific Time (PT); 4:30 p.m. Eastern Time (ET).
The live event and supporting slides will be simultaneously webcast on
the Seattle Genetics website at www.seattlegenetics.com,
under the Investors section. Investors may also participate in the
conference call by calling 877-260-1479 (domestic)
or 334-323-0522 (international). The conference ID is 6169352. A replay
of the live event and supporting slides will be available for at least
30 days. A replay of the audio only will be available by
calling 888-203-1112 (domestic) or 719-457-0820 (international), using
conference ID 6169352. The telephone replay will be available until 5:00
p.m. PT on April 29, 2019.

About Seattle Genetics

Seattle Genetics, Inc. is an emerging multi-product, global
biotechnology company that develops and commercializes transformative
therapies targeting cancer to make a meaningful difference in people’s
lives. ADCETRIS® (brentuximab vedotin) utilizes the company’s
industry-leading antibody-drug conjugate (ADC) technology and is
currently approved for the treatment of multiple CD30-expressing
lymphomas. Beyond ADCETRIS, the company has established a pipeline of
novel targeted therapies at various stages of clinical testing,
including three in ongoing pivotal trials for solid tumors. Enfortumab
vedotin for metastatic urothelial cancer and tisotumab vedotin for
metastatic cervical cancer utilize our proprietary ADC technology.
Tucatinib, a small molecule tyrosine kinase inhibitor, is in a pivotal
trial for HER2-positive metastatic breast cancer. In addition, we are
leveraging our expertise in empowered antibodies to build a portfolio of
proprietary immuno-oncology agents in clinical trials targeting
hematologic malignancies and solid tumors. The company is headquartered
in Bothell, Washington, and has a European office in Switzerland. For
more information on our robust pipeline, visit www.seattlegenetics.com and
follow @SeattleGenetics on Twitter.

Forward-Looking Statements

Certain of the statements made in this press release are forward
looking, such as those, among others, relating to the company’s 2019
outlook, including anticipated 2019 revenues, costs and expenses; the
company’s potential to achieve the noted development and regulatory
milestones in 2019 and in future periods including to submit a Biologics
License Application for enfortumab vedotin under the U.S. Food and Drug
Administration’s (FDA) accelerated approval pathway and to report
topline data for tucatinib for the HER2CLIMB trial in 2019; anticipated
activities related to the company’s planned and ongoing clinical trials,
including clinical trial enrollment and data availability and the
expected timing thereof; the potential for the company’s clinical trials
to support further development, regulatory submissions and potential
marketing approvals; the opportunities for, and the therapeutic and
commercial potential of ADCETRIS, enfortumab vedotin, tucatinib, and
tisotumab vedotin and the company’s other product candidates and those
of its licensees and collaborators; the company’s anticipation to become
a multi-product oncology company; as well as other statements that are
not historical facts. Actual results or developments may differ
materially from those projected or implied in these forward-looking
statements. Factors that may cause such a difference include the risks
that the company’s ADCETRIS net sales, revenues, expenses, costs, and
other financial guidance may not be as expected, as well as risks and
uncertainties associated with maintaining or increasing sales of
ADCETRIS due to competition, unexpected adverse events, regulatory
action, reimbursement, or market adoption by physicians. The company may
also be delayed in its planned clinical trial initiations, the
enrollment in and conduct of its clinical trials, obtaining data from
clinical trials, planned regulatory submissions, and regulatory
approvals in each case for a variety of reasons including the difficulty
and uncertainty of pharmaceutical product development, negative or
disappointing clinical trial results, unexpected adverse events or
regulatory discussions or actions and the inherent uncertainty
associated with the regulatory approval process. More information about
the risks and uncertainties faced by Seattle Genetics is contained under
the caption “Risk Factors” included in the company’s Annual Report
on Form 10-K for the year ended December 31, 2018 filed with the
Securities and Exchange Commission. Seattle Genetics disclaims any
intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise except as required by applicable law.


Seattle Genetics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)

	Three Months Ended March 31,
	2019			2018
Revenues:
Net product sales	$	135,001		$	95,357
Collaboration and license agreement revenues	44,578			29,559
Royalty revenues	15,620			15,674
Total revenues	195,199			140,590
Costs and expenses:
Cost of sales	7,911			10,358
Cost of royalty revenues	2,389			5,377
Research and development	158,265			152,502
Selling, general and administrative	80,271			66,182
Total costs and expenses	248,836			234,419
Loss from operations	(53,637		)	(93,829		)
Investment and other income (loss), net	40,308			(17,886		)
Net loss	$	(13,329	)	$	(111,715	)
Net loss per share – basic and diluted	$	(0.08	)	$	(0.73	)
Shares used in computation of per share amounts – basic and diluted	160,657			152,049


Seattle Genetics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

	March 31, 2019		December 31, 2018
Assets
Cash, cash equivalents and investments	$	418,295	$	459,866
Other assets		1,174,309		1,043,463
Total assets	$	1,592,604	$	1,503,329
Liabilities and Stockholders’ Equity
Accounts payable and accrued liabilities	$	180,959	$	191,472
Deferred revenue and long-term liabilities		98,234		37,914
Stockholders’ equity		1,313,411		1,273,943
Total liabilities and stockholders’ equity	$	1,592,604	$	1,503,329