Seattle Genetics, Inc. (NASDAQ:SGEN)
31st Annual JPMorgan Healthcare Conference
January 07, 2013 2:30 pm ET
Clay B. Siegall - Co-Founder, Chairman, Chief Executive Officer and President
Cory William Kasimov - JP Morgan Chase & Co, Research Division
Cory William Kasimov - JP Morgan Chase & Co, Research Division
All right. Good morning, everybody. It is still morning, right? I'm Cory Kasimov, biotechnology analyst at JPMorgan, and it's my pleasure to introduce our next presenting company which is Seattle Genetics. Here to tell us about the Seattle Genetics story is the President and CEO, Clay Siegall. And please note that following Clay's presentation, there will be a breakout session just across the hall in the Georgian Room. So with that, I'll turn it over to Clay.
Clay B. Siegall
Thank you, Cory. I'm delighted to be here to tell you a little bit about Seattle Genetics. Before I get started, I will mention that I will be making forward-looking statements. Please refer to our SEC filings for more information.
So I'd like to start by telling you about the key value drivers for Seattle Genetics. First and foremost, it's building the ADCETRIS franchise. We've had a successful launch for a little bit over a year now, net sales of almost $150 million since approval in August 2011. And right now, as I will explain to you on some slides that are upcoming, we had a broad development program to really evaluate how we can use this exciting, targeted antibody-drug conjugate in many different types of CD30 malignancies, that being the target of ADCETRIS. So I'll get to those slides shortly.
In addition, we are advancing our ADC pipeline and our industry-leading technology. We have more than 15 different internal and collaborator programs that are in the clinic right now, and I'll update you on a little bit of those. Before the end of 2013, we're adding 3 additional antibody-drug conjugates that are proprietary to us in 2 trials. And I'll briefly touch on those, as well.
Lastly, we have a solid financial position to fund our very robust research and clinical programs, as well as a very burgeoning preclinical development activity that will keep our pipeline filled for many years to come. Now outside of the U.S., ADCETRIS is approved in EU with our partner Millennium/Takeda, and we're very excited about the work they've done there and look forward to all the financial payback for that as well through royalties. And then, we have a lot of ADC collaborators, which I'll mention toward the end of my talk, which are also providing us with a lot of economics, as well.
Now I'm not going to go through each line on this pipeline. It's too long to go through one at a time. It shows you how active Seattle Genetics is. We have approval at just the tip of the iceberg for ADCETRIS in 2 different indications, in either relapse/refractory Hodgkin lymphoma and anaplastic large cell lymphoma. And I'll tell you about all of the other trials that we're doing that are really important and meaningful. Most important is the 4 Phase III trials, 3 that are underway and 1 that should be starting any week now, to really establish ADCETRIS in many different areas, including front-line and a couple different disease types. But we have much planned for ADCETRIS as well as the rest of our pipeline.
Now, ADCs or antibody-drug conjugates are basically empowered antibodies. And it's one of the ways you consider -- you could think about as the next stage of antibodies. These are monoclonal antibodies, which a few monoclonal antibodies can work on their own and be very effective, such as Rituxan, which is effective on its own. But most monoclonal antibodies can find cancer based on the target they're going after, but they're not potent enough to kill cancer cells and they don't really help patients very much. And for those vast majority of monoclonal antibodies, sometimes they can really differentiate cancer and really find it. And what antibody-drug conjugates do is they enable you to link, through a chemical linker, a drug, which will then be brought to the cell through the antibody and kill the cell. So it's really designed to improve efficacy from a naked antibody and to reduce toxicity that you would see with standard chemotherapy, that can really kill any dividing cells. That's generally how standard chemotherapy works whereas a targeted cytotoxic through an antibody can be directed and reduce toxicity.
We use highly-potent cytotoxic drugs. With ADCETRIS, we have a drug linker unit that we're very excited about. And we -- this year, we'll start a new therapeutic agent targeted to CD33. I'll mention with a different therapeutic agent, so a completely different modality that we've developed over the last number of years.
And it's a relatively low cost of goods. Our dose with ADCETRIS is 1.8 milligram per kilogram every 3 weeks. And when you compare that to doses for drugs like Rituxan and Herceptin and others, it's a much smaller dose of protein. So we could keep the cost of goods down low. And of course, we have a very strong and broad IP portfolio.
Now ADCETRIS, as I mentioned, targets CD30. Outside of the U.S. and Canada, we have a collaboration with Millennium/Takeda. Now in the U.S., ADCETRIS was approved for these 2 relapse indications, Hodgkin and ALCL, and that was August 2011. European approval was in October 2012. And there's a lot of other progress toward making this a fully global brand. We're expecting a decision on Health Canada, which should happen now any month. So we're waiting on that. And then Takeda is working on regulatory submissions in all the major countries worldwide. And so I think you should be hearing about those through 2013 and 2014.
And then the broad clinical program, which is really our centerpiece. Now as far as our commercial launch, like I said, we're gaining on $150 million in sales. In the third quarter, which is the last quarter we reported, we had $33.7 million in sales. Over 1,000 accounts have ordered ADCETRIS since launch. We believe that if you look at all the hem/onc accounts in the United States, it's close to 2,000. So we still have a ways to go, although for sure, we fit all the big major cancer centers and a lot of the large community centers. And so the accounts that are remaining are smaller accounts.
We did a survey and found out that 97% of physicians were aware of ADCETRIS. So we really have a very good awareness and market penetration. And just recently, we secured a permanent J-code. So that will help and make it even easier for accounts to order ADCETRIS, especially the community accounts that really rely on having a permanent J-code.
Now as far as ourselves going to the future, we've discussed on our last conference call how we're transitioning to an incident model from a model of incident and prevalent for the labeled indications, and that's important. But our market research does suggest that we can extend duration with ADCETRIS. That's more consistent with our pivotal trials. We've been, as a commercial product, a little smaller than our -- in our duration of use of the drug than we saw in our pivotal trials, but our research suggests that we can continue moving that forward and increase our market setting. And especially in the community setting, we're the first really getting to understand and use ADCETRIS.
So our vision for building ADCETRIS is, as on this slide, we currently have more than 20 separate trials, I won't go through all of them, to -- that are designed to really build the ADCETRIS brand and make it the foundation of therapy for all CD30 malignancies.
Currently, we're only approved what's in the green bar, the relapse Hodgkin and systemic anaplastic large cell lymphoma. But we already have a substantial data set in cutaneous T-cell lymphoma or CTCL. We are building data sets in many other types of lymphomas, and I will explain to you all about what we're doing all the way through front-line to make this -- to really change front-line therapy and redefine it to make it less toxic and more efficacious for the patients that can receive ADCETRIS.
And additionally, there are many opportunities in solid tumors and in non-oncology indications, and I won't be talking about those, but we have a few trials underway in non-oncology indications where CD30 is present on activated T-cells but not resting T-cells. And some of the trials we have underway there include in graft-versus-host disease.
So our development strategy is -- in Hodgkin lymphoma is going after -- in Phase III trial we call AETHERA, and it's really post transplant and it's compared versus maintenance -- I mean, versus placebo. So it's more of a maintenance type of trial comparing ADCETRIS with instead of just watchful waiting with placebo, and the primary endpoint is PFS. The data is expected early 2014, it's fully enrolled, and we're just waiting on the events of PFS.
We completed a front-line Phase I study, with ADCETRIS plus AVD. Now front-line standard of care with Hodgkin lymphoma is ABVD, b as bleomycin. It causes a lot of pulmonary toxicity. And we found a higher objective response rate than we would expect with ABVD, a very manageable safety profile and no pulmonary toxicity, and I'll detail that on a slide coming up.
And as far as front-line goes right now, we have a trial under a SPA with a little bit over 1,000 patients, and that's underway and occurring and that's being done with our partner Millennium/Takeda as an international study. In T-cell lymphomas, we completed a Phase I trial, and we presented that at the recent ASH conference to show that ADCETRIS plus CHP, and that is removing the O from CHOP therapy, the Oncovin vincristine to reduce the neurotoxicity, and we've reported 100% objective response rate. And we were very excited with that. And that front-line trial is also going to be done under SPA, and that should start early this year in a small population of only 300 patients, 150 both arms CHOP and ADCETRIS CHP. And the in cutaneous T-cell lymphomas, we reported data on 2 different investigator-sponsored trials or ISTs, showing greater than 65% response rate, and that is about double of what you would see with approved drugs for CTCL. And so we're underway in a Phase III front-line trial, also under a SPA, and we put a very high importance on getting SPAs with the FDA to really establish the design and the criteria and the endpoints of studies, and they've been successful for us in the past with our pivotal trial in Phase II with Hodgkin lymphoma having a SPA with the FDA. And we really focus on that in our discussions with the agency.
So our front-line trial in CTCL is underway and in only 124 patients. And why are we really excited about front-line? Well, with ABVD alone, in advanced Hodgkin lymphoma patients, and so we did not use any of these stage 1 or 2A patients, so advanced Hodgkin's patients. You would expect to see our rate in this population of patients between 70% and 80% with ABVD. It's pretty good. It's a success story for cytotoxics even though you have a pulmonary toxicity rate of as high as 25% and you get these lung lesions that can be very damaging, especially in young people with Hodgkin lymphoma, and a lot of young people get the disease. And then, if we replace out bleomycin and put in ADCETRIS on the right side of the slide, you could see 96% complete remission after 6 cycles and with 0 pulmonary toxicity. And that's exactly the design of our Phase III study, ABD plus ADCETRIS versus ABVD alone. And so we're very excited that, that trial is underway and looking to really redefine front-line Hodgkin lymphoma globally for the next number of decades. ABVD was approved in 1977. It's been 36 years since there had been any change front-line therapy and we're trying to make that happen, to make it better for patients.
Now in mature T-cell lymphomas or MTCL, we have a set of data where we did ADCETRIS in a trial plus CHP, getting rid of Oncovin like I mentioned. And our objective response rate was 100%, and importantly our complete response rate was 88%. And that compares to a complete response rate that had been reported from mature T-cell lymphomas over the last few decades of somewhere in publications between 39% and 53% CR rate. So an 88% CR rate and without the Oncovin, we think, is very important and a well-tolerated regimen. So that's something we're really working hard to try to redefine as well.
Now our IST data in cutaneous lymphoma was dramatic. You could see on the left, the patient with a type of CTCL called mycosis fungoides, and they were a late-stage patient and they achieved a pretty remarkable remission. In this disease of CTCL, it's very, very, very hard to get what they call a CR. And even though with this patient, you can look at their neck on the left and you could say that it looks like a CR, it's a very hard category to achieve, and the FDA is very aware of how to measure cutaneous lymphoma.
But in the trial done at Stanford, we had a 70% objective response rate. And on the right side, you also see a pretty dramatic result in a man with an anaplastic CTCL. And at the MD Anderson investigator trial, we did 67% overall response rate. Now drugs that are approved for CTCL are some in the low 30% response rates. So we think we're about double from that, and that's why we have this Phase III now that's underway in only 124 patients, 62 in arm and doctor's choice of some of the approved drugs on one arm and on the other arm, single-agent ADCETRIS.
Recently at ASH, we presented data on other types of non-Hodgkin lymphoma. And overall, we had a response rate of 34% in late-stage patients. I'll point out that in diffuse large B-cell lymphoma, we had a 44% response rate. And these are patients that have failed the other types of standard therapies. And then some of the other mature T-cell lymphomas like angioimmunoblastic T-cell lymphoma or AITL, we had a 50% response rates. So we're excited to be focusing on even more different and additional lymphoma indications. And like I said, we expect that ADCETRIS will ultimately become the foundation for anybody with lymphoma that has CD30 that can really benefit from this drug.
We have a variety of other key trials including a Phase II retreatment trial, where we had a 70% objective response rate for retreatment experience, and we're planning a supplemental BLA on our retreatment data for the first half this year. We have a front-line trial in patients that are 60 and older for ADCETRIS, newly diagnosed patients that just really can't get chemotherapy. They are too frail to get chemotherapy. We're excited about that, as well as an indication. And the non-Hodgkin's lymphoma, we're screening -- for non-lymphoma, I should say, we're screening 3,000 patients and what we found is that there's many types of solid tumors and non-lymphomas that do have CD30 on them at different ranges of expression level. And we are developing a diagnostic kit with a partnership with Ventana that would make it simple to screen for CD30 and be able to potentially treat the future patients with mesothelioma and melanoma triple negative breast cancer. So we're excited with those trials and look for data coming into the future.
As I said before, we performed a lot of investigative or sponsored trials. This is a list of some of them that we have underway. Another 8 to 10 will be underway in 2013. We get many, many, many requests for ISTs from doctors around the United States and our partner, Millennium/Takeda, to get them from around world. We're excited to perform some of these. We don't agree to all of them, but we provide drug for quite a few and it provides a lot of very exciting information like I detailed with CTCL.
Now as far as the global potential of ADCETRIS, I mentioned that we have partnered with Millennium/Takeda and we kept the full rights to the U.S. and Canada. But outside and the rest of the world, the milestones are greater than $230 million. We received a substantial upfront payment, and the royalties range from the mid-teens to the mid-20s depending on the sales in the rest of the world. Importantly, there is 50-50 cost sharing, and we have 4 Phase IIIs going on right now, and they're cost shared, which really brings down the expense for Seattle Genetics in a big way.
Now the European Commission provided approval for the relapse/refractory Hodgkin and ALCL with a label that's very similar to what was the FDA gave us at Seattle Genetics in 2011. And right now, there's country-by-country pricing and reimbursement that's proceeding on track so we're excited with that and submissions in many other countries underway.
I don't have time to talk about the rest of our pipeline in any depth, but I could tell you right now, we have 3 products that are in trials and 3 that will be in trials within the next 8 to 10 months. We have SGN-75 targeting CD70, 2 products called ASG products, and they're in collaboration with the Agensys, a division of Astellas. And they both are for solid tumors, and those 3 products are in Phase I trials and moving along. And then the 3 products that Seattle Genetics owns, wholly owns, that are going forward within the next 8 to 10 months in patients are CD19 program that the INDs already been filed, and so that should start -- that trial should start early this year.
And then a drug targeted to CD33 and 1 targeted to a target called LIV-1, and LIV-1 is for breast cancer. But going back to the CD33 product, that one employs our next-generation ADC technology. It's a different chemo type. Our chemo type and ADCETRIS affects tubulin. So it affects cell division through tubulin. The new product affects DNA directly. It's more potent -- it's a couple hundred times more potent than auristatin, which is the component -- the drug component of ADCETRIS.
We developed a new linker. We developed an engineer to antibody that has 2 attachment sites, so it's highly-specific, second-generation antibody-drug conjugate that we've developed for CD33. We're very familiar and aware of the data with Mylotarg with CD33, how it did help some patients but had some level of toxicity. The linker for that product was not very stable. It was developed a few decades ago. We think we've developed a product that has a fantastic pre-clinical package, and we're excited to get that into clinical trials this year.
Now we Seattle Genetics are the leaders in ADCS. We have the only ADC on the market at present. We're looking forward to other ADCs coming on to the market in the future from other companies as well as Seattle Genetics. There's approximately 30 ADCs in clinical development now, and I think something like 17 or 18 of them use Seattle Genetics technology. We've generated more than $200 million to date doing these technology deals and have potential for $3.8 billion in milestone payments plus royalties. We've done deals with companies such as Abbott and Bayer and Genentech has 9 products alone that are in clinical development that utilize our technology.
And then, we have other types of relationships such as with the Agensys unit of Astellas and Genmap where we have opt-ins or codevelopment rights and they're a little different than the standard upfront money and milestone deals. So we like both deals. We continue to do a couple of deals a year, and we foresee that continuing to happen going forward.
This lists our collaborators that are in clinical trial. Obviously, I can't go through all the slide, but you could see how active companies like Genentech and Celldex and Agensys and Millennium and Abbott are with clinical programs.
Financially, Seattle Genetics had total revenues in the third quarter of almost $50 million. Of that, $33.7 million were ADCETRIS. The rest were payments by our partners. We had cash and investments at the end of the third quarter of $313 million. We ended the year with substantially more than this. So we'll report our results in February, but the fourth quarter was very strong with milestone payments and new ADC deals as well as ADCETRIS sales. So we brought in a lot of cash, and we'll end with more than that and have no debt.
Upcoming milestones on ADCETRIS. Regulatory actions from Health Canada, 2 sBLAs; 1 for retreatment, 1 for extended duration past 1 year. We're submitting clinical trial initiations and milestones there. We're going to start our Phase III MTCL, mature T-cell lymphoma trial, shortly; a Phase I/II trial that I didn't have time to speak about, in combination with Bendamustine that we're very excited about based on preclinical data; and then another up to 10 ISTs to start shortly. And the data that we'll put out in 2013 includes data in non-lymphomas, as well as NHL. And obviously, our ISTs continue to report out data, and that will happen all year long. And then 2013 will be our first full year of receiving royalties on ADCETRIS from our partners at Millennium/Takeda for sales in the EU. And our pipeline will progress very strongly during 2013 with initiating a Phase I trial shortly with our CD19 drug conjugate; and then submitting INDs and starting trials with both our CD33 product for AML and our LIV-1 product for breast cancer; and then, all our collaborators, which will continue their progress through the year. And with that, I will thank you for your attention and take questions across the hall in the breakout.
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