Seattle Genetics Inc. Q1 2009 Earnings Call Transcript

| About: Seattle Genetics, (SGEN)

Seattle Genetics Inc. (NASDAQ:SGEN)

Q1 2009 Earnings Call

April 23, 2009 05:00 pm ET

Executives

Peggy Pinkston - Director of Corporate Communications

Clay Siegall - President and CEO

Todd Simpson - CFO

Tom Reynolds - CMO

Eric Dobmeier - CBO

Analysts

Mark Monane - Needham & Company

Tim Mchugh - William Blair

George Farmer - Canaccord Adams

David Miller - Biotech Stock Research

Jason Kantor - RBC Capital Markets

Cory Kasimov - JPMorgan

Operator

Good Afternoon ladies and gentlemen and thank you for standing by. Welcome to the Seattle Genetics first quarter 2009 financial results conference call. (Operator Instructions). This conference is being recorded, April 23, 2009.

I would now like to turn the conference over to Ms. Peggy Pinkston, Director of Corporate Communications. Please go ahead, madam.

Peggy Pinkston

Great, [Marisa]. I'd like to welcome all of you to Seattle Genetics first quarter 2009 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Business Officer; and Tom Reynolds, Chief Medical Officer.

This afternoon, Clay will provide an update on our programs, including recent highlights and upcoming activities. Then Todd will discuss our first quarter financial results, and then we will open the call for your questions.

Today's conference call will include forward-looking statements based on current expectations. Such statements are only predictions, and actual results may vary materially from those projected. Please refer to the documents that we file from time-to-time with the SEC and which are available on our website for information concerning the factors that could affect the company.

With that I'd like to turn the call over to Clay.

Clay Siegall

Thanks, Peg, and thank you all for joining us today. We started of 2009 with a lot of momentum making key progress with our program, adding a new ADC collaborator and enhancing our financial position. Among our accomplishments so far this year, we received a special protocol assessment for SGN-35 in Hodgkin lymphoma and within weeks initiated a pivotal trial. This is a major milestone for Seattle Genetics and a step towards potential commercial launch in 2012.

We reached our targeted enrollment goal of 210 patients in our lintuzumab Phase IIb trial. We expect top-line data from this randomized event-driven study will be available in the first half of 2010.

We continue to generate value from our ADC technology by entering into a collaboration with Millennium under which we received a $4 million upfront payment and are entitled to receive additional fees, milestones and mid-single digit royalties for any resulting ADC product. And we raised $53 million in a current stock offering, strengthening our financial position to continue investing in our pipeline.

Over the remainder of the year, we are continuing to drive towards additional milestones across our key programs. Let's start with SGN-35, an antibody-drug conjugate or ADC targeting CD30. We're developing SGN-35 initially for relapse and refractory Hodgkin lymphoma and systemic anaplastic large cell lymphoma or ALCL.

In February, we initiated pivotal trial in Hodgkin Lymphoma just five weeks after receiving the SPA. The single agent trial will enroll 100 patients and the primary end points is objective response rate assessed by independent radiology review.

Investigator enthusiasm is high and enrollment is off to a great start. Our goal is to report data and submit the new drug application in 2011 with commercial launch in 2012.

In March, we received fast track designation from the FDA for SGN-35 in Hodgkin lymphoma, another important component of our regulatory strategy.

The fast track program is designed to expedite the development and review of new drug that treats serious or life threatening conditions and address unmet medical needs.

NDAs for drug with fast track designation may be submitted on a rolling basis and often qualify for six months priority review. We also have orphan drug designation for Hodgkin lymphoma and ALCL in both the United States and Europe.

In addition to the ongoing pivotal trial, we are conducting a Phase I trial of SGN-35 administered weekly.

Data from this trial will be the subject of an oral presentation at ASCO on Monday June 1st. These data will also be highlighted during Best of ASCO Conferences in late June and July.

We are also initiating a single agent Phase II trial of SGN-35 for systemic ALCL. Our clinical data in ALCL have been impressive. We previously reported that five of the first six patients treated in our Phase I trial achieved a complete response. We believe that ALCL may provide an additional registration pathway for SGN-35.

Another trial that we are preparing to initiate is a retreatment study with SGN-35. This trial is designed to evaluate the potential to induce traditional antitumor activity in patients who have relapse after discontinuing SGN-35 therapy. Retreatment with SGN-35 can provide a way to keep patient disease in check and potentially extend survival. It could also extend the market potential for SGN-35.

We expect this trial to be underway by mid-2009. Lastly, we are developing our global registration and lifecycle management strategies and are ramping up our commercial CMC activities in preparation for launch.

We recently hired Dr. Vaughn Himes as Executive Vice President of Technical Operations and promoted Dr. Morris Rosenberg to Executive Vice President of Process Sciences. These moves will support our aggressive development goals in particular SGN-35 commercial manufacturing and supply chain initiative. We believe that SGN-35 has the potential to address a substantial unmet medical need for patients with relapsed or refractory Hodgkin lymphoma and ALCL.

We are moving the program forward rapidly towards regulatory approval for these patients who have very few treatment option. There are additional opportunities that we are evaluating for SGN-35 in frontline lymphoma, other CD30 positive malignancies as well as in autoimmune disease.

Dacetuzumab or SGN-40 is an antibody targeting CD40 that we are developing in collaboration with Genentch, now a wholly-owned member of the Roche Group. We and Genentech are advancing five trials for non-Hodgkin lymphoma and multiple myeloma in combination with standard treatments for these diseases. We expect that data from these clinical trials will be available later in 2009 and in 2010.

At the American Association for Cancer Research or AACR annual meeting this week, we showed pre-clinical synergy of dacetuzumab in combination with conventional chemotherapy drug commonly used in a treatment of lymphoma.

In addition, dacetuzumab shown to sensitized non-Hodgkin lymphoma tumors to Gemzar and improve the efficacy of Rituxan plus Gemzar in models of non-Hodgkin lymphoma.

One of our ongoing clinical trials of dacetuzumab is a Phase Ib study in combination with Rituxan and Gemzar, the patients with relapse or refractory diffuse large B-cell lymphoma.

In another presentation at AACR, Genentch reported data showing a correlation between a diagnostic gene signature and sensitivity to treatment with dacetuzumab in patients with diffuse large B-cell lymphoma. The gene signature which was originally identified in non-Hodgkin lymphoma cell line was retrospectively analyzed the patients sample from completed single-agent clinical trials of dacetuzumab.

The gene signature correlated with sensitivity to treatment with dacetuzumab within overall accuracy of 80%. In addition, patients who are positive for the gene signature experienced longer progression free survival compared to patients who were not.

This exciting research may ultimately lead to a diagnostic test that could

predict which patients are most likely to benefit from dacetuzumab therapy. We're currently evaluating the gene signature in our ongoing clinical trial of dacetuzumab's in combination with standard therapy.

The next program I'll discuss is lintuzumab or SGN-33, an antibody targeting CD33. We've completed enrollment of 210 patients with acute myeloid leukemia or AML, age 60 or older. This is a Phase IIb randomized double-blind, placebo-controlled trials comparing overall survival of patients receiving a low dose cytarabine plus lintuzumab to those receiving low dose cytarabine alone.

This trial will be unblinded up on reaching 186 events and our expectation is that data will be available in the first half of 2010. If we successfully achieve our goal of demonstrating that the addition of lintuzumab leads to a meaningful overall survival advantage in elderly AML patients, it could lead to substantive discussions with the FDA and trigger the manufacturing commercial and CMC activities necessary to support a regulatory submission.

In addition to the Phase IIb trial we've completed a single agent Phase IB trial in AML and myelodysplastic syndrome or MDS and plan to report data mid year.

We're also working on investigator sponsored Phase II trial to evaluate lintuzumab in combination with Vidaza for MDS. This trial should be underway by the end of 2009.

Our next two programs, SGN-70 and SGN-75 both targets CD70. CD70 is highly expressed on activated T and B-cells but not resting lymphocytes, and has been associated with a variety of autoimmune and inflammatory disorders.

By selectively targeting activated immune cells, SGN-70 may provide a new therapeutic option for autoimmune disease that avoids globally suppressing the patients immune system. We have completed enrollment of healthy volunteers to a Phase I trial of SGN-70 and plan to expand into patients with other immune disease by mid-year.

We're also advancing SGN-75, an ADC targeted to CD70. We reported preclinical data at AACR on Tuesday showing the broad expression profile of CD70 on a variety of solid tumors including pancreatic, ovarian and colon cancers.

We previously described CD70 expression on multiple hematologic malignancies, as well as renal cell cancer and glioblastoma. We are on track to submit an IND in the second half of this year for hematologic malignancies and solid tumors.

Beyond our product pipeline, we've also continued to execute well on our business development initiatives. We have licensed our ADC technology to leading biotech and pharma companies, and a weeks ago we added Millennium, The Takeda Oncology Company.

We received an upfront fee of $4 million for access to our ADC technology for single solid tumor antigen. Millennium also has options for up to two more targets in exchange for additional fees. We are entitled to receive annual maintenance and research support fees, progress depending milestone payments and mid-single digit royalties on net sales of any resulting products using our ADC technology.

To-date we have generated more than $75 million through our ADC collaboration. In addition to the upfront payments, these deals have the potential to generate future revenue streams from milestones and royalties, as our collaborators advance their ADC programs into and through clinical trials. The increased value of our recent ADC deals with Daiichi Sankyo and Millennium is a testament to a growing appreciation within the oncology community of the therapeutic potential of our ADC technology to empower antibodies.

Three of our collaborators have entered the clinic with programs utilizing our technology, including CuraGen, Genentech, Progenics. We expect additional ADCs from our collaborators to follow in the next 12 to 18 months.

Before I turn the call over to Todd, let me summarize our key upcoming activities. They include for SGN-35, continue the strong enrollment to our pivotal trial, initiate the Phase II trial in ALCL, report data for the weekly dosing trial at ASCO and initiate the retreatment clinical study.

For dacetuzumab, advance five ongoing combination clinical trials in collaboration with Genentech and report data beginning later this year.

For lintuzumab, report data from the Phase I single-agent trial and complete treatment and follow-up in the Phase IIb trial.

For SGN-70, expand the ongoing Phase I trial to include patients with autoimmune disease and for SGN-75 submit an IND for a Phase I trial at CD70-positive malignancies. We look forward to keeping you updated on our progress.

I would now like to turn the call over to Todd to discuss financial results.

Todd Simpson

All right. Thanks, Clay and thanks everyone for joining us on the call this afternoon. Our first quarter 2009 financial results are in line with line with our expectations and continue to reflect revenue growth and expense increases, resulting from the expanded activities in our pipeline that Clay just described.

Revenues in the first quarter of 2009 were $9.1 million, up 29% from the first quarter of 2008. These revenues continued to be driven by our dacetuzumab collaboration with Genentech.

Operating expenses for the first quarter of 2009 increased to $37.4 million. This compares to $26.1 million for the first quarter of 2008. This increase is primarily due to higher R&D expenses, which were $33.2 million for the first quarter of 2009 compared to $22.2 million for the first quarter of 2008.

There are three main drivers for this planned increase in R&D expense. First, clinical development activities increased, in particular from the initiation of our SGN-35 pivotal trial, as well as the accruals into the Phase IIB trails for lintuzumab and dacetuzumab. Lintuzumab Phase IIB trial was now fully enrolled and ongoing cause for this trial will reflect patient treatment in follow-up.

Second, manufacturing activities for SGN-35 increased. These activities related to drug supply campaigns for ongoing and plain clinical trials and commercials CMC activities in preparation for the MDA and launch. The increase in SGN-35 manufacturing activities was partially offset by lower lintuzumab and dacetuzumab cost as drug supply campaigns for those programs concluded in 2008.

And third, employee expenses increased and continue to reflect growth in our clinical and development teams. We've now recruit the majority of our key hires and are well positioned to execute on our plans. Therefore, we expect our headcount growth to moderate over the remainder of 2009.

I'll also note the total operating expenses include non-cash share based compensation expense of $2.7 million for the first quarter of 2009 compared to $2.2 million in 2008. And lastly as a reminder, dacetuzumab collaboration cost incurred by us are included in our operating expenses, but are fully reimbursed by Genentech under the collaboration.

We ended the first quarter of 2009 in strong financial position with $192.4 million in cash and investments. This reflects $52.5 million in net proceeds received from our common stock financing in February.

We expect to receive an additional $11.5 million from a plan private placement of common stocks to Baker Brothers Life Sciences. This stock sale will take place at the same $9.72 price per share paid by investors in the public offering. But because Baker Brothers has representation on our Board of Directors, this sale is subject to stockholder approval at our annual meeting on May 15.

So we are off to a strong start in 2009, and with that I'll turn the call back over to Clay.

Clay Siegall

Thanks Todd. Operator at this point we'd like to open the call for questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question and answer session. (Operator Instructions) And our first question comes from the line of Mark Monane with Needham & Company. Please go ahead sir.

Mark Monane - Needham & Company

Thank you. Good Afternoon from New York City, a nice clear day after many days of rain. I was hoping, please you would help us clear up some questions we have here on what you mean by retreatment? Is that maintenance or adjuvants. These terms are used a lot, maybe you could help define it a little bit better for us.

Clay Siegall

Sure Mark. Thanks for the question. I'm going to turn the question over to the Chief Medical Officer Tom Reynolds.

Tom Reynolds

Hey Mark. Its sunny here in Settle too, and we are feeling very sunny about SGN-35 these days. The retreatment study is based on our observation from our Phase I studies where anecdotally we've had a few patients who had initial good responses, stayed on therapy for a while, went off because they were doing well. And then had subsequent progression of their disease and now have reentered protocol and have had tumor shrinkages second time around.

So the retreatment study is really designed to look at patients who have responses in one of our ongoing clinical studies and go off because they are doing well and then are able to come back and get another course of therapy.

We think this is very similar to the way Rituxan has been shown to work in a number of lymphoma setting, and we'd like to be able to evaluate 35 for this application. We think it'd be important both for the patients and for expanding the market.

Mark Monane - Needham & Company

Could you go over then what the treatment protocol will be? How many courses recommended in the current treatment protocol?

Tom Reynolds

So right now in our currently opened studies, patients are remaining on study for up to a year of therapy. Currently the pivotal study is a Q3 week regimen of the single-dose every three weeks for up to 16 cycles.

We also have a weekly dosing study that's currently opened which doses once a week for three week, a week off and then repeat that cycle again for up to a year. So the retreatment protocol will be using the Q3 weekly dosing regimen at this point.

Mark Monane - Needham & Company

And given that we're going to use some data, I believe you said at ASCO on 35 every week. May be you can help us understand Hodgkin is a potential for incorporating this into the [crunch off], how will you use that information?

Tom Reynolds

That is a fantastic question. We are excited about our weekly dosing data. We have continued that trial and are currently enrolling patients. We've as yet to define MTD in the study and we'll be sharing all of those data.

One of the things that's still early days in that study is evaluating durability. I had nice durability on the Q3 week data, and it's still kind of premature to really know how our durability is going to play out on the weekly data. We keep looking at it as it evolves. We're pleased with how it's evolving.

We think it's premature to make a switch or to modify our plans at this point but we are keeping our eye on it and as it matures there, we have a number of ways that we could fold that into our program for registration or for label expansion.

Mark Monane - Needham & Company

That was helpful. We have financial question.

Unidentified Analyst

Yes. Congratulations on the trial results in terms of getting the trials forward, but in terms of the R&D, do you see any increase throughout the year with more clinical trials and any update to your burn guidance of $80 to $90 million this year.

Todd Simpson

Yes, this is Todd. No updates on our guidance right now. One of the things we did comment on during our year end call is that we expected to see, and we're seeing a little bit of an expense bump that started in Q4 of last year and is extending into the first part of 2009.

That bump relates to a number of manufacturing campaigns, including active campaigns that we had for dacetuzumab and lintuzumab that ended last year and then a number of SGN-35 manufacturing initiatives that are underway now, so we do expect a little bit and we are seeing some front loading of expenses this year but then things should start to settle out in the back half of the year.

Unidentified Analyst

Thanks for the added information. Congratulations on the progress.

Todd Simpson

Thank you.

Operator

Thank you, and our next question comes from the line of John Sonnier with William Blair. Please go ahead.

Tim Mchugh - William Blair

This is actually Tim Mchugh for John. Congratulations on a good quarter. Can you talk a little bit about SGN-35's prospects in earlier lines of therapy and do you see those being combination studies?

Clay Siegall

Tom will address that again, I think that's appropriate.

Tom Reynolds

Sure. This is Tom Reynolds again. We have a lot of aspirations for evaluating 35 in upfront Hodgkin lymphoma in combination with other therapies, not only for Hodgkin but for other forms of non- Hodgkin lymphoma. We have had a fair bit of interest from clinicians and thinking about how to design those types of studies.

First to show that it would be safe to combine these agents. As you are aware for Hodgkin the front line therapy in this countries will be called ABVD, which is a mix of four chemotherapeutic agents.

We have some nice preclinical data that shows that 35 combines well on improved efficacy, and we think that we would like to take advantage of those properties and test that out in the clinic. We have a number of investigators that have proposals in front of us about how to do that and as the year progresses we expect to enlighten you on how we're going to move forward in the frontline.

Its very much on our minds. We think it's important not only to expand the market, but also to help those patients who are not completely well served with current frontline therapy.

Eric Dobmeier

And that this is Eric Dobmeier, just to add a little color to that. There are a lot of low risk younger patients with these diseases are well served with upfront chemotherapy. But, there are number of subpopulations like elderly patients, patients who have had positive after a few cycles of chemotherapy who don't do as well and could definitely use some additional therapy. So those are the kinds of opportunities, we are evaluating to go into first.

Tim Mchugh - William Blair

Okay. That sounds interesting. Can you also talk about the gene signature data we saw recently and how you are going to incorporate that in SGN-40

Clay Siegall

Sure. The gene signature data that was presented at AACR this week, actually was on patient samples that are treated with SGN-40 in a trial and this is a retrospective study. We had previously reported on data from tumor cell lines, specifically B-cell lymphoma cell lines.

And so, we have now going from the cell lines to patient samples in our study, albeit retrospective. We are using gene signatures in some of the studies that we have now, but not prospectively. We are collecting the data and going to look at those data and look at how the gene signature works in the setting of combination with SGN-40 and chemotherapeutic agents.

And so in the future one can imagine that a gene signature can be used to select patients that had a high chance to respond to SGN-40 in the specific setting whether combining with one agent or a different agent and really get a higher chance of success, namely in terms of anti-tumor activity.

Tom you want to add anything to that?

Tom Reynolds

And just to reiterate some of the points because Clay is right on. We've got some nice data with single agent, which seem to show about 80% predictive value. We are continuing to now expand that into our ongoing studies in combination'

Again, these will be retrospective, but we ultimately indigenous being used this prospective diagnostic that would enable the patients that receive this therapy to have a higher chance of responding in the general population.

And I think as you have all seen with other therapeutics looking at the [kinase mutations] things like that that seems to be the direction medicine going right now trying to have a diagnostic that gives you much better value for the patient if they receive the therapy that accompanies the diagnostic.

Tim Mchugh - William Blair

Sounds good, thank you very much.

Operator

Thank you and our next question comes from the line of George Farmer with Canaccord Adams. Please go ahead.

George Farmer - Canaccord Adams

Hi, thanks for taking my question, Todd getting back to expenses, it seems like there is still is a lot required to continue on with the ongoing trials and if I just sort of continue like and a non-growth ramp if you will from Q1 this year, it exceeds your expense guidance that you gave in the early part of the year. How should we think about R&D going forward? Is it going to be less than Q1 in subsequent quarters or will it be growing.

Todd Simpson

Yes, it's a good question. This really gets back to the point I was making about the manufacturing activities that began in the fourth quarter of last year and will now be completing in the first quarter or two of this year. If you just go back into the fourth quarter of last year, our total expenses were about $42 million. They were down to about $37 million in Q1 and we again expect to see a little bit of front loading of expenses in 2009 and expect to hit our expense guidance range which was given as a $125 to $140 million.

George Farmer - Canaccord Adams

Okay. Also can you remind us again how many shares are going to be issued to the Bakers Brothers that all be accounted for in this quarter, is that what you are expecting?

Todd Simpson

Right, it will follow the share holder vote that will happen at our annual meeting on May 15 and the share counts is about 1.2 million shares.

George Farmer - Canaccord Adams

Okay. And regarding your other ADC collaborations, I know ADC has been going on for quite sometime, certainly its encouraging that a new one is on board, what is the status of some of these other programs?

I know one of them has moved into the clinic. Can you give us any guidance on what to expect from these other programs and maybe give us a little bit more detail on what to expect going forward regarding new partnerships.

Eric Dobmeier

Sure this is Eric Dobmeier. I can give you a little more color on that. So I think as Clay mentioned in the script, there is three collaborator programs that have entered clinical trials. The CuraGen has a program in Phase II for melanoma and breast cancer. For GenX has a program for prostate cancer in Phase I and a Genentech had started a Phase I as well.

There are several other collaborators that we think will be starting clinical trials in the near term and we can't give a lot of specifics. Its really up to our collaborators to be announcing when things are going to happen, but our collaborations with Bayer, and MedImmune, I think both are moving forward well in terms of getting a program into the clinic soon.

And then, Daiichi Sankyo is a recent deal we did about a year ago and obviously we added Millennium just recently. So, right now there is three in the clinic. We expect that number of continue to increase overtime. And most of the money that we have brought in so far in the $75 million we have generated total from these collaborations has been through upfront payments in research support fees, and some very early small milestones. We expect those numbers to increase as these programs move further into development into later stage trials.

George Farmer - Canaccord Adams

And the Bayer, and Medi programs are those oncology indications?

Eric Dobmeier

Yes.

George Farmer - Canaccord Adams

They are.

Eric Dobmeier

They are.

George Farmer - Canaccord Adams

Okay thanks very much.

Eric Dobmeier

We have booked presented preclinical data on that programs that you can find in various conferences.

George Farmer - Canaccord Adams

All right great.

Operator

Thank you and our next question comes from the line of David Miller with Biotech Stock Research. Please go ahead.

David Miller - Biotech Stock Research

Hi Good Afternoon and congratulations for getting first drug in the Phase III trials. First question, I have is can you give us some information on the powering of the SGN-35 trial?

Clay Siegall

Yes, Tom go ahead.

Tom Reynolds

Yes. So as you are aware it's a single-arm study really designed to evaluate response rate, complete response rate and durability. It's not a difference of powering between two. So a 100 patients really is enough to give us a tight confidence interval around those numbers and what we are shooting for something like what we saw in Phase I where we have got a 54% overall response rate and 32% CR rate and durability that's six months plus.

David Miller - Biotech Stock Research

Have you had any feedback on programs well on the 40 program from Roche people yet or you still mostly talking to the same people you were talking to before?

Clay Siegall

We are still mainly talking to the same people, we've talked before. It's a little too early to really assess the impact. The Roche complete acquisition of Genetech, but we know that Genetech is going to be very active and they have been developing cancer drugs and a very active with the SGN-40 programs. So we don't envision any substantive changes. We have not heard of any, but it's early to fully assess that.

David Miller - Biotech Stock Research

Okay. On the gene signature that you are working on and Genetech is working on for 40. Can you give us some idea what percentage of the current kind of target patient population has the signature?

Clay Siegall

Yes. So, David it's about half of the patients. The numbers that we're presented are actually fairly small. They are derived from patients that we could have tissue on from Phase I and Phase II studies. So, it's not large enough to really lock on to. There are difference between 40%, 50% or 60%, but it's roughly in the half of those patients range.

Now what we don't know yet at all, because the studies are still ongoing, is how that's going to play out into the combination data and so it'd be premature to speculate, but it's unlikely to be only a small slice. It looks like it's a reasonably good slice to look at.

David Miller - Biotech Stock Research

Okay. So if I remember and so let that about twice what the Herceptin positives are?

Clay Siegall

Yes, that's correct.

David Miller - Biotech Stock Research

Now, in talking about the weekly data, can you give us some idea - if the weekly data on 35 comes back really positive, could you actually amend the FDA trial and finish out the enrollment on weekly, is that what you're headed or are you thinking more for a confirmatory trial?

Clay Siegall

Yes, we've had quite a bit of discussion about this internally, and what pros and cons are. I think it's premature to comment on what we're going to do, because the data are still evolving.

David Miller - Biotech Stock Research

Right.

Clay Siegall

What I'll say is that it is possible to amend in FDA. Lot's of companies do it. What I can also say is, we're very pleased with enrollment on to the pivotal trial that there is a huge amount of enthusiasm and its going very quickly. So we do have a number of options that you include amending the trial or thinking about other ways to bring that dosing regimen forward much as (inaudible) has moved to a different dosing regimen as compared to what was originally labeled. So we think we've got options. We'll let you know as our data matures and how the program may or may not change.

David Miller - Biotech Stock Research

Okay, so if I can understand you are thinking on this, if you probably sum it up by saying is that it's a balance between how much different the results might be and how far down the path you are to completely enrolling the trials back, is those kind of the two ways you are looking at it.

Clay Siegall

Its very succinct and correct..

David Miller - Biotech Stock Research

Okay, perfect, thanks gentlemen, I appreciate it.

Operator

Thank you and our next question comes from the line of Jason Kantor with RBC Capital Markets. Please go ahead.

Jason Kantor - RBC Capital Markets

Obviously, a lot of questions have been asked already, but with regard to the SGN-35 is there a specific target response rate or a minimum response rate that you think you need to get to declare success.

Clay Siegall

Our belief is that if we can replicate the Phase I data we are extremely in a good shape. What's the lower limit? If we were to talk to our KOLs, things that get them excited is a 30% overall response rate, with a number of CRs there and durability in the four to six month range. FDA was very clear that they were not going to give us a hard number or bar that we had to be over or under and that would be a review issue in the context of safety and other factors that go into the NDA. You can see from other compounds that have been filed on recently that things in the 30% range people feel those are fileable and potentially improvable and we would believe that if we can be at that range or above that we should be in a pretty good shape.

Jason Kantor - RBC Capital Markets

Then you said you are doing work for TMT works now on SGN-35. Is the material that's been tested in the pivotal study the same material that you would be launching with or is there a need for a bridging study? I guess along with that are there any particular challenges with the ADC technology in terms of purity and potency assays and the types of things that normally need to be done.

Clay Siegall

Jason you are asking really very smart questions. We have not fully laid out our exact strategy for CMC manufacturing product launch et cetera. We absolutely have been discussing this with the FDA and are moving forward, but we have not laid that out laid that out yet publicly. So, we will choose not to make comment on that now.

As far as potency and all the other questions you were asking, we absolutely have a very exacting series of assays and analytical tools that we run through with each of our batches of material. And, we qualify each of our batches so that they do have right characteristics. I could say that there is no issue with an ADC going through these types of assays.

That doesn't mean that every batch that the Seattle Genetics would ever make will qualify, but I can assure you that when we qualify batches, they will have the right analytics behind them, so that we know that the batches are very equivalent and appropriate for use in humans.

Jason Kantor - RBC Capital Markets

Then one last thing, in terms of future pipeline growth and if you can talk about pre-clinically that behind the SGN-75 that we can look forward to?

Clay Siegall

Well, I can give you an example of behind SGN-75, which is in IND for this year, our next program for IND is in collaboration with Agensys, which is parts of Astellas, the large Japanese pharmaceutical company and the program that we are developing is for solid tumors. We have not been specific out there as to where our clinical plans will be, but suffice it to say its for some very large market, solid tumor opportunities, where there is a real need for additional therapies.

We have a active program. It's undergoing our manufacturing, and also it's a assay development toxicology, you name it and we look forward to doing and IND filing in 2010. As the year progresses, we can be a little bit more specific at to when we are going to guide for that, but right now, I'd like to just say, 2010, and tell you how excited we are with the program. We are very active with our collaboration with Agensys. It is a 50-50 relationship just in case you're going to ask that.

So that will be our next IND filing. We have a variety of other antibodies in pre-clinical development at different stages, but I think right now they probably are a little premature to discuss.

Operator

Our next question comes from the line of Bret Holley with Oppenheimer. Please go ahead.

Unidentified Analyst

Hi, it's actually [Matt Low] in for Bret today. I just wanted to discuss, if we could the SGN-35 comparative front. It appears there has been anti-CD30 antibody and a HDAC inhibitor among other things in the clinic. I just wanted to see if you could offer some thoughts on this agent's potential level of activity in Hodgkin's lymphoma, just to discuss the comparative landscape that you see?

Eric Dobmeier

This is Eric Dobmeier. I can address that. You mentioned first anti-CD30 antibodies. Medarex had a couple programs for CD30, one was a regular antibody called MDX-060 and then they had a effector function enhanced antibody as well. We have not seen much data from the effector function enhanced antibody, but from the unenhanced one, it does not look particularly active. It looks fairly similar to our naked antibody SGN-30 program, which really didn't have a lot of activity in Hodgkin's.

We believe that an ADC approach due to some of the biology of Hodgkin and just enhanced potency of our agent is a way to go. Hodgkin's tumors are very heterogeneous, where the CD30 is expressed on the Reed-Sternberg cell, but not the rest of the lymphocytes, so we believe with an antibody drug conjugate that can really penetrate in the tumor and use the set of toxic to kill the cells its going to be more efficacious. So we believe we have a competitive advantage over other CD30 targeted agents.

You also mentioned HDAC inhibitors there was one in the development by Pharmion through MethylGene and then acquired by Celgene. That has largely been closed at this point, we understand. It had some activity but the therapeutic window was not all that great. So there are some other sort of more small molecule cytotoxics that are been developed in the same types of lymphoma that we are, but they have a very different therapeutic profile and there are toxicities associated with them.

We are enthusiastic about what we are seeing, which is some really strong activity with less toxicity we do the targeted nature of our agent.

Operator

(Operator Instructions). And our next question comes from the line of Cory Kasimov with JPMorgan.

Cory Kasimov - JPMorgan

Most of them been asked and answered already, but I have two for you. One is I am just curious as to why you don't intend to take the weekly SGN-35 regiment in pending re-treatment study?

Clay Siegall

So at this point Cory as we've talked about, we're still in our dose escalation phase. We have not identified an optimum weekly dose. We are going to present our interim data at ASCO in a month or so. I think you will see there that why we are exited about, but the data are still developing.

We need to regimen through re-treatment and for all of our studies that can be well tolerated by patients, where they can stay on the drug a long time to get the best benefit and be maintained in good responses if they are responders. And it is premature for us to make that decision today.

Cory Kasimov - JPMorgan

Okay. Its fair enough. And then secondly, I am wondering about your current thinking regarding potential partnerships especially for SGN-33 and 35? Really, I am wondering how much of the priority is this for the company at this point and is the preferred task forward still to just license the ex-US rights to one or both of those compounds.

Eric Dobmeier

This is Eric. I can address that one. We have talked about in past calls that we are evaluating ex-US partnerships for both programs. That continues to be the case. Discussions are going well. There is definitely a lot of interest, particularly in the SGN-35 based on the data that we presented so far.

I think for SGN-33, it is probably less likely that we want to do a deal prior to having our Phase IIb data, which is now roughly a year out from having. So we likely would want to hold on to that and think there is a big value inflection when we report that data if its positive, but for 35 you know the focus is discussing, can we get a strong ex-US partner not only that can provide some additional resources, but regulatory commercial experience outside the US. We are not pressed to do a deal from the financial point of view, we are well-positioned, but if we can find the right deal with the right partner, we are absolutely moving forward with the number of discussions along those lines.

Operator

Thank you. Ms Pinkston, I would like to hand it over to you. There are no further questions at this time.

Peggy Pinkston

Thanks everybody for joining us this afternoon. Have a good evening.

Operator

Ladies and gentlemen, this concludes the Seattle genetics…

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