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Seattle Genetics (NASDAQ:SGEN)

Q1 2013 Earnings Call

May 07, 2013 4:30 pm ET

Executives

Peggy Pinkston - Director of Corporate Communications

Clay B. Siegall - Co-Founder, Chairman, Chief Executive Officer and President

Christopher S. Boerner - Senior Vice President of Commercial

Todd E. Simpson - Chief Financial Officer and Principal Accounting Officer

Analysts

Leah Batkiewicz - UBS Investment Bank, Research Division

Matthew J. Lowe - JP Morgan Chase & Co, Research Division

Jason Kantor - Crédit Suisse AG, Research Division

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

Howard Liang - Leerink Swann LLC, Research Division

Bret Holley - Guggenheim Partners, LLC

Alan Carr - Needham & Company, LLC, Research Division

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Seattle Genetics First Quarter 2013 Financial Results Conference Call. [Operator Instructions] This conference is being recorded today, May 7, 2013. I would now like to turn the conference over to Peggy Pinkston, Senior Director of Corporate Communications. Please go ahead.

Peggy Pinkston

Thanks, operator. I'd like to welcome everybody to Seattle Genetics' First Quarter 2013 Conference Call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Operating Officer; and Chris Boerner, Senior Vice President, Commercial. Following our prepared remarks today, we will open the line for questions. If we are unable to get to all of your questions, we will be available after the conclusion of the call.

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. I will now turn the call over to Clay.

Clay B. Siegall

Thanks, Peg, and good afternoon, everyone. I'm pleased to update you today on Seattle Genetics' strong progress so far in 2013. Our 3 key areas of focus are: first, continuing to deliver on our commercial goal of bringing ADCETRIS to relapsed Hodgkin lymphoma and systemic anaplastic large cell lymphoma, or ALCL, patients in need; second, building on the ADCETRIS brand through multiple clinical trials designed to generate data and expand its label; and third, advancing our industry-leading ADC technology through both internal and collaborator pipeline programs.

Some of the recent accomplishments towards these goals include: we received ADCETRIS approval in Canada; and Takeda Millennium received approval in Switzerland. ADCETRIS is now approved in more than 30 countries. We submitted to the FDA a supplemental BLA for retreatment with ADCETRIS and for dosing beyond 16 cycles in relapsed Hodgkin lymphoma and ALCL. We obtained fast track designation from the FDA for frontline CD30-positive mature T-cell lymphomas, or MTCL, and we initiated the Phase III ECHELON-2 trial for these patients. We initiated 2 Phase I trials at SGN-CD19A and we submitted an IND for SGN-CD33A.

ADCETRIS net sales in the first quarter were $33.9 million, which is in line with our guidance of $130 million to $140 million for the year in 2013. We ended the first quarter in a solid cash position, with more than $344 million in cash and investments. The cash flow we are generating from ADCETRIS sales, royalty revenues and collaborations is enabling us to continue executing on our vision of improving the lives of people with cancer through innovative and empowered antibody-based therapies.

Today, I'll highlight the progress we and our collaborator, Takeda Millennium, are making on our broad ADCETRIS clinical development program. Next, Chris will update you on our ADCETRIS commercial activities. And Todd will discuss our first quarter financial results. Then, I'll provide a brief review of our ADC pipeline and collaborator progress before we open for questions.

On the global expansion front, we received approval for ADCETRIS in Canada during the first quarter. The Canadian label is broad, consistent with our label in the U.S. and includes both relapsed post-transplant and transplant ineligible Hodgkin lymphoma, as well as relapsed systemic ALCL patients. We are working to secure both national and provincial Canadian reimbursement coverage, which we anticipate beginning in the second half of 2013.

In parallel, Takeda Millennium is executing on the ADCETRIS launch in a number of European countries. They continue to actively pursue pricing and reimbursement applications in European Union member states, having achieved coverage in 9 countries to date. In addition, ADCETRIS was recently approved in Switzerland, and Takeda Millennium continues to pursue regulatory approvals in other countries, including Japan where they recently submitted a new drug application. Prior to each individual country launch and in regions where ADCETRIS is not yet approved, Takeda Millennium continues to make ADCETRIS available based on unsolicited physician request through an international paid Named Patient Program, or NPP.

From an ADCETRIS clinical development perspective, we are making substantial progress. Our initiatives are intended to generate clinical data and support label expansion opportunities over the course of the next several years. In the near term, we anticipate data will be generated by several corporate and investigator sponsor trials. One key corporate study with additional data plan during 2013 is our Phase II non-Hodgkin lymphoma trial, which includes diffused large B-cell lymphoma or DLBCL. This is an ADCETRIS monotherapy trial in relapsed patients. At ASH, we reported an interim response rate of 44% with a manageable safety profile in relapsed DLBCL. We are continuing to treat patients on this study and assessing durability of responses. We also recently added an arm to the trial that will enroll approximately 15 patients to assess the combination of ADCETRIS and Rituxan. In addition, we plan to initiate a Phase II trial in frontline DLBCL, evaluating ADCETRIS plus R-CHOP later this year. This trial is being designed to assess objective response rate, complete response rate and PFS, as well as the safety of adding ADCETRIS to the standard of care in newly diagnosed patients. We are enthusiastic about the potential of ADCETRIS in DLBCL and look forward to additional data and clinical trial progress in this disease.

We also expect clinical trial results in 2013 from our ongoing corporate trial of single-agent ADCETRIS in frontline Hodgkin lymphoma patients aged 60 or older who are unable to tolerate combination chemotherapy, and from several ISTs. These include data from an MD Anderson trial for CTCL that is part of a plenary session at the upcoming Society of Investigative Dermatology meeting in Edinburgh, Scotland this weekend, and data from a Memorial Sloan-Kettering trial in salvage Hodgkin lymphoma at the International Conference on Malignant Lymphoma in Lugano, Switzerland in June.

We also plan to submit IST data from the evaluation of ADCETRIS in CTCL to compendia review committees in mid 2013. We believe the data are compelling and worthy of consideration, although we cannot control the outcome or timing of these reviews.

Moving now beyond 2013, I'd like to update you on our Phase III AETHERA clinical trial. This trial is evaluating ADCETRIS compared to placebo in 329 Hodgkin lymphoma patients at high risk of disease progression after autologous transplant. We are evaluating whether ADCETRIS can extend progression-free survival, or PFS, in a consolidation or maintenance type setting for these patients. AETHERA finished enrollment in September 2012, and all patients are scheduled to complete treatment in the third quarter of this year. Previously, we estimated that we would reach the prespecified number of PFS events during the first half of 2014. A recent review, a pool-blinded data indicates that a slower-than-expected rate of progression in the trial now suggests that reaching the targeted number of events is likely to extend into 2015. Given this new timeline, we are working with Takeda Millennium to evaluate options that could enable unblinding of the data before the end of 2014. This is an important decision, so we are working closely with our collaborator and plan to seek regulatory feedback from both the FDA and European regulators. Our ultimate goal is to maintain the integrity of the safety and efficacy evaluations from this trial.

In the 2014 to 2015 time frame, we anticipate data from our ongoing ALCANZA Phase III trial intended to support registration in relapsed CTCL patients. This is a global randomized Phase III study in relapsed CD30 expressing CTCL patients to evaluate single-agent ADCETRIS versus physicians' choice of methotrexate or bexarotene. The primary endpoint is objective response rate with duration of at least 4 months. This trial is being conducted under an SPA agreement with the FDA and received scientific advice from the EMA. We also continued to execute on our strategy to bring ADCETRIS to the frontline setting for both Hodgkin lymphoma and MTCL.

We and Takeda Millennium are conducting 2 global, randomized Phase III trials intended to support registration. The goal of these trials is to redefine the standard frontline regimen for these patients. ECHELON-1 is a frontline trial in Hodgkin lymphoma patients comparing ABVD to ADCETRIS plus AVD, intended to increase antitumor activity and decrease pulmonary toxicity associated with bleomycin. The planned enrollment is 1,040 patients and the primary endpoint of this trial is PFS. Encouraging data from an ADCETRIS Phase I combination study in frontline Hodgkin lymphoma most recently reported at ASH have a bolstered our enthusiasm for this trial.

And in the first quarter, we initiated ECHELON-2, a frontline trial in MTCL comparing CHOP to ADCETRIS plus CHP. The planned enrollment is 300 patients and the primary endpoint is PFS. We recently received fast track designation from the FDA for ADCETRIS in frontline MTCL and orphan drug designation for peripheral T-cell lymphoma, a type of MTCL.

Data from an ADCETRIS Phase I combination trial in MTCL that we reported at ASH provided a strong rationale for the evaluation of ADCETRIS plus CHP in this setting. The ECHELON-1 and ECHELON-2 trials are being conducted under SPAs with the FDA and with scientific advice provided by the EMA. In addition, the FDA has agreed that if successful, either of these trials will be confirmatory for regular approval in both of our current indications. We expect our frontline trials to reach their primary endpoints within the next 4 to 5 years. At this point, I'll turn the call over to Chris to provide an update on our ADCETRIS commercial activities.

Christopher S. Boerner

Thanks, Clay, and good afternoon, everyone. During the first quarter, we continued to make good progress in driving breadth of ADCETRIS use, with approximately 1,400 accounts ordering drugs since approval. In Q1, approximately 130 new accounts ordered ADCETRIS and another 130 accounts that had previously ordered, reinitiated use as we continue to work closely with customers to identify new, appropriate on-label patients for the product.

In the U.S., net sales for the quarter increased modestly over our fourth quarter 2012. Strategically, our goal is to entrench ADCETRIS use in our labeled indications. With high on-label penetration rates and high product awareness, our focus is on assisting physicians in identifying appropriate patients, ensuring adequate CD30 testing and driving duration of therapy consistent with our label. Reimbursement for ADCETRIS continues to be favorable. One question that has come up related to reimbursement is the recent implementation of sequestration, specifically the mandated reduction in Medicare drug payments to providers. Sequestration will likely impact the oncology market in different ways, depending upon the drug and patient population. We have not seen any impact on ADCETRIS utilization thus far.

Moreover, our analysis indicates that practice economics for ADCETRIS continue to be favorable in spite of these cuts. We continue to monitor the situation and are appropriately engaging customers as needed. We also continue to highlight all of the significant reimbursement support services available to customers through our SeaGen Secure program.

As Clay mentioned, we received Canadian regulatory authorization on February 1. We shipped our first commercial vials in Canada within 3 weeks of approval. We continue to make progress on the national and provincial reimbursement approval processes and are encouraged by the coverage in reimbursement discussions that we've had thus far. As previously stated, we anticipate obtaining those reimbursement milestones beginning in the second half of 2013. Overall, I'm pleased with the progress made by the commercial team and by the execution against our plans for bringing ADCETRIS to patients in need.

In the U.S., we are continuing to solidify ADCETRIS's position as standard of care in our approved indications and ensure that patients are treated consistent with our label. The Canadian approval in the first quarter, along with the efforts of our partner, Takeda Millennium, in the rest of the world, placed us another step closer to our goal of making ADCETRIS a global brand. With that, I now turn the call over to Todd, to review our financial results for the quarter.

Todd E. Simpson

Thanks, Chris, and thanks to everyone for joining us on the call this afternoon. Our financial performance in the first quarter was strong and in line with guidance. And we ended the quarter with more than $344 million of cash and investments. Total revenues for the first quarter of 2013 were $57.3 million, which included ADCETRIS net sales of $33.9 million. We don't intend to break out U.S. and Canadian sales going forward, but recall that fourth quarter 2012 sales included a one-time amount of $2.6 million related to patients treated in Canada between October 2011 and December 2012 under a paid special access program. Factoring this one-time amount out, net sales of ADCETRIS increased from $32.8 million to $33.9 million quarter-to-quarter.

First quarter 2013 revenues also reflect collaboration revenues of $21 million related to our ADCETRIS collaboration with Millennium and our ADC collaborations. We also recorded $2.4 million in royalties on Millennium sales of ADCETRIS. As a reminder, we report royalties 1 quarter in arrears, so this amount relates to sales by Millennium in the fourth quarter of last year, which was a combination of NPP sales as well as initial commercial sales.

ADCETRIS gross to net adjustments increased to 13.5% in the first quarter. This is consistent with our expectation of modest increases in gross to net discounts this year. These adjustments will continue to be driven by government discounts, primarily the PHS and Medicaid programs, as well as price increases. Approximately 40% of ADCETRIS sales in the U.S. are covered by these government discount programs, with discounts now approaching 30%.

Cost of sales continued to be less than 10% of net sales, primarily reflecting royalty cost at this time as we continue to benefit from the sale of ADCETRIS product that was manufactured prior to FDA approval. This benefit is diminishing as that product is utilized. As previously guided, we expected ADCETRIS cost of sales as a percentage of net sales in 2013 will increase into the 10% to 12% range and, eventually, into the low to mid teens. R&D expenses were $47.7 million in the first quarter of 2013. This reflects spending for ADCETRIS development activities, as well as increased investment in our other ADC programs. One of the components of the collaboration agreement with Millennium is for us to provide them with adequate drug supply for clinical and commercial use. For accounting purposes, the cost of this material is reflected as an R&D expense as we deliver product to Millennium. This is expected to create variability in R&D expenses over the remainder of the year and indicates acceleration by Millennium of its clinical and commercial activities with ADCETRIS. We are reimbursed for this material at cost plus markup. The reimbursement payments for products supplier amortized in the collaboration revenue, along with other development payments received from Millennium under the collaboration.

SG&A expenses were relatively flat year-over-year. Noncash share-based compensation expense for the first quarter of 2013 was $6.6 million compared to $6.1 million for the first quarter of 2012. Cash generated through ADCETRIS commercial activities as well as through our collaboration continues to be substantial and supports our investment in clinical trials designed to enable expanded uses of ADCETRIS as well as driving our ADC technology and product pipeline forward. With that, I'll now turn the call back over to Clay.

Clay B. Siegall

Thanks, Todd. Next, I'd like to provide a brief review of our earlier stage product pipeline and our ADC collaborations, as well as advances with our ADC technology. Our clinical programs include SGN-75, which is in a Phase Ib trial in combination with everolimus, an mTOR inhibitor for renal cell cancer. ASG-5ME, which is in Phase I trials for prostate, pancreatic and gastric cancers. We have completed enrollment in all 3 indications. We plan to review all of the Phase I data from these 3 disease areas with our partner, Agensys/Astellas, and then make decisions on next steps for the program.

ASG-22ME, which is in a Phase I trial for solid tumors under our collaboration with Agensys/Astellas. And SGN-CD19A, our fifth clinical stage ADC. We recently initiated 2 Phase I trials with this CD19-targeted ADC, one for acute lymphoblastic leukemia and one for B-cell non-Hodgkin lymphoma.

The next ADC that we plan to advance into the clinic is SGN-CD33A, which is targeted to CD33, a well-characterized antigen for acute myeloid leukemia. This molecule employs our newest proprietary ADC technology. The payload is a highly potent cytotoxic agent called a PBD dimer, that works by a different mechanism than auristatins. The payload is stably linked to an antibody, with our site-specific engineered cysteine, resulting in uniform drug-loading of 2 PBD dimers per antibody. We call this engineered antibody an EC-mAbs. These technologies resulted in compelling preclinical activity of SGN-CD33A, which was described at ASH in December and at AACR last month. We recently submitted an IND for SGN-CD33A and are on track to begin a Phase I trial in the second half of the year.

We also plan to submit an IND this year for SGN-LIV1A, an auristatin-based ADC using the same drug linker as ADCETRIS. SGN-LIV1A is targeted to an antigen called LIV1A, which is expressed on several types of solid tumors, including more than 90% of breast cancers. Preclinical data for this IND candidate were presented at the AACR annual meeting, demonstrating significant antitumor activity in multiple cancer models. A Phase I trial in breast cancer is planned to start by the end of the year.

Our ADC collaborators are also making progress with programs using our technology. Recent highlights include Genentech reported data at AACR including multiple objective responses from a Phase I clinical trial of an anti-MUC16 ADC for advanced recurrent platinum-resistant ovarian cancer utilizing Seattle Genetics' technology. We generated fees under our ongoing ADC collaboration with Genentech for extension of the research terms and renewal of exclusive licenses to specific targets. We received milestone payments under our collaborations with Daiichi Sankyo and GlaxoSmithKline, triggered by preclinical progress with ADCs utilizing Seattle Genetics' technology. And we generated fees from Agensys, an affiliate of Astellas, trigged by its option exercise for an additional exclusive antigen license under our ongoing ADC collaboration.

I'm very excited by the progress we are making across the company and by the path ahead for ADCETRIS, our product pipeline and our ADC technology. We are executing on many ambitious goals, generating value in the company and bringing important new drugs to cancer patients in need.

At this point, we will open the line for Q&A. [Operator Instructions] Operator, please open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from the line of Matt Roden with UBS.

Leah Batkiewicz - UBS Investment Bank, Research Division

It's Leah, in for Matt. I have 2 quick questions. The first is if you could comment on off-label use now and in the future, and sort of what is included in guidance, since on the last conference call, you mentioned that guidance for this year assumes duration would largely be flat, just so we can get a sense of the current market dynamics. And then I have one follow-up question.

Clay B. Siegall

Thanks, Leah. Yes, our guidance that we have given is largely flat and doesn't really include anything substantial [ph] with off-label use, really de minimis. Chris, would you like to comment?

Christopher S. Boerner

The only noticeable off-label use that we're seeing right now is in the pre-transplant patients who are eligible. We have seen some use there. But really, aside from that, as Clay said, it's been minimal, and that's why it's minimal in the guidance.

Leah Batkiewicz - UBS Investment Bank, Research Division

Okay. And my follow-up question is with regards to your clinical files for compendia for CTCL. Do you have a sense of physician awareness of ADCETRIS in this patient population, and is there any potential impact to guidance for this year as well?

Clay B. Siegall

Yes. We do have awareness for physicians and we do hear about it. And there's a small amount of off-label use that we hear about in CTCL. Certainly, our data is very strong. We're excited about our data. It's almost 2-fold more activity than the competitive drugs in relapsed CTCL space. We are confident with the package that we're going to be submitting to compendia. And -- but there's nothing in our guidance for that for this year. We really don't have control over when compendia would rule on this. We know that there is a meeting this year, but when they would make any guidance change and if they will make guidance change is not something that we have in our guidance. It's just something we are striving toward. It's a goal of ours, trying to get in guidance because, quite frankly, we think it's in the patient's best interest.

Leah Batkiewicz - UBS Investment Bank, Research Division

And any thoughts on patient awareness of the data? Or physician awareness of the data?

Clay B. Siegall

Chris, any thoughts on that?

Christopher S. Boerner

Sure, I think physician awareness of the CTCL data is quite good. It's a relatively concentrated group of prescribers for CTCL, certainly in the population of patients we're looking at. And so I think we've had very good awareness of the data that we'd presented at previous conferences.

Operator

Our next question is from the line of Cory Kasimov with JPMorgan.

Matthew J. Lowe - JP Morgan Chase & Co, Research Division

It's actually Matt Lowe in for Cory today. I just wanted to ask about the rate of mean patient adds you've seen in 1Q as well as any trends in duration of use that you've noticed? And whether the current penetration for on label indication is still around the 60% mark?

Clay B. Siegall

Chris, would you like to talk about your thoughts on new patient adds and duration? I mean I can make one comment. First of all, on duration of use, that's something we are not planning to make specific comments on. We are certainly working with our doctors out there that use ADCETRIS to try to use the appropriate amount, the duration that can benefit the patients the most. And -- but commenting on specific changes in that are not something we want to do. We think it's going -- I will say it's -- we think it's going in the right direction to get the best use by patients.

Christopher S. Boerner

I think the continued use of the product has been very strong in the first quarter. We have seen -- we certainly hear about a number of new accounts coming online. I mentioned 130 new accounts came on line. We also had a fairly large number of accounts that have used the product previously. We initiate use suggesting that they have new patients available. I will say we did not update the penetration rates for this quarter. The penetration rates and duration data that we have recorded on previously, come from relatively large scale physician chart reviews, and given the size of the relapse, refractory Hodgkin and ALCL markets is just not feasible to perform those audits every quarter. However, we will be updating those specific data points on -- in subsequent calls. But we feel pretty good about the rate at which new patients are coming on, and then as Clay mentioned, we continue to focus on duration and we're also happy with what we've seen here.

Operator

Our next question is from the line of Jason Kantor with Crédit Suisse.

Jason Kantor - Crédit Suisse AG, Research Division

I have a couple, I guess the DLBCL trial that you're going to start, is that going to be a randomized study with ADCETRIS plus standard of care? And then, when you talk about 130 accounts reinitiating orders, does that mean those are accounts that did not order last quarter? Or are those just repeat order accounts? I'm a little confused.

Clay B. Siegall

Okay, Chris, can you take the second question, then I'll address the second question.

Christopher S. Boerner

Yes. So Jason, those are accounts that had ordered previously, discontinued in the last quarter and reinitiated use. And when we probed into those accounts, the reinitiation is really a result of new patients that those accounts had identified.

Clay B. Siegall

And then on DLBCL, it's -- with the study we talked about is not randomized. It's a study looking primarily at the safety of efficacy, the combination of ADCETRIS plus R-CHOP. It's a Phase II trial. And we're excited to get those data.

Jason Kantor - Crédit Suisse AG, Research Division

And then with AETHERA, are you contemplating putting in like a high stringency interim analysis, or just simply on planning the trial early?

Clay B. Siegall

Well, the first and foremost with AETHERA, our goal is to maintain the integrity of the safety and efficacy evaluations from the trial. And please note that it's very important that we work with regulatory agencies and to make sure that whatever we -- approach we take is acceptable. We are also working with the Takeda Millennium to evaluate our options, and there are a number of possibilities. One such option, Jason, and I'm not suggesting at this point that we are guaranteed to do this, but one concept is to amend the study to perform the primary analysis at an earlier time point, such as after all patients have completed their 1-year post-treatment assessments, which is the last prespecified PET scan part of the protocol. And that's estimated to occur in the third quarter of 2014. But that's just a possibility to try to use prespecified scans in the protocol and say, once patients are all done with that, could that be a time where we can keep the integrity of the safety and efficacy evaluations? But that remains to be seen after working with our partners and working with the agencies, both in U.S. and in Europe.

Operator

Next question is from the line of Rachel McMinn with Bank of America Merrill Lynch.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Yes, just following up on that question. I'm curious, given, is the fact that the PFS is taking a longer, how -- why that wouldn't influence the PFS assumptions in the front line studies? And I think you had said 4 to 5 years for us to get the primary implant. Why couldn't that be more like 6 to 7 years?

Clay B. Siegall

Well, when we started the AETHERA trial, please remember that we only had Phase I data, and we powered this -- the trial to the best of our ability with very limited information. And that's why that approval for AETHERA's done, now. We powered the Phase I trials based on more information and a deeper understanding. So we think that the guidance that we're giving on our Phase III trials, front-line trials, frontline Phase III trials and HL and MTCL, we feel confident with those, that those are the right guidance to give. Certainly, we'll have to continue watching those, but those were based on a lot more information that we knew than when the first set out on the AETHERA trial. And it -- with Phase I, we knew we had a drug that was active and it was an exciting drug and could help patients. What we didn't know until we got our Phase II data, the pivotal data that we used to get approval in both indications, was how efficacious it was. And it was very efficacious, as you know, from the data, and with very high response rates. But we did not have those information when we first designed AETHERA.

Rachel L. McMinn - BofA Merrill Lynch, Research Division

Okay, and then so to go back then to AETHERA, so just -- so I can get a sense of this. Do you feel like this is more of a kind of a judgment call from, after sitting down with Millennium and figuring out what you guys want to do? Or do you think the FDA, like -- while you have to go to the FDA and obviously get approval, is there any reason why they will come back and just like, say no. Companies change physical plans before unblinding. Not all the time, but certainly, it's relatively common. So when you think about, sort of like how things could play out, is it more from a discussion partner or more relying on FDA feedback?

Clay B. Siegall

No, I think both are important. I think that we have a very great, strong partnership with Takeda Millennium and we intend to keep that strong, and so it's really a discussion between the 2 companies as to what's best for the drug, what's best for patients, what's best for the doctors, and so we're going to make sure that we try to come up with the best plan to go forward. And it's also important to meet with the regulatory agencies and make sure that we maintain the integrity and efficacy of the study. And we have 2 different regulatory agencies that were very focused on working with, and that's U.S. FDA and the EMA. And so we want to make sure that all parties are satisfied with any plan we have. And that's why, when Jason asked me the question of what are you thinking here? One possibility and there are other possibilities, for sure, but one possibility is to say, what is the last time that we would have a prespecified PET scan that was built into the study? And that's basically 1-year post treatment for all patients and that's estimated to be the third quarter of '14. So that's an example of something that, I feel that, one can go to regulators with as a real, tangible data set to say, "okay, we'll have all of these data, plus we'll have PFS on as many patients as we can at that point" and maybe we haven't hit the prespecified number, but we'll have a substantial amount of data on every single patient, and those are the kinds of things you want to bring forward so that you can have really strong data, ultimately, provided that the data come out in favor of ADCETRIS here, and helping patients. We want to make sure we have great data here, and so those are the kinds of things we're trying to just ensure.

Operator

Our next question is from the line of Adnan Butt with RBC Capital markets.

Adnan S. Butt - RBC Capital Markets, LLC, Research Division

The first question is on ADCETRIS usage that the company in the past had talked about. Switching over to the incident model, so the first question is, is that -- are the sales we're seeing pretty much incidence sales at this point? And then secondly, the second question is on the DLBCL studies. Is the front-line studies CD30-positive only, and then for the prior -- the DLBCL data that was presented at ASH, when can we expect an update on durability, if there will be an update?

Clay B. Siegall

That was a bunch of things. As far as sales, yes, we previously guided that we're largely in incident sales now, and that's not changed. I think that's where we are now, and that's a good thing. We really have a good handle on this, but I would focus on it being incident. As far as DLBCL, you asked a few things, I want to make sure I captured all of them. In our front-line study, you asked about whether these were CD30-positive patients and the specifics of any trial that we do, we don't discuss, because protocols, until they -- the trial starts, protocols can be moved around and we work with regulators, and et cetera. So as soon as we get this protocol listed on clinicaltrials.gov, I'll be happy to answer those type of questions, but right now, it'd be premature to answer questions about the protocol. And as far as durability goes, that's something that -- our intention is to present durability of the process in many different disease types. We have done that in the past, we'll continue to do that, whether it be in presentations at conferences like ASCO, at Lugano, the lymphoma conference at ASH. We usually have a pretty big presence at ASH, that's a big conference for us. ASCO is usually a little lighter for us. And then about a week or two after ASCO, there's Lugano, and that's usually a big conference for us as well. So we had multiple opportunities to present on efficacy and durability of trials and we intend to do so.

Operator

Our next question is from the line of Howard Liang with Leerink Swann.

Howard Liang - Leerink Swann LLC, Research Division

Just a follow-up on AETHERA. The change, or potential change of the primary analysis. I guess my question is, so if this has changed to a -- some sort of a landmark-phase analysis, something like 1 year after the collection of PET scans, how do you control the risk that there may not be enough events to have sufficient power for positive study? And then sort of, you talked about the events at the current rate "into 2015"? Are we talking about just going into 2015, or well beyond the beginning of 2015?

Clay B. Siegall

Good questions, Howard. Well thought out. We don't know. The answer is, we don't know. That at least we do a landmark analysis rather than the PFS endpoint analysis, that there would be enough power. It is uncertain. That's the risk that you take when you consider those type of things. And that's why we want to work very closely with our partner and the regulators, to make sure that we have as small of a risk, while maintaining integrity and safety of the tri -- evaluation for the trial. So that is something that is a little risky, but it's also, as you know, with trials, as they get longer and longer, past when you had guided for, there's also a risk you could just let them go as well. So there's risk to be balanced and risk to decide of what's best for the company, what's best for our partner, what's best for patients. And we're very proud of the study that we've done. We are not trying to make comments that the trial looks good, or looks not good. We're giving you data on what we see and when we do analysis of the data, and we see the endpoints going into 2015, we certainly will present that on a quarterly call, like we have. We are not giving specific time points in '15, whether it's early mid or late right now, and I know you asked that. We just said going into '15. And we'll continue going into the future to update you on thoughts with AETHERA and any action probably the agency that changed this trial from a different -- from PFS endpoint to a landmark endpoint, we'll be sure to keep you updated.

Howard Liang - Leerink Swann LLC, Research Division

Can I just follow up -- just to make sure I understand correctly, there's no prespecified interim look so far?

Clay B. Siegall

That is correct. There's no prespecified interim look for efficacy. There certainly were quite a few prespecified interim looks for safety. And that happened many different times, and we have an IDMC, and they had looked at our safety throughout the whole trial, and they have not recommended any changes to the study protocol or safety evaluations, and they've always recommended over and over and over for the study to continue, and we've reported that.

Operator

Next question is from the line of Bret Holley with Guggenheim.

Bret Holley - Guggenheim Partners, LLC

I hate to harp on AETHERA, but I guess, I'd love for you to just expand a little bit on what your -- I guess your key motivation for quicker results from the trial would be. I mean, I understand the commercial considerations, but I mean, I guess at the end of the day, how much time could you theoretically save if, in fact, the delay of events is due to essentially the trial heading towards positive results in 2015? Why not just wait?

Clay B. Siegall

I guess part of that I'll try to answer, and part of it is kind of hard to answer. Clearly, we have, over time, at different time points, reported the delay in AETHERA. So this is the first time we're reporting a delay in what we initially guided, and you probably know that. And you all probably know that. And as we look at something like this that has continued delays, it's hard to know what we will see in the future. And having a trial that has had many delays, and delays is something that is real here, but it's something we need to address and not leave the study lingering, we think that there is risk both ways. It's not just that there's no risk in letting it go, and it's important from a patient's standpoint and a corporate standpoint to make sure that we provide data and evaluate our data in a reasonable, timely fashion. Right now, we're providing -- we're saying, extended to '15. If the date was a different date, and continued to get longer, we would still ask the same question. If I said, what if it went longer than that? And I can't predict the future. We don't know what will happen, but we want it to be very clear on this call that this has extended subsequently longer than we thought. We've announced that a couple of times, and we are considering other alternatives. We haven't said that. We will definitively make a move in certain regard. We want to work with our partner, Takeda Millennium, and regulators on this before we do anything.

Operator

Next question is from the line of Alan Carr with Needham and Company.

Alan Carr - Needham & Company, LLC, Research Division

I wonder if you can comment on your efforts to -- you commented on this earlier, efforts to encourage CD30 testing. How's that going? How does that fit into your marketing, etc. and I guess another element to that is, what sort of impact did that have on awareness outside of HL and ALCL?

Clay B. Siegall

Right, well, first of all, I want to note that in our current approvals, in relapsed refractory HL and ALCL, there is no requirements for CD30 testing. So I want to first put that out there. So when you say we are encouraging people to test, that's not for our current label. And now, having said that, we certainly know that a lot of people screen for CD30 and we, certainly, we can encourage CD30 screening as we go forward. There are a lot of other diseases that we can consider and encourage it for, as doctors evaluate what treatment options there are. And CD30, we think could play an important role in the future, specially as we get more data in different disease settings. Chris, would like to comment?

Christopher S. Boerner

Yes. So the one area where we have put some focus is, as Clay mentioned, for HL, it's certainly not a requirement for HL or ALCL, but we do know that about 20% of ALCL is misdiagnosed as PTCL in our labs. And so, that is one area where we feel that we want to make sure that physicians are aware of CD30 testing, as that is one of the primary ways by which you can correctly diagnose ALCL. And so that's the main focus area that we have today. And then beyond that, awareness of CD30 is potentially helpful in the future, as we get additional data and potentially additional labels.

Operator

Our next question is from the line Navdeep Singh with Goldman Sachs.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

So I just want to clarify, if you were to modify that AETHERA trial, are you still looking at PFS as a 1 year post-treatment time point?

Clay B. Siegall

Yes, of course. We would still be absolutely looking at PFS and reporting those data. It's just that if -- we have a prespecified number of PFS events. And if we're short of that, and we think it's going to be a substantive amount of time to get to this PFS event, it may not make sense to continue waiting and waiting and waiting. And so we will have a -- most certainly, we'll have a substantive amount of PFS data, but it just might be short of the prespecified amount. And that's why we're looking for other opportunities, so that it makes -- it can make sense such as after the last PET scan, that is prespecified in the trial.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

Okay so, at this earlier time point, how confident are you that PFS [indiscernible] would be, I guess, differentiated enough at that point?

Clay B. Siegall

Because it's blinded, I have no knowledge of the specifics of this.

Navdeep Singh - Goldman Sachs Group Inc., Research Division

And I think you had mentioned, you are also looking at other scenarios? Can you just walk us through the other scenarios you were thinking about?

Clay B. Siegall

Not at this point. I wanted to -- I hesitated to actually walk you through one, but I didn't want to leave everyone hanging, and thought that it would not be good to say, "we have scenarios" and I'll tell you anything. But I think this is an important discussion between Millennium -- Takeda Millennium and Seattle Genetics and it's important to work this out with regulators. So I just -- we put one in there, just so that you know that we actually have thought about this, and there's a tangible one, at least, to discuss. There other tangible ones, but I don't think it's appropriate to discuss it at this point.

Operator

Our next question is from the line of Mara Goldstein with Cantor Fitzgerald.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

I actually had a question on the supplemental for retreatment use, and your, I guess, knowledge about or understanding of how much understanding of that data is already in the marketplace for retreatment. And if you're seeing any of that.

Clay B. Siegall

Yes, it's a fair question. So thank you for it. Certainly, our label allows for use up to 16 cycles. And so if a patient gets, let's just say they get half that, 8 cycles, and then they go off drug and they want -- and the patient decides to go back on drug, it could still be thought of as within label to get more drug there because it's within that 16 cycles. So, if that's what you're referring to, yes, that's out there and Chris could comment in a moment on what his thoughts are there. It is still very important to us to work with the agency to try to get our label changed to formalize that we can get retreatment. And in that regard, it can do a few things: One of them is, then our reps can discuss it with doctors, and talk about the data we have and present those information on -- as a cover label where the reps can't talk about now, some of the data we have. And it will allow patients that go on drug and then go off for a substantive period of time to come back on, which it is a little confusing that sometimes, to think about what is within label, and how long? What if you run 8 cycles and then off for a year. [indiscernible] go without label and so to have this as a formal label, would clarify any questions that we think that docs could have, and enable us to talk about it and be there for patients to support patients needs. I mean, our data's good, we have 70% retreatment reresponse rate. This is very substantive. And so that we think it's important to get out there.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

And do you think today there exists a unified thought in terms of what constitutes a continuation of treatment, versus a retreatment?

Clay B. Siegall

There's probably not a fully unified thought. And I think getting a label could help that a lot. Chris, would you like to comment?

Christopher S. Boerner

Yes. So just to address the awareness piece, I think Clay has correctly characterized it. The data have been presented previously at conference -- at scientific conferences. I would say that the awareness of the retreatment data is fairly high among academic physicians. In the community setting, I would say, the opposite is true, it's relatively low. I mean, that's one of the reasons it's important to get this on label, so that we can promote to it and drive awareness of that. I think retreatment becomes an important option, particularly for physicians who, for reasons of patient preference or other reasons have decided to give a patient a drug holiday, knowing with confidence that they can bring the drug back at a later time. It's also important, as Clay mentioned, in order to take out any concerns about reimbursement on the retreatment side after you've gone beyond 16 cycles. So for those reasons, we're looking forward to getting that in the label now or here in the future.

Mara Goldstein - Cantor Fitzgerald & Co., Research Division

And does your market research, if you don't mind me asking, is the market research you're doing say, give you any sense of -- from those institutions that you're getting data from? How many are actually retreating, versus just discontinuing treatment?

Clay B. Siegall

We do see some amount of retreatment. The numbers are relatively small, so I would be loathe to provide any specific data. Obviously, we will be tracking that going forward as awareness of the data percolates, but when you see some physicians retreating, and that's particularly true of physicians who have decided to take a patient off to give them a drug holiday and coming back. And certainly we know of anecdotes of patients who have been retreated multiple times, but the numbers are still relatively small.

Clay B. Siegall

And that's another reason why we want to get this added to our label and get out there and really talk about it, and raise the awareness that this can really benefit patients. It could be a big thing for us.

Operator

And at this time there are no further questions in queue. I'd like to turn the call back over to Peggy Pinkston for closing remarks.

Peggy Pinkston

Thank you, operator, and thanks, everybody, for joining us this afternoon. Have a good evening.

Operator

Thank you, ladies and gentlemen, that does conclude our conference for today. If you'd like to listen to a replay of today's conference, please dial (303)590-3030 or (800)406-7325 and enter the access code 4614064. We'd like to thank you for your participation and you may now disconnect.

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