Seattle Genetics and Immunogen: Fabless Biotechs?

| About: Agree Realty (ADC)

The results are in and it appears Seattle Genetics’ Antibody Drug Conjugate (NYSE:ADC) technology does indeed work after all- not that that should be a surprise to anyone following the company. Results released early Monday morning showed 75% of relapsed or refractory Hodgkin's Lymphoma (HL) patients taking the drug Brentuximab Vendotin, or as I prefer to call it, SGN-35, in this pivotal Phase II trial achieved an objective response with a median duration of greater than six months... Applause.

This is the second major trial to validate ADCs. Last year, Genentech (Private:DNA), in collaboration with Immunogen, showed impressive responses with their ADC, Trastuzumab-DM1, in a Phase II trial for refractory HER2 positive breast cancer patients.

With their lead positions in ADC technology, numerous biotechs and pharmas have signed on to use their technology. A couple, Genentech and Bayer (OTCPK:BAYRY), have hedged their bets by working with both companies. Pfizer (NYSE:PFE) has its own technology through its merger with Wyeth (WYE) - inventor of the first marketed ADC, Mylotarg (however, it was recently removed from the market for lack of efficacy.) Bristol Myers Squibb (NYSE:BMY) also bought into the technology with the acquisition of Medarex (MEDX), and now has an anti-CD70 conjugate in early clinical testing.

A good number of pharmas are still sitting on the sidelines. Anyone playing in the oncology space, and it appears practically everyone is, will be giving ADCs a good look. Build you own, or license a proven winner? Seeing as the goal in pharma is speed and efficiency, I’m betting lots of licensing deals are in the works.

I liken the technology platform portion of Seattle Genetics and Immunogen to a fabless semiconductor firm such as Qualcomm (NASDAQ:QCOM). Both biotechs are revolutionizing their industry through constant innovation- better linkers, more potent payloads. They design, tinker, and engineer a product for their customers who then go on to (hopefully) sell to the public. Though the companies don’t do the selling, they must continually improve their technology or be surpassed by others. Just as Qualcomm has cornered the market on 3G wireless technology, Seattle Genetics (NASDAQ:SGEN) and Immunogen (NASDAQ:IMGN) seem poised to have the market cornered on ADCs, for now.

Disclosure: Author long RHHBY.PK, BMY and SGEN

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