The Winner of ASH 2010: Seattle Genetics

by: Ohad Hammer

As expected, earlier this month at the annual American Society of Hematology (ASH) meeting, Seattle Genetics (NASDAQ:SGEN) reported positive results that will likely lead to the company’s first ever regulatory approval for Brentuximab vedotin (SGN-35). The data will transform Seattle Genetics into a commercial stage company, with an initial market opportunity of ~$250M in the US alone. In addition, the results further validate the company’s ADC (antibody drug conjugate) technology, which has broad utility and huge commercial potential. In particular, Seattle Genetics could become a market leader in hematology by next year’s meeting, with results for two additional ADCs.

SGN-35 demonstrated overwhelming activity and a good safety profile in two relatively small indications: Hodgkin Lymphoma (HL) and ALCL (anaplastic large cell lymphoma). Both trials demonstrated stellar response rates, 75% for HL and 86% in ALCL. The duration of response in the HL study was 6.7 months, somewhat disappointing given SGN-35’s potency, however, it is above the unofficial approval bar of 6 months. Duration of response in ALCL was still not reached.

Duration of response is also important for product sales, as it affects treatment duration and the overall amount of drug patients receive. Still, the small patient population, the lack of other approved therapeutic options and the strong efficacy will probably enable Seattle Genetics and its partner Takeda to price SGN-35 higher than most marketed antibodies for cancer.

As the HL trial was conducted under SPA (special protocol assessment), chances for approval in this indication are extremely high. Although the ALCL trial is not under SPA, chances for approval are very high as well. In fact, SGN-35 looks even more effective in this indication than in HL. Assuming SGN-35 is approved, the drug is expected to be on the market by late 2011.

Evaluations regarding SGN-35’s market potential vary, ranging from $150M to $300M in the US, where Seattle Genetics has marketing rights for the drug. The company is entitled to double digit royalties on sales outside of the US, which could reach $300M (~$40 million in royalties). These values do not represent potential label expansion into earlier treatment lines within HL and ALCL.

In addition, SGN-35 might have utility in other indications based on data in the scientific literature, however, there is still no clinical experience with SGN-35 in these indications. In addition, unlike HL and ALCL, where the vast majority of patients express CD30 (SGN-35’s target), the incidence in other cancers such as certain types of sarcoma and NHL is unknown but probably substantially lower.

Novartis (NYSE:NVS) also published results in refractory HL with its HDAC inhibitor, LBH589, but results pale in comparison to those of SGN-35, with a response rate of 27% and a response duration of 6.1 months. Importantly, Novartis' drug rarely leads to complete responses (4%), whereas a third of patients treated with SGN-35 achieved a CR. Novartis plans to file for regulatory approval in the coming weeks but even if LBH589 receives approval and beat SGN-35 by several months, the superiority of the latter is unmistakable.

Growing presence in hematology

SGN-35 success more than compensates for the failures of two previous Seattle Genetics agents for blood cancer, SGN-40 for NHL and SGN-33 (lintuzumab) for AML. Next year, however, the company should have an update on SGN-75, which is being evaluated in NHL as well as in renal cancer. Preliminary data with suboptimal doses that was presented 2 months ago showed activity in NHL.

NHL is a group of diseases that represent a very large yet highly competitive indication. Still, effective and safe treatment options are needed for refractory patients as well as for augmenting approved regimens. Next year, the company should present updated results with SGN-75 that will shed more light on this agent’s prospects in NHL. A response rate of 30% in heavily pretreated patients will make SGN-75, wholly owned by Seattle Genetics, an important asset.

Seattle Genetics has another shot in NHL with an antibody-drug conjugate in development by Genentech. This ADC (DCDT2980S), which utilizes Seattle Genetics’ technology, targets CD22, a well recognized target for NHL as well as other blood cancers. CD22 is considered a validated target thanks to positive data for Pfizer’s (NYSE:PFE) anti- CD22 ADC (CMC-544), which is now in phase III testing. This makes the probability of seeing activity with Genentech’s agent rather high. Although DCDT2980S will not be a first in class agent, it may very well be a best in class agent as Seattle Genetics’ technology seems to be superior to that of Pfizer in terms of efficacy and safety.

Genentech’s CD22 conjugate just entered the clinic so it could have preliminary data by next year’s ASH meeting. It is the third antibody drug conjugate Genentech is bringing to the clinic (the other two are T-DM1 using Immunogen’s (NASDAQ:IMGN) technology and another ADC using Seattle Genetics’ technology that was discontinued). This further demonstrates Genentech/Roche’s enthusiasm with the ADC field. Many additional pharmaceutical companies are developing ADCs, which are considered the hottest topic in the antibody industry. These include Novartis and Sanofi-Aventis (NYSE:SNY) (both using Immunogen’s technology), Astellas and GSK (NYSE:GSK) (both using Seattle Genetics’ technology), and Pfizer (proprietary technology). Genentech is using technologies from both companies as well as proprietary technologies and probably has the largest preclinical pipeline of ADCs in the industry.

Interestingly, Genentech evaluated Immunogen’s technology for CD22 as well and eventually decided to go with Seattle Genetics’ technology. Based on Genentech’s publications, Immunogen’s conjugates appeared to also be very effective in animal models using the same technology used in T-DM1. It will therefore not be surprising if Immunogen or one of its partners bring a CD22 ADC to the clinic in the near future. Sanofi Aventis is developing SAR-3419, an anti CD19 ADC for NHL using Immunogen’s technology, which should enter phase II next year.

Biotech portfolio updates

We are selling Celgene (NASDAQ:CELG), Myriad Genetics (NASDAQ:MYGN) and one of three positions in Micromet (NASDAQ:MITI). We are initiating a position in YM Biosciences (YMI), on which we will elaborate in the upcoming article on additional results from ASH.

Portfolio holdings as of Dec 19th, 2010

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Disclosure: I am long SGEN, IMGN.