Seattle Genetics' (SGEN) CEO Clay Siegall on Q1 2020 Results - Earnings Call Transcript

Seattle Genetics, Inc. (NASDAQ:SGEN) Q1 2020 Earnings Conference Call April 30, 2020 4:30 PM ET

Company Participants

Peggy Pinkston – Vice President, Investor Relations

Clay Siegall – President and Chief Executive Officer

Chip Romp – Executive Vice President-Commercial

Todd Simpson – Chief Financial Officer

Roger Dansey – Chief Medical Officer

Conference Call Participants

Salveen Richter – Goldman Sachs

Kennen MacKay – RBC Capital Markets

Michael Schmidt – Guggenheim

Greg Harrison – Bank of America

Chad Messer – Needham & Company

Gena Wang – Barclays

Joe Catanzaro – Piper Jaffray

Andrew Berens – SVB

Stephen Willey – Stifel

George Farmer – BMO Capital Market

Andy Hsieh – William Blair

Silvan Tuerkcan – Oppenheimer

Operator

Good day and welcome to the Seattle Genetics First Quarter 2020 Financial Results Conference Call. Today’s call is being recorded.

At this time I would like to turn the conference over to Ms. Peggy Pinkston, Vice President of Investor Relations. Please go ahead.

Peggy Pinkston

Thank you, operator, and good afternoon, everyone. I’d like to welcome all of you to Seattle Genetics first quarter 2020 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Chip Romp, Executive Vice President-Commercial, Todd Simpson, Chief Financial Officer; and Roger Dansey, Chief Medical Officer.

Accompanying today’s conference call are supporting slides, which are available on our website in the Investors section, Events and Presentations page. Following our prepared remarks, we’ll open the line for questions. [Operator Instructions]

Today’s conference call will include forward-looking statements regarding future or anticipated events and results, including the company’s 2020 financial outlook, anticipated product sales, revenues, costs and expenses, and timing to achieve potential clinical and regulatory milestones, including data readouts, regulatory submissions and approvals.

Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include the difficulty in forecasting sales, revenues and expenses, impacts related to the COVID-19 pandemic and the uncertainty associated with pharmaceutical development and regulatory approval process. More information about the risks and uncertainties faced by Seattle Genetics is contained under the caption Risk Factors included in the company’s periodic reports filed with the Securities and Exchange Commission, including the company’s annual report on Form 10-K for the year ended December 31, 2019.

And now I’ll turn the call over to Clay.

Clay Siegall

Thank you, Pegg and good afternoon everyone. Seattle Genetics has made remarkable progress over the past few months. I’ve been extremely proud of our accomplishments and the focus and creativity of our team during a period of significant global and individual impact.

We broadened our commercial portfolio, which now includes three first-in-class or best-in-class medicines for cancer patients. ADCETRIS is an important global brand for lymphoma and we are investing in future growth opportunities. PADCEV was approved in late December for metastatic urothelial cancer and today we are pleased to announce a strong first full quarter of sales. And earlier this month we received approval of TUKYSA for metastatic breast cancer, four months ahead of the PDUFA date. These are significant milestones and we remain excited with the expansion opportunities across these three programs as well as our emerging earlier stage pipeline.

I’ll begin today with some comments on each of our approved programs starting with ADCETRIS. We’re pleased to report ADCETRIS net sales of $164 million in the first quarter of 2020 up 22% over the first quarter of 2019. We are maintaining our guidance of full year 2020 ADCETRIS net sales in the range of $675 million to $700 million. Our ADCETRIS partner Takeda, continues to make global regulatory progress. Most recently CHMP adopted a positive opinion recommending extension of the marketing authorization for ADCETRIS+ chemotherapy for frontline systemic anaplastic large cell lymphoma based on results from the ECHELON-2 trials. We look-forward to additional frontline Hodgkin and PTCL approvals in Takeda’s territory over time. We believe there are several additional opportunities for ADCETRIS and our advancing ongoing and planned clinical trials in a range of settings.

These include re-treatment, using patients who are unfit for combination chemotherapy, novel frontline Hodgkin lymphoma combinations and relapsed/refractory diffused large B cell lymphoma. We also expect to report five year progression free survival results later this year from both the ECHELON-1 and ECHELON-2 trials. These data could further establish the positive long-term benefit of the approved ADCETRIS+ chemotherapy regimen in frontline Stage III/IV Hodgkin lymphoma and in frontline CD30 expressing PTCL.

I’ll move on now to PADCEV, which we’re developing and commercialization in collaboration with Astellas. PADCEV was approved in late December, 2019, three months ahead of the PDUFA date. In its first full quarter on the market, PADCEV net sales in the U.S. were $34 million. We’re pleased by the initial physician and patient reception to PADCEV as well as our commercial team’s ability to shift mid-quarter to a virtual engagement. There are additional opportunities for PADCEV in earlier lines of end stages of bladder cancer. A primary focus of this work is evaluating PADCEV in combination with KEYTRUDA. In the past month, we’ve made important progress as we the first line metastatic urothelial cancer and muscle invasive bladder cancer that Roger will describe in more detail. Looking beyond bladder cancer, the first patient was recently dosed in the EV-202 basket trial evaluating single-agent PADCEV in a range of solid tumors.

Our third and newest commercial product is TUKYSA, the brand name for tucatinib. We’re very pleased with the strong label granted by FDA. TUKYSA is approved for use in combination with trastuzumab and capecitabine for patients with metastatic HER-2 positive breast cancer including patients with brain metastasis, whoever received one or more prior anti HER-2 based regimens in the metastatic setting. This positions the regimen as an option for second line treatment. We’re almost two weeks into the launch of TUKYSA, which we’re conducting through virtual communication channels. We’ve been pleased by the reception from the breast cancer community to this new treatment option for patients.

To maximize the potential of TUKYSA, we’re investing in a broad development program across HER-2 positive cancers. In addition, we’re preparing for European commercial operations and hire general managers in major European markets ahead of potential ex-U.S. approvals of TUKYSA.

Turning now out or pipeline on the horizon with a clinical trial readout is Tisotumab Vedotin or TV which we are developing in collaboration with Genmab. We’re conducting a pivotal Phase 2 single-arm simulation trial in women with recurrent or metastatic cervical cancer where there is no standard of care and outcomes are poor. We expect to report top line results late this quarter or into the third quarter. Our early stage clinical pipeline is robust. It includes ADCs such as Ladiratuzumab Vedotin, SGN-CD228 and SGN-B6A for which an IND has just been submitted. These three ADCs are all targeted to receptors that are widely expressed in solid tumors.

To expand upon our deep knowledge of CD30 expressing malignancies and our expertise with CD30 directed ADCs, we’re advancing another IND candidate this year called SGN-CD30C. This is a novel anti-CD30 ADC that has the potential for enhanced activity and improved tolerability compared to ADCETRIS. Preclinical data on SGN-CD30C will be presented along with several other abstracts on our research at the AACR virtual annual meeting in June. In addition to ADCs, we’ve made progress with novel immunotherapy agents in our early stage clinical pipeline. These include SEA-CD40 and SGN-TGT.

Lastly, I wanted to provide an update on our dispute with Daiichi Sankyo regarding ownership of certain technology used in the breast cancer drug and HER-2, and other product candidates. According to our agreement, this type of dispute should be resolved through arbitration. Daiichi Sankyo has been trying to prevent our dispute from going to arbitration through actions in federal court. On April 27, it was ruled that the dispute should be resolved in arbitration and that the arbitration process should move forward. We view this as a positive development. With our diverse commercial portfolio, growing revenues and multiple programs that provide significant opportunities in a range of cancer types we are well-positioned for the future.

At this point. I’ll turn the call over to Chip to discuss our commercial activities. Then Todd will comment on our financial results. After that, Roger will discuss our clinical development activities. Chip?

Chip Romp

Thanks, Clay. I’m excited to update you on our commercial activities. ADCETRIS net sales growth in the U.S. and Canada in the first quarter were driven by our frontline indications in Hodgkin lymphoma and UCL. As Clay mentioned, we look forward to the five-year PFS data later this year from the ECHELON-1 trial. Five year data are an established standard that we believe will resonate with some physicians who’ve been slow to adopt ADCETRIS+ AVD in the frontline setting. In PTCL, ADCETRIS should become the standard of care for patients with ALCL. One of our areas for focus in 2020 is to increase use in additional CD30 expressing subtypes.

Now I’d like to transition to PADCEV. In the first full quarter since launch, net sales were $34 million. We are very pleased with these early results and with the strong uptake, particularly in the community setting. We are still early into the launch and our goal with PADCEV is to maintain our strong momentum. Along with our Astellas colleagues, we are working hard to support our customers and to drive awareness and understanding of this important new treatment option for metastatic urothelial patients, seeking treatment after platinum and PD-1 or PD-L1 therapy.

And finally our third product is TUKYSA, the commercial team was ready for the rapid approval, marketing materials were complete. Physician and patient websites were up the day of approval and the dedicated TUKYSA salesforce comprised of breast cancer specialist was trained and ready. Interest in the product is very high and our field sales teams are reporting good virtual access to customers. TUKYSA is available in our distribution networks and accounts are beginning to order. I look forward to updating you on our progress in future calls. Now I’ll turn the call over to Todd.

Todd Simpson

Thanks Chip and thanks to everyone for joining us on the call this afternoon. Our financial results for the first quarter reflect significant progress across the business, including a strong first quarter of PADCEV sales. Today I’ll summarize our results for the first quarter and then comment on our outlook for the remainder of 2020.

Total revenues were $235 million in the first quarter of 2020, this included ADCETRIS net sales of $164 million and PADCEV net sales of $34 million. As a reminder, we record 100% of PADCEV sales in the U.S. under our co-promote with Astellas. Royalty revenues in the first quarter of 2020 increased to $20 million compared to $16 million in the first quarter of 2019. This growth primarily reflects sales of ADCETRIS by Takeda and to a lesser degree now royalties on sales of Polivy by Roche. Collaboration revenues were $16 million in the first quarter of 2020 compared to $45 million in the first quarter of last year.

The decrease in collaboration revenues is the result of a $30 million milestone from Takeda earned last year. That was triggered by the approval of ADCETRIS in the EU for frontline Hodgkin lymphoma.

Cost of sales for the first quarter of 2020 increased to $29 million and now reflects both ADCETRIS and PADCEV including the PADCEV profit share to Astellas that was $16 million in the first quarter. Beginning in the second quarter, cost of sales will also reflect TUKYSA and we’ll also include the non-cash amortization of acquired in-process R&D. That was part of the Cascadian acquisition. We plan to provide further guidance on cost of sales on future calls.

R&D expenses were $195 million in the first quarter of 2020, growth over 2019 reflects higher investment across our pipeline.

SG&A expenses were $122 million in the first quarter of 2020. The increase over 2019 reflects commercialization efforts related to the launches of PADCEV in TUKYSA.

We ended the first quarter with $800 million in cash and investments. In addition, we held approximately $104 million in Immunomedics common stock at the end of the quarter. These shares are mark-to-market which resulted in a non-cash loss that contributed to an overall investment loss of $56 million for the first quarter. We monetize the remaining portion of our investment in April, which generated cash of $175 million.

We acquired this investment back in 2017 and our total gain when also including prior year sales was $210 million.

Regarding our financial outlook for 2020, product sales will now include all three brands. At this point we’re not providing guidance for PADCEV or TUKYSA and our ADCETRIS guidance is unchanged from our expectations provided in February. We expect R&D expenses to increase as trials of PADCEV in TUKYSA ramp up.

SG&A expense growth in 2020 is primarily driven by the U.S. launches of both PADCEV and TUKYSA.

Our guidance for R&D and SG&A expenses remains unchanged.

Lastly, we continue to closely monitor the impact of COVID-19 on our business. We have implemented a number of measures to protect the health and safety of our employees, patients, and healthcare professionals, while also taking steps to advance our operations. These include efforts to mitigate disruptions to our supply chain and continue clinical trial and commercial activities.

To-date, we’re pleased with the continuity of our business and in our ability to support the critical need of cancer patients for treatment. However, COVID-19 has created a dynamic environment that may impact the company over time. We will keep investors updated as appropriate going forward.

With that, I’ll now turn the call over to Roger.

Roger Dansey

Thanks, Todd, and good afternoon, everyone. I’m pleased to update you today on our clinical development and regulatory activities and the work we’re undertaking to maximize the therapeutic potential of our programs. I’ll start with PADCEV, our ADC directed against Nectin-4, which is ubiquitously expressed in bladder cancer. As you know, data from the first cohort of the EV-201 trial supported approval of PADCEV in metastatic urothelial cancer patients following treatments with a platinum-containing regimen and the PD-1 or PD-L1 inhibitor.

Earlier this month, we completed enrollment in the second cohort which is evaluating patients who received the PD-1 or PD-L1 inhibitor but we were not eligible for treatment with cisplatin. We believe data from the second cohort of EV-201 could potentially support a second indication for PADCEV. Other key activity or PADCEV monotherapy is the ongoing randomized Phase 3 EV-301 trial in advanced urothelial cancer. Enrollment of 608 patients was completed earlier this year and we are following patients for the primary endpoint of overall survival.

EV-301 is intended to serve as a confirmatory study for EV-201 and support global regulatory applications for approval. PADCEV in combination with KEYTRUDA in first line metastatic urothelial cancer is another key effort. At the ASCO GU meeting in February, we reported updated results from the EV-103 trial of 45 metastatic urothelial cancer patients who were previously untreated and ineligible for cisplatin-based chemotherapy.

The objective response rate was 73% and median duration of response had not been reached. Median progression free survival was 12 months and median overall survival was not reached. The safety profile appeared consistent with individual components of the combination including rash, hyperglycemia, peripheral neuropathy, and immune-mediated events. These data supported breakthrough therapy designation from the FDA for PADCEV in combination with KEYTRUDA in the setting. This is our second PADCEV BGD. [ph]

Based on discussion with the FDA, we are pleased that EV-103 now has the potential to support and accelerated approval for PADCEV in first line cisplatin ineligible metastatic disease.

In January, we added cohort KEYTRUDA trial which will enroll 150 patients randomized to receive either PADCEV plus KEYTRUDA or PADCEV alone. The primary endpoint is objective response rates supported by duration of response. This accelerated pathway would be complimentary to the randomized Phase 3 EV-302 trial that is intended to support global registrations and now also serves as a potential confirmatory trial.

Today, we are announcing that we have treated the first patient in EV-302. In this trial together with Astellas and Merck, we are evaluating the PADCEV and KEYTRUDA combination with or without chemotherapy compared to chemotherapy alone. Target enrollment is 1,095 patients and importantly includes all patients whether they are cisplatin eligible or ineligible and irrespective of PD-L1 expression. The trial is evaluating dual primary endpoints of progression-free and overall survival.

In early bladder cancer, Seattle Genetics, Astellas and Merck recently completed a clinical trial agreement under which we will evaluate PADCEV and KEYTRUDA in muscle invasive bladder cancer by adding an arm to an ongoing Merck Phase 3 registrational trial. Under this agreement, we are providing PADCEV and Merck will continue to fund and operationalize the study. This expedites the development of the PADCEV/KEYTRUDA combination in this setting.

I’ll now move on to TUKYSA, our recently approved oral tyrosine kinase inhibitor that targets HER2. We’re very pleased by the FDA label and the speed at which we received approval under the FDA is realtime oncology review. We believe that the activity seen in the HER2CLIMB trial establishes TUKYSA as a best-in-class HER2 TKI. At the ASCO Virtual Scientific Program in late May we will present analysis on patients with brain metastases in HER2CLIMB to further demonstrate the treatment effects of TUKYSA observed in the brain.

The data which was selected for an oral presentation will provide more insights into this aspect of the trial. Our ongoing regulatory efforts with HER2CLIMB include marketing applications that are currently under review in Switzerland, Singapore, Australia, and Canada as part of Project Orbis and also in the EU. We are also evaluating TUKYSA in a randomized Phase 3 trial called HER2CLIMB-02 in combination with T-DM1 versus T-DM1 alone in metastatic breast cancer including persons with brain metastases.

In this trial, patients must have previously received taxane and trastuzumab and in the neoadjuvant, adjuvant or metastatic setting and thus represent a population receiving first or second line treatment. HER2CLIMB-02 remains a key part of our TUKYSA development program. Both TUKYSA and T-DM1 are important drugs for the treatment of HER2 positive breast cancer and if HER2CLIMB-02 is successful, it will support use of the combination in the first line metastatic setting that’s expanding beyond the current label.

In addition, given the demonstrated activity of TUKYSA and patients with brain mets, the combination may also improve outcomes for these patients. Enrollment in HER2CLIMB-02 is ongoing with a target of 460 patients. The primary endpoint is progression free survival and key secondary endpoints of overall survival and PFS in patients with brain mets.

Lastly on TUKYSA, we previously outlined our plans and neoadjuvant breast cancer and metastatic colorectal cancer and those efforts are continuing. Trials in adjuvant breast cancer, gastric cancer and HER2 mutant or amplified cancers are in the planning phase.

Next, I’ll turn to ADCETRIS. We recently expanded our clinical collaboration with Bristol-Myers Squibb to further evaluate the combination of ADCETRIS and Opdivo in an ongoing clinical trial. The focus of this new effort will be to assess the combination plus chemotherapy in stage one and two Hodgkin lymphoma. This approach brings together two of the most active agents in early stage Hodgkin lymphoma. Our goal is to improve efficacy while reducing toxicity by limiting the chemotherapy components of the regimen.

Now, I’ll turn the call back over to Clay.

Clay Siegall

Thanks, Roger. Before we open the line for questions, I want to recap key upcoming activities across our oncology portfolio. They include first continue to establish ADCETRIS as standard of care in frontline Hodgkin lymphoma and frontline PTCL and initiate additional clinical trials.

Second, continue our strong PADCEV launch in U.S. with Astellas and advanced the broad development program including trials in firstline metastatic and muscle invasive bladder cancer.

Third, continue to launch TUKYSA following the recent FDA approval and advance its robust clinical development program. And fourth report top line results from the TV pivotal trial in cervical cancer. We look forward to continuing our momentum into the remainder of the year.

At this point, we’ll open the line for Q&A. Operator, please open the call for questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] And we will take our first question from Salveen Richter with Goldman Sachs.

Salveen Richter

Thank you and congratulations on the PADCEV launch. What has been the key drivers for the rapid uptake care for PADCEV and how should we think about the launch trajectory on the Board? And maybe you can just comment on that part as to whether there was a bolus of patients in 1Q? Thank you.

Clay Siegall

Yes. Salveen, thank you very much for the question. We’re delighted with our first full quarter of PADCEV sales at $34 million. And as I previously had mentioned on other calls that along the way that was exceeding our expectations early on. We mentioned that the uptake was good, including in the community setting. But at this point, it’s really it’s hard to really look and see whether sites, and we can’t really see that sites are accumulating inventory or that there was pent-up demand or things like that.

So it’s very hard to see that right now. This is an important drug for disease that didn’t really have a lot of good therapy. And so I think we’re there and helping patients in a big way. Chip, do you want to add anything to PADCEV that I didn’t mention?

Chip Romp

Sure, Clay. Yes. We generally don’t see sites include significant inventory or accumulated significant inventory. This is kind of a just-in-time delivery model. So generally when they’re ordering, they have a patient. I think you’re right in saying that this just represents an advancement, I think, for bladder cancer and that there wasn’t a good treatment alternatives out in the marketplace.

Salveen Richter

Thank you.

Operator

We’ll take our next question from Kennen MacKay with RBC Capital Markets.

Kennen MacKay

Thank you so much for taking the question and let me offer my congrats on the very incredible PADCEV launch as well, even a very bullish estimate despite a global pandemic ongoing. So a huge, huge congrats there. So PADCEV has been discussed a little bit. So I was going to ask elsewhere. I was wondering what you’re seeing around the impact of ADCETRIS use due to the COVID pandemic. It seems like it might have been a little bit impacted in Q1 or maybe in March and then also, it seems like the tisotumab vedotin readout maybe got pushed back a little bit, given this trial was fully enrolled.

I’m wondering if we should be thinking that maybe that’s suggesting longer progression-free survival response is an ongoing scan collection from some of these patients that are in that trial. Thank you so much and congrats again.

Clay Siegall

Thank you. So with ADCETRIS, we’re really excited about ADCETRIS. And it’s a great drug. It’s helped tens of thousands of patients and continues to. The first time that this drug ever hit $1 billion in sales globally was last year. Sales have doubled over the past two years. And quarter from 2019, it was 22% up. And the first quarter is always a little bit light with ADCETRIS, it has been year in and year out.

So I look at the quarter over year’s first quarter. Now having said that, you did bring up COVID-19. And certainly, that is a – it’s something to look at. Whether there’s a small number of patients that are unable to come in and get therapy for lymphoma is something that very well could be happening. It’s really hard to know exactly.

But we’re really excited about our five-year data coming out later this year. And it’s something that we haven’t changed our guidance for the year. So I think that that’s really something important to look at. Now you briefly snuck in a second question on TV about timing. The most important thing with our data with TV is that this is potentially registerable. And we need to follow the data and follow the duration of the data and work with a third-party that puts these type of blinded data together and before we can present this and reveal the data.

So that’s something that’s ongoing. We’re working hard at. If they may very well come this quarter, okay, and we’re working toward trying to make that happen. We just put out that it may slip a little bit into the third quarter, just in case it does but we’re working hard to get this done in the soonest time frame possible. So I wouldn’t read too much into it. And you will hear about it soon.

Kennen MacKay

Thank you.

Operator

We will take our next question from Cory Kasimov with JPMorgan.

Unidentified Analyst

Hey, thanks for taking my question. This is Turner [ph] on for Cory. On TUKYSA, we’ve heard from a few docs that pharmacy co-pays could be a barrier to access for some patients just based on experience from other orally administered products. What are your thoughts on this? And can you comment on some of the programs you’re undertaking right now on this front? And then also on EV, I’m curious when we could expect data from the EV-103 study for patients that are platinum eligible? Thanks.

Clay Siegall

You asked a question on EV-103 trial. It was a little hard for me to hear it. Roger, did you capture the question?

Roger Dansey

Yes, I did. I did. And thanks for the question.

Clay Siegall

And can you do data first, and then we’ll go back to the TUKYSA question with Chip.

Roger Dansey

Sure. Sure. I can do that. So the question was, when would we expect data from the 103 trial that would lead to a potential approval in cisplatin eligible frontline metastatic bladder cancer. And the answer is, we started the cohort in January. The total number enrolled is 150. It’s a randomization versus PADCEV monotherapy to PADCEV plus KEYTRUDA. The enrollment is going as we expect. We are not – we can’t reveal the timing of that. But just to point out the response rates and duration of response are the two endpoints that we need. So we understand, once we fully enrolled what that timing will look like. But we just can’t reveal that at this point.

Clay Siegall

Okay. And Chip, can you comment on the Turner had heard about to TUKYSA and copay and any potential barrier? We worked very hard to make that not happen. So Chip, can you talk about our systems for doing that?

Chip Romp

Sure, Clay. Through our already established SeaGen Secure program, we will provide copay assistance for eligible commercially insured patients to help with in order to minimize out of pocket costs associated with the product.

Unidentified Analyst

Great. Thanks.

Operator

We will take our next question from Matthew Harrison with Morgan Stanley.

Unidentified Analyst

[Indiscernible] on for Matthew. Thanks for taking the question. So just on PADCEV. Can you elaborate a bit on your discussions with the FDA and the accelerated approval in the frontline? And I guess how those conversations have been going and how they may impact the timeline there. And then just quickly on COVID and on the launch, what sort of penetration have you guys been seeing thus far? Thank you.

Clay Siegall

Matthew, I am so sorry to ask you and I apologize for this multimedia way of doing this. Can you – my phone cut out just for a second, can you go through your two questions one more time briefly?

Unidentified Analyst

Sure. Yes. Sorry. It might be my end as well. So could you just elaborate briefly on your discussions with the FDA regarding frontline accelerated approval for PADCEV? And I guess, just how those may going and potentially timelines if available. And then could you just provide some commentary on COVID and the impact that it’s had to the PADCEV launch and then what sort of penetration that you guys have seen during the first quarter?

Clay Siegall

Okay. So, first of all Roger just gave an update on the frontline work we’re doing in the 150 patients for the accelerated PADCEV approach. And so he explained the two arms in his prepared remarks, 75 patients each, it’s 150 patients. We started the enrollment in January. It’s going well. We have not provided set timelines at this point, but our interaction with the FDA was strong and we put out a press release on it. We – I think, at the end of the day we’ve done this a lot with different drugs. We have eight different approvals with drugs and labels and I think we’re pretty good at this and we know what we need to bring to the FDA. But at the end of the day, it’s always a review decision. The FDA looks at your data and making decision based on the data.

So we will work forward fast, we’ll be prepared and we’ll bring it to the FDA. And as we get further into the trials, we usually provide timelines, but not yet. As far as COVID-19 and PADCEV, we can’t rule out that there wasn’t an impact on COVID-19. It’s impossible to rule that out. We had two months in the field and then COVID-19 hit and our salespeople switch to a virtual Salesforce, which actually help train us to be fully ready for TUKYSA. We had two drugs getting approval four months apart.

So – but the second drug to TUKYSA is purely a virtual as far as, communications with doctors, et cetera and caregivers. But with PADCEV, while we can’t rule it out that have had impact. We’re very pleased with the $34 million in net sales. It means we’ve gone out there and we’ve really got to a lot of patients, doctors are using the drug. We hear really good things about it. We’re certainly bullish on PADCEV going forward not only in the relapse setting like we have, but also in first line and other settings and we have not provided a market penetration number on this as of yet. These are things that we would decide in the future whether or not we would provide these type of guidance.

Unidentified Analyst

Understood. Thank you.

Operator

We will take our next question from Michael Schmidt with Guggenheim.

Michael Schmidt

Hey guys. Thanks for taking my questions and congrats on the terrific launch here as well as PADCEV. Maybe just a couple for Roger on additional labeling opportunities. The EV-201 cohort two, can you just help us understand how big that incremental additional opportunity might be in bladder cancer? And then you mentioned the Merck collaboration for muscle invasive bladder cancer patients. Can you just help us here what the potential path to market could look like?

Clay Siegall

Sure. Roger, go on ahead.

Roger Dansey

Sure. Thanks for the question. So, as we’ve indicated, we’ve enrolled cohort two. Cohort two is this group of patients on the EV-201 trial who have not cisplatin eligible but have seen a PD-1 or PDL-1 inhibitor that’s a smaller population than the broader population, which are platinum eligible. And have seen a PD-1. Nevertheless, it’s a meaningful – it’s a high unmet need. It’s a meaningful population. So we’re hopeful as the data matures and we’re able to give you a little bit more guidance around timing. We’ve completed enrollment. This is – as is cohort one as was cohort one. It’s an overall response followed by duration of response evaluation. So, we’re hoping we’ll get the results, potentially later this year. But I think as we get more clarity on the timing, we’ll give you more guidance.

With regard to muscle invasive bladder cancer, we are very pleased. As you know, we have two cohorts running in EV-103, one looking at PADCEV monotherapy and the other looking at PADCEV together with KEYTRUDA in cisplatin ineligible patients with muscle invasive bladder cancer and essentially by being able to join the Merck registrational trial, we’re sort of leapfrogged, our potential to get an approval in this very important group of patients.

The endpoints as defined by, original negotiations between Merck and the FDA focused on things like pathologic complete response and event-free survival. I think the details of how that trial has been altered to accommodate PADCEV and KEYTRUDA will become available through ct.gov or some other means. And once they’re available publicly, I think we’ll go into more detail for you. But that is an ongoing trial which we are joining.

Michael Schmidt

Great, thanks for the information. Really appreciate it and congrats again.

Operator

We’ll take our next question from Geoff Meacham with Bank of America.

Greg Harrison

Hi, this is Greg Harrison on for Geoff. Thanks for taking our question. Just to dig into the guidance a little more, the fact that you maintained it across the board definitely showed some confidence. So just wondering what impact from COVID-19 know is implied in your decision to maintain the guidance and what two factors are in play, negative or positive that give you confidence in that outlook, both in terms of ADCETRIS as well as expenses and your other guidance items?

Clay Siegall

Sure. I will address the ADCETRIS. And let Todd address the expenses. ADCETRIS is a great product. It’s been out there, approved in 2011. We have six labels and helps patients in many different ways. So doctors rely on it, depend on it, and patients benefit from it. And I think that when we – COVID first comes out and came out onto the scene, it was really hard, I think for some docs and patients to really know exactly what to do, we were all a little bit stunned by the changes that happened so rapidly. And so I think that initially it was not as clear, but it is really important for these patients to continue getting therapy and when they need therapy for cancer, getting therapy, it is really, really important.

So I think that, over time we’ve learned a little bit more and learned how to stay safe and wear masks and do other things. And so I think that right now, cancer patients are getting therapy and which is really important for cancer patients with life threatening disease. And we see that strengthening and improving through the years. So I think staying with our guidance makes a lot of sense for us because there are patients that need therapy and we think that largely they’re going to be getting their therapy. Todd, do you want to talk about expenses?

Todd Simpson

Yes. I’ll first maybe start off by saying that we have really, as a management team, tried to focus on this and keep business interruption to an absolute minimum, Clay. Clay is right. When you look at what we’re doing commercially, what we’re looking at from a clinical trial perspective, our trials to cancer patients are important and we have really done the best we can to keep the level of disruption on our trials down. Now, when you look at our R&D expenses in the first quarter, if you annualize that, we’re a little bit below our annual guidance.

But I would point out that we’ve got a whole bunch of trials that are sort of in ramp up mode now and we’re trying to keep that going as best we can. This include the 301, the 302 and the 103 trials for EV. The TUKYSA combination trial with TDM-1 the MOUNTAINEER trial, the TV pivotal study. We’ve got a lot of potentially registration studies underway and we really done the best we can to keep moving forward as fast as we can and still doing it responsibly.

Greg Harrison

That’s very helpful. Thank you.

Operator

Our next question comes from Chad Messer with Needham & Company.

Chad Messer

Great. Thanks for taking my question. And let me add my congratulations on a really strong first full quarter for PADCEV. I don’t think we expected you to get to this run rate for another few quarters at least.

My question is on Nectin-4 expression. So in urothelial cancers, you’re not enrolling any of these studies based on that, presumably because it’s so ubiquitous, but are you collecting information on Nectin-4 expression and looking to see how it correlates the response in any other studies and sort of where I’m going is maybe that becomes more important as you look outside of urothelial cancer to some other indications where it’s not quite so ubiquitous and kind of watering how you were handling that in your basket trial. Thanks.

Clay Siegall

Yes. I’ll make a quick comment and turn it over to Roger, I mean to talk about a lot of other factors. But very early on, we were looking when this product started years ago in Phase 1, we looked at H scores, which tells you how much napkin for there is and response rate.

Now keep in mind that H scores are, is kind of a crude way to determine level of Nectin-4, and forth. It’s not a 100% precise, but it’s pretty good. And it’s quick and it’s readily available and it is ubiquitous in bladder cancer. And so we found pretty early on that it was very hard to see a correlation between the H score for the histology to the response. So in that regard, we do not need a diagnostic tool for it in the metastatic setting. And I’ll let Roger speak from there about any other thing in the basket trial, et cetera.

Roger Dansey

Yeah, it’s a great question. So really for all of our ADCs, we look obviously for the highest expressing tumors. And so the basket trial EV-202 as a group of cancers, breast, lung, head, neck, gastric cancer and sun, which has high Nectin-4 expression. But we are always prepared. So Nectin-4 expression is always measured. And if it turned out that actually a biomarker was relevant potentially in selecting patients who would respond, I think we would be ready for that. Our supposition is that that will not be the case. There are components, for example, [indiscernible] ADCs have bystander effect so the drug can get, can leak into a cell next door that isn’t, it doesn’t mark with a particular biomarker. But, going in premises, we will not need it, but we will be prepared if we do.

Chad Messer

Okay. Great. Thanks.

Operator

We will take our next question from Gena Wang with Barclays.

Gena Wang

Thank you for taking my questions. Two parts of the questions. First one is regarding the PADCEV, I’m just wondering, the strong revenue through first quarter with the scripts mainly driven by academic doctors or was that by the community doctors? Well, my second question is regarding the IT arbitration process. Just wondering how long it will usually take and it will there be multiple rounds of the process.

Clay Siegall

So first of all, concerning PADCEV, we are not at this point planning to outline what percentage is in academic settings and what percentage is in community settings. I think in the prepared remarks Chip mentioned that a fair amount of the use is coming from community settings, which we’re delighted with. So right now, we see script coming out of both academic and community settings and we’re very pleased with the uptake and we look forward to having a great year of providing PADCEV to patients in need and to the doctors and supporting the doctors as they use PADCEV in patient that can really benefit from this exciting drug.

So that’s something we’re going to continue. Maybe in the future we’ll be in a position to discuss the academics and community settings, but it’s entirely too soon to really speculate and think about that.

As far as the litigation, you – I do believe, you asked a question about what we meant, what we discussed in Daiichi Sankyo is that correct Gena, did you ask that?

Gena Wang

Yes, yes. So the arbitration process is just wondering how long usually would that take? And also, would there be multiple rounds? I know it’s not the court process, but just wondering, would that be – is there like a certain time frame, should we expect the final results will be read out?

Clay Siegall

Okay. So we are not guiding to any specific timeframe for that. I appreciate the question very much. We are pleased that the ruling was to go forward in arbitration. Keeping the mind that the deal we did basically said that if there was an issue like what has come up, that’s the correct approach and the right legal pathway forward based on the deal that we had with Daiichi Sankyo was to go through arbitration.

And we believe that our case is very strong, we mentioned this publicly before. We believe that they used our technology and they made improvements, which was completely spelled out in the agreement to the products they have. And we believe we are correct in bringing this case forward and protecting our IP as appropriate. So we feel very strong about that.

Going forward in arbitration is it’s a more efficient and rapid path forward to a resolution rather than bringing it to a court case. And so we’re very pleased that is going through arbitration and that’s now started. And but other than that it’s a pending legal matter and we really can’t make comments.

Gena Wang

Okay. Thank you.

Operator

We will take our next question from Joe Catanzaro with Piper Jaffray.

Joe Catanzaro

Hey guys. Thanks for taking my question here and congrats on this nice PADCEV quarter. Just one question around and maybe just try and give us a sense of the trajectory moving forward. One thing we had heard even prior to COVID is that with PADCEV in the real world setting, some physicians felt they had flexibility in how they dosed it, given its dosed every three weeks out of four, it’s a balanced advocacy with the tolerability. Just wondering if you’re sort of seeing that and whether you expect that to maybe pick up in light of the current environment to sort of maybe minimize patient visits. Thanks. And any sense around duration of treatment, though realize it’s early here.

Clay Siegall

So, Joe, we haven’t really seen what you’re talking about. I can turn it over to Roger to comment on this, but we haven’t seen doctors flexing to some other schedule. I mean, we’ve, done our schedules three weeks on and one week of holiday, a drug holiday and that’s our schedule. The duration also, we presented that with all our data and so we have some firm data on duration that we’re very proud of and it’s exciting and great drug.

I mean, Roger, is there anything you want to add to that?

Roger Dansey

Yes, sure. So I think when you get into cancer medicine and a disease like bladder cancer which can be devastated – is devastating, patients are very symptomatic with the demand to get the treatment per the plan is high. With the initial sort of onset of COVID it may have taken some time for oncology clinics to work out how to manage through what a new schedule could look like and how to get patients treatment. So most of the focus that I think we’re aware of is that the clinics focus on giving treatment, they may struggle with off treatment visits and so on, but getting the treatment is paramount.

Joe Catanzaro

Okay. Thanks for taking my question.

Operator

We will take our next question from Andrew Berens with SVB.

Andrew Berens

Thanks. And let me add my congrats on the strong launch, you guys beat the n HER-2 number and we thought that was a great launch yesterday. Just wanted to get some more color on PADCEV uses and it’s really I guess one question, but three parts. Should we think of the beat as being driven by more advanced patients that then you’ll eventually get, I mean, we’ve seen other launches that kind of roar out of the gate and then the duration of usage for the early patients drops off, because they’re more advanced. Just trying to see if that can be the case here? And then can you guys give us any color or are you seeing usage of PADCEV with KEYTRUDA? And then the last part is, are you getting patients that have the FGFR biomarker?

Clay Siegall

Thank you for your questions. And congratulations to you on putting three questions into one, that’s very innovative. So as far as the advanced patients go, your comments on whether we’re seeing a lot of advanced patients and we’ll see a fall off and all that stuff, that is not where we feel we are. We feel this is being used broadly and will continue to be used broadly. We have a lot – there’s a lot of excitement for this drug going forward. And I think for anybody that has metastatic bladder cancer according to the label, this treats anybody, whether you’re advanced, more advanced or less advanced, keep in mind that most patients with bladder cancer to some extent are advanced, it’s a bad disease. And whether they’re earlier in that cycle or later in the cycle all of them can benefit. And I don’t – I really can’t make comments that we’re just seeing one type of patient. I don’t think that’s happening.

As far as the combination with KEYTRUDA, we loved our data. Our data was spectacular with that, which is why we started a global trial to look for frontline, which is also why we went to FDA, early to say is there an expedited pathway to get to first line in combination with KEYTRUDA. So we’re doing both the full global trial as well as doing the expedited trial with PADCEV.

And as far as whether anybody is using PADCEV combination with KEYTRUDA we can’t make any comments on that, that’s not, certainly not something that we’re out there promoting for. We have clinical trials open right now I think that, we’re encouraging people to sign up for trials to do that.

And as far as the last question on FGFR biomarker, we’re very aware of that. It’s not something that we’re focused on though. I mean, that’s a small subsection of bladder cancer. We basically have no – there’s no diagnostic tool. We can use everybody, so we should treat everyone, I should say. And we’re looking at really just helping out as many patients as we possibly can and working with the doctors that make their therapy decisions.

Andrew Berens

Right. Thank you very much, Clay.

Operator

We will take our next question from Stephen Willey with Stifel.

Stephen Willey

Yes. Thank you for taking the question and congrats on that PADCEV launch. Just a couple of quick ones, was wondering, maybe if you could just talk a little bit about CD-30C in terms of what’s being used there to drive the improved tolerability that was referenced in the opening remarks. Is that a more stable linker? Is that a different payload? And then just curious regarding your publication plans, if there’s any in the works for the EV-103 data in terms of the preliminary results that we’ve seen thus far. Thanks.

Clay Siegall

Sure. I’ll answer the CD-30C question and then Roger can opine on the EV-103 plans for publications, presentations, whatever. With CD-30C we decided that it was important to try to continue to innovate and continue to make as best of drugs as we can for cancer patients. And CD30 is a target and we know a heck of a lot of that. This is something that we have studied for years. I think we’re one of the top companies, if not the top company in the world thinking about CD30 therapies. And so I think that it’s really important to think about can you continue to get better and treat patients better, ADCETRIS is a phenomenal drug, but to try to improve outcomes for patients with CD30 malignancies is important for us.

So we set out a few years ago to try and say how can we make a drug that can even give patients even better outcomes than what’s already a really good drug ADCETRIS. And, it was hard. I mean, we made a lot of different versions and just couldn’t get any better than ADCETRIS, for years and which tells you a lot about ADCETRIS and how good of a drug it is. So with CD-30C, what I would say is it’s different. It has different linkers, different payloads, different ways it’s going to work, different ways it could combine with things.

So in the laboratory setting and animal models of cancer, we’re really excited with it. In the clinic, whether this will prove to be better than ADCETRIS or different than ADCETRIS with different characteristics, we don’t know yet. But we’re excited to bring this forward and see how much we can work toward helping patients, so that’s really what that’s about. Roger, do you want to talk about EV-103 and plans?

Roger Dansey

Sure. Yes. So it’s a great question and it’s under consideration, because as you know, the results were really quite remarkable and we think that it could potentially be worthy of a publication, but I don’t think a final decision has been made, but obviously we’ll update you, if we make that call.

Stephen Willey

Alright. Thanks for taking the questions.

Operator

We will take our next question from George Farmer with BMO Capital Market.

George Farmer

Hi, good afternoon and congratulations on PADCEV. It’s fantastic to see, I actually had a question about ADCETRIS. And Clay, you mentioned that there’s going to be some five-year follow-up data coming. Do you expect that’s going to move the needle with practitioners? And if so, how do you see that?

Clay Siegall

Thank you for the question, George. It’s a good question. When we started and got our first approval in frontline Hodgkin lymphoma, a lot of docs saw the data and they saw it was two years worth of data and the data were strong, but they said this is a disease we know how to treat for decades they were using ABVD and had a lot of data. And the docs remarked to us that the five-year data was the gold standard for this. And they really wanted to see the five-year data and really know what’s the durable long-term and they call it cure rate.

Now cure, I mean we all die someday of something, but if you’re five-years out and you have no evidence of disease, doctors will talk to their patients and they say you are disease free, you are technically cured of your cancer, because we have no evidence five-years out, so this a defined cure for sure.

But they’ve always said to us that the five-year number as the gold standard. And I think that, for anybody that is still on the fence or not considering it, I think that the five-year data absolutely could be interesting whether it’ll be a mad rush or something, we’re not guiding to that George. But I think it certainly could be important. The other thing is, especially during the COVID era we’re living in, having five-year data with a regimen without bleomycin is important.

Bleomycin causes lung scarring and gives you respiratory distress. And for somebody to have Hodgkin lymphoma, which is in many circumstances a curable disease by the definition I’ve said, but to give them some pretty severe lung toxicity, I would not want a patient to have that and then be exposed to COVID, because it could be much, much worse because of the lung scarring that you get and the respiratory distress you get with bleomycin. So having this alternative that not only is better, you have a higher rate of – we’ve, we presented the four-year data, in a four-year data so far a higher rate of disease free survival by around 6% to 7% over ABVD and without the lung scarring of bleomycin, I think is an important thing to think about in this COVID era that we are working through and having the five-year data would even be better.

George Farmer

Yes, that makes sense. And then finally can you talk a little bit about what the two kinds of presentation will be discussing at ASCO in more detail?

Clay Siegall

Well, we can’t tell you the whole presentation, because that’s for the ASCO virtual meeting. But Roger, can you give a little foreshadowing?

Roger Dansey

Sure. So as HER2CLIMB was designed and as it was presented, we’re focused on the main end points which were progression free survival in the overall population, overall survival and then progression free survival in patients with brain metastases, but important questions and that’s the framework under which you understand the value and the benefit to patients. But important questions can still be answered by interrogating the data and focusing really on the outcome in the brain itself. And so we’ve done those analyses and we’ve put together what we think is a coherent story to explain, more clearly what the brain specific outcomes will look like. And that’s what we hope will be a value to everyone when it gets presented at ASCO.

George Farmer

Okay. Thanks very much.

Operator

We will take our next question from Andy Hsieh with William Blair.

Andy Hsieh

Great. Thanks for taking my question. I hope everybody is staying safe and healthy and congratulations on a spectacular quarter. So my question has to do with kind of the concurrent enrollment of the EV-103 cohort K and the pivotal EV-302 very similar patient population. Now do you see kind of enrollment tilt towards the cohort K, given that you have those options which are chemotherapy free versus EV-302, and therefore we should expect a really rapid enrollment timeframe.

Clay Siegall

So thanks for the question on the cohort K and the pivotal trials. Roger, can you explain what we’re thinking of it, looking there and the geographies, et cetera?

Roger Dansey

Sure. Andy, it’s a great question and so to some degree, yes. Cohort K would overlap with EV-302, but bear in mind EV-302 is a very large trial that will have a global footprint. EV-103 is more focused in places like the United States and there are more than enough patients to enroll both of those trials. So we’ll – it’s what we do all day, which is to manage trial recruitment and to make sure that trials are adequately supported for both of them. So I don’t have any concerns that we’ll be able to enroll both trials expeditiously and that’s what we plan to do.

Andy Hsieh

Got it. Okay. And then so I guess, what I was saying the company has executed to perfection in the past two years and so it’s welcoming to see in the presentation you have some early stage assets highlighted. Just curious, Clay, any assets heading into ASCO that you are particularly excited and just curious on your thoughts on the progress made in the SEA, Sugar Engineered platform and the CD40 assets that it could be immune potentiating.

Clay Siegall

Sure. So thank you very much for your remarks on how well the company has done over the last few years. We’re focused on cancer patients and we’ve been working really hard to help cancer patients get drugs approved, even during the COVID time we arranged the company for efficiency and people that can work from home or working from home. We have even started to reopen under very strict guidelines our laboratories where we have social distancing and people with masks and gloves, but they’re back in the laboratories working. And our goals to really work hard and execute well to make a difference in cancer patients lives and so we’re making – trying to make the right decisions and focusing on that.

Now to your question on the early stage assets, you bring up the SEA-CD40 program, that is a very exciting drug that we are developing and you’ll hear more data about that in the future. Right now, I don’t want to disclose any data. It’s not ready to be disclosed. We’ll disclose it at the right time. But it’s an exciting program. It’s a non-ADC, we are doing more and more with non-ADCs plus adding more ADCs, I think we mentioned that in the prepared remarks that there’s both ADCs and non-ADCs, and certainly our last approval TUKYSA is a non-ADC, so first non-ADC approved. And so we’re excited to make a difference in cancer patients in any way.

We work on targeted therapies whether they’re targeted to the cell surface or inside the cell. I think that our early stage assets are very exciting. We have quite a lot of assets and we don’t talk about them too much until we have some real data to show. But I think over the next year or two you’re going to hear a lot about our early assets and I’m excited about them.

Andy Hsieh

Great. Thank you very much for all the questions.

Operator

We’ll take our next question Silvan Tuerkcan with Oppenheimer.

Silvan Tuerkcan

Thanks for taking my question and congrats on the quarter. I have a question on the PADCEV development in muscle invasive setting. Since your clinical development moves so fast, I want to make sure that I don’t lose track here. So first what EV-103 and the amended Phase 3 now be enough to file? And second of all, I think it’s a pretty big deal that Merck amends an ongoing Phase 3 to include PADCEV even prior to seeing the EV-103 data, could you give us a little bit more color on how did this happen and does it mean that Merck views the combo as potentially a new standard of care in this setting here?

Clay Siegall

Well, first of all, thank you for your very insightful question about this and we really can’t comment on Merck and what their thoughts are and whatever we can tell you, what the trial is and what we’re doing and what we’re attempting to do and why we’re going after this. And Roger, maybe you could give a little color on muscle invasive bladder cancer and why this is important. But I’m sorry, I just can’t comment and we can’t comment on what Merck or any company is thinking at this time.

Roger Dansey

Yes. So, again it’s a great question and I think the excitement around combining an ADC with a Vedotin warhead, which has been shown to not only kill cancer cells and kill them well in bladder cancer, but also set up an immunogenic cell death environment that is potentially – that that could help a PD-1 inhibitor with an improved immune response. So combining those two and the data that we generated out of EV-103 with cisplatin [ph] eligible frontline I think gives us conviction that we should take this combination forward as appropriate. And of course we are still executing the small cohort in EV-103, but the opportunity to join an already established registrational trial and taking this combination together into a muscle invasive setting we think is really opportune for us.

And Nectin-4 for expression is consistent across all of the stages of bladder cancer, all the way from advanced metastatic disease back into the non-muscle invasive bladder cancer and in muscle invasive bladder cancer. So there’s no reason to believe that somehow PADCEV will behave differently in this disease setting. Merck has already generated data with pembrolizumab, which is with KEYTRUDA, which is pretty exciting. So taking these two active agents and combining them in this population for which really there is no therapy apart from cystectomy, we think is an important potential step forward.

Silvan Tuerkcan

Great. Thanks. Thanks a lot for taking my question.

Operator

There are no further questions at this time, Ms. Pinkston I’d like to turn the conference back to you for any additional or closing remarks.

Peggy Pinkston

Okay. Thank you operator, and thanks everybody for joining us this afternoon. Be well.

Operator

That concludes today’s presentation. Thank you for your participation. You may now disconnect.