Investment Thesis
In our view, Seagen Inc. (SGEN) (formerly Seattle Genetics) has gained momentum this year on its journey towards a fully integrated, commercial-stage and multi-skewed company, with key differentiators as an antibody-drug conjugate (ADC) proprietor. The ADC segment has high propensity to produce long-tailed asset returns, and SGEN has clear expertise drivers within this domain that insulate its competitive bastion. SGEN is a "founding father" of ADC technology, leveraging this expertise to produce the wonder drug Adcetris, which has application for Hodgkins lymphoma. The therapy has been adopted by over 55,000 patients, with greater utilisation imminent for years to come.
SGEN has since diversified commercial oncological operations to include two other mainstay products, Padcev and Tukysa. We firmly believe that these additions can expand total revenue volumes exponentially into 2024, where we forecast profitability by 2022. SGEN's deep pipeline is currently in development for a fourth ADC compound, known as tisotumab vedotin. Here, we have already observed sound efficacy and safety data from its phase 2 trial in recurrent and metastatic cervical cancer patients. More refinements will need to be completed prior to successful phase progression, however, in light of early success with Padcev and Tukysa, we are confident management will successfully commercialise this segment of the ADC portfolio also. We see Padcev sales of $200 million and Tukysa sales of half that volume at ~$70 million as our 2020 estimates, in line with consensus.
Shareholders have enjoyed +95% in price appreciation over the single-year period to date, with low downside volatility and high reward for exposure to the downside. We see further upside likely for investors seeking exposure to oncology, on the back of an extensive pipeline and key differentials within the ADC segment, plus immediate upside from the Merck (MRK) deal described below.
On the charts, we've observed
