On July 30, 2020 Seattle Genetics, Inc. (Nasdaq:SGEN) reported financial results for the second quarter and six months ended June 30, 2020. The Company also highlighted ADCETRIS (brentuximab vedotin), PADCEV (enfortumab vedotin-ejfv) and TUKYSA (tucatinib) commercial and development accomplishments, as well as progress with its lead pipeline programs to treat cancer.
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"We generated record product sales of $240.5 million in the second quarter driven by ADCETRIS, PADCEV and now a third commercial product, TUKYSA, following the FDA approval in mid-April for metastatic HER2-positive breast cancer," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "We successfully launched TUKYSA in the United States and are building our international capabilities to support global launches. In addition, we reported another quarter of strong PADCEV sales with revenues of $91.6 million in its first two full quarters on the market. Our total revenues are on track to exceed $1 billion in 2020."
PRODUCT SALES SUMMARY
ADCETRIS: Continued growth with net sales in the U.S. and Canada of $167.5 million in the second quarter of 2020, an increase of five percent over the second quarter of 2019.
PADCEV: U.S. net sales in the second quarter were $57.2 million, an increase of 66 percent over the first quarter of 2020.
TUKYSA: Second quarter net sales of $15.8 million following U.S. approval in mid-April.
Dr. Siegall continued, "We also made substantial progress in the second quarter across our pipeline of more than a dozen programs. We reported positive results from the innovaTV 204 trial of tisotumab vedotin in recurrent or metastatic cervical cancer and plan to discuss with the FDA the potential submission of a Biologics License Application to support an accelerated approval. In addition, we advanced two novel drug candidates into phase 1 trials. We plan to host an investor R&D day later in 2020 to highlight the breadth of opportunities across our programs."
COMMERCIAL PRODUCT HIGHLIGHTS
ADCETRIS
Announced Partner’s Ex-U.S. Regulatory Progress: In May 2020, Takeda received approval from the European Commission for ADCETRIS for the treatment of patients with previously untreated systemic anaplastic large cell lymphoma (sALCL) in combination with CHP (cyclophosphamide, doxorubicin, prednisone). Also in May 2020, Takeda received approval from China’s National Medical Products Administration for ADCETRIS for the treatment of relapsed or refractory sALCL and Hodgkin lymphoma. This marks the first approval of ADCETRIS in China.
Expanded Clinical Program: Seattle Genetics recently initiated a phase 3 trial in relapsed and refractory diffuse large B-cell lymphoma and expanded a trial in frontline Hodgkin lymphoma to evaluate stage I and II patients.
PADCEV
Completed Enrollment in Second Cohort of EV-201 Trial: In April 2020, Seattle Genetics and Astellas completed enrollment in the second cohort of the EV-201 trial for patients who previously received a PD-1 or PD-L1 inhibitor, are platinum naive and are not candidates for treatment with cisplatin chemotherapy. Data from the second cohort could potentially serve as the basis for a second PADCEV indication.
PADCEV Added to Merck Trial in Muscle Invasive Bladder Cancer (MIBC): In July 2020, Merck expanded its ongoing phase 3 KEYNOTE 905 trial to include an arm evaluating PADCEV in combination with KEYTRUDA for patients with cisplatin-ineligible MIBC. The expansion is being conducted under a clinical trial collaboration and supply agreement among Seattle Genetics, Astellas and Merck.
TUKYSA
Received FDA Approval: In April 2020, TUKYSA was approved by the FDA in combination with trastuzumab and capecitabine for the treatment of adult patients with advanced unresectable or metastatic HER2-positive breast cancer, including patients with brain metastases, who have received one or more prior anti-HER2-based regimens in the metastatic setting. Approval was granted four months ahead of the PDUFA target action date under the FDA’s Real-Time Oncology Review pilot program.
Received Ex-US Regulatory Approvals: TUKYSA received approval in Canada, Singapore and Switzerland under the Project Orbis initiative of the FDA Oncology Center of Excellence that provides a framework for concurrent submission and review of oncology products among international partners.
Presented and Published HER2CLIMB Analyses in Brain Metastases Patients: Announced positive results from exploratory analyses of the treatment effect of the TUKYSA regimen in metastatic HER2-positive breast cancer patients with brain metastases in the HER2CLIMB trial. Results demonstrated that the addition of TUKYSA to trastuzumab and capecitabine in patients with brain metastases delayed progression in the brain, doubled the intracranial response rate (tumor shrinkage in the brain) and reduced the overall risk of death by nearly half. In the HER2CLIMB trial, the tucatinib regimen was generally well-tolerated with a manageable safety profile. Results were featured in an oral presentation during the virtual scientific program of the 2020 American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting held in June 2020 and simultaneously published in the Journal of Clinical Oncology.
PIPELINE HIGHLIGHTS
Reported Positive Topline Results from Tisotumab Vedotin Pivotal Trial: In June 2020, Seattle Genetics and Genmab announced positive topline results from the phase 2 single-arm clinical trial known as innovaTV 204 evaluating tisotumab vedotin administered every three weeks for the treatment of patients who have relapsed or progressed on or after prior treatment for recurrent or metastatic cervical cancer. Results from the trial showed a 24 percent confirmed objective response rate (ORR) by independent central review with a median duration of response of 8.3 months. The most common treatment-related adverse events (greater than or equal to 20 percent) included alopecia, epistaxis (nose bleeds), nausea, conjunctivitis, fatigue and dry eye. The companies plan to discuss with the FDA a potential Biologics License Application (BLA) submission to support accelerated approval.
Initiated Phase 1 Trials of Two Novel Drug Candidates: In June 2020, the first patient was dosed in a phase 1 trial of SEA-TGT, an anti-TIGIT antibody for patients with solid tumors and lymphomas. SEA-TGT employs the Company’s proprietary Sugar Engineered Antibody (SEA) technology. Seattle Genetics also announced dosing of the first patient in a phase 1 clinical trial evaluating SGN-B6A, an antibody-drug conjugate (ADC) targeting integrin beta-6, which is overexpressed in a variety of solid tumors and has been shown to be a negative prognostic indicator across a diverse range of cancers.
Presented Early Pipeline and ADC Technology: Advancements in the Company’s drug linker and payload components of ADCs as well as preclinical data on multiple investigational drug candidates were presented at the American Association for Cancer Research (AACR) (Free AACR Whitepaper) Virtual Meeting II held in June 2020.
For additional information on Seattle Genetics’ pipeline, visit www.seattlegenetics.com/pipeline.
CORPORATE HIGHLIGHTS
Named Tuomo Pätsi Executive Vice President, Commercial International: In July 2020, Tuomo Pätsi joined Seattle Genetics in the newly created position of Executive Vice President, Commercial Internati
Royalty Revenues: Royalty revenues for the second quarter and year-to-date in 2020 were $31.2 million and $51.6 million, respectively, compared to $23.3 million and $39.0 million for the same periods in 2019. Royalty revenues are primarily driven by sales of ADCETRIS outside the U.S. and Canada by Takeda and, to a lesser extent, sales of Polivy (polatuzumab vedotin-piiq) by Roche.
Collaboration and License Agreement Revenues: Amounts earned under the Company’s ADCETRIS and ADC collaborations were $6.3 million and $21.9 million in the second quarter and year-to-date in 2020, respectively, compared to $36.1 million and $80.7 million for the same periods in 2019. Collaboration revenues for the first half of 2019 included $37.5 million in milestones from Takeda triggered by additional approvals of ADCETRIS in combination with chemotherapy for frontline Hodgkin lymphoma.
Research and Development (R&D) Expenses: R&D expenses for the second quarter and year-to-date in 2020 were $198.1 million and $393.3 million, respectively, compared to $163.9 million and $322.2 million for the same periods in 2019. The increase in 2020 primarily reflected increased investment in the Company’s pipeline.
Selling, General and Administrative (SG&A) Expenses: SG&A expenses for the second quarter and year-to-date in 2020 were $125.6 million and $247.9 million, respectively, compared to $82.3 million and $162.6 million for the same periods in 2019. The increase was primarily attributed to increased field sales personnel for Seattle Genetics’ recently commercialized products, PADCEV and TUKYSA, as well as higher infrastructure costs to support the Company’s continued growth and international expansion.
Cost of Sales: Cost of sales for the second quarter and year-to-date in 2020 were $48.2 million and $77.7 million, respectively, compared to $10.9 million and $21.2 million for the same periods in 2019. The increase in 2020 was primarily due to the gross profit share with Astellas based on PADCEV sales, which were $27.1 million and $43.5 million in the 2020 second quarter and year-to-date, respectively. Cost of sales also increased due to amortization of acquired in-process technology costs that began with the approval of TUKYSA in April 2020, as well as royalties owed for PADCEV and TUKYSA net product sales.
Non-cash, share-based compensation cost for the first six months of 2020 was $68.4 million, compared to $51.9 million for the same period in 2019.
Net Loss: Net loss for the second quarter of 2020 was $21.2 million, or $0.12 per diluted share, compared to net loss of $79.2 million, or $0.49 per diluted share, for the second quarter of 2019. Net loss for the six months ended June 30, 2020 was $189.6 million, or $1.10 per diluted share, compared to net loss of $92.6 million, or $0.57 per diluted share, for the same period in 2019. Net loss in the second quarter and the year-to-date in 2020 included a net investment gain of $72.8 million and $16.7 million, respectively, primarily associated with Seattle Genetics’ common stock holdings in Immunomedics, which was sold in April 2020 for $174.7 million.
Cash and Investments: As of June 30, 2020, Seattle Genetics had $895.7 million in cash and investments.
2020 FINANCIAL OUTLOOK
The Company’s 2020 financial guidance is shown below, including PADCEV net sales guidance.
Non-cash costs include share-based compensation, depreciation and amortization of intangible assets.
Conference Call Details
Seattle Genetics’ management will host a conference call and webcast with supporting slides to discuss its second quarter 2020 and year-to-date financial results and provide an update on business activities. The event will be held today at 1:30 p.m. Pacific Time (PT); 4:30 p.m. Eastern Time (ET). The live event and supporting slides will be simultaneously webcast and available for replay from the Seattle Genetics website at www.seattlegenetics.com, under the Investors section. Investors may also participate in the conference call by calling 866-248-8441 (domestic) or 720-452-9102 (international). The conference ID is 1128188. A webcast replay will be archived on the Company’s website www.seattlegenetics.com, under the Investors section.