On October 27, 2016 Bristol-Myers Squibb Company (NYSE:BMY) reported results for the third quarter of 2016 which were highlighted by strong sales and operating performance, and continued growth for key products including Opdivo and Eliquis (Press release, Bristol-Myers Squibb, OCT 27, 2016, View Source [SID1234516034]).

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The company raised full-year guidance for 2016 and provided guidance expectations for 2017, announced a new $3 billion share repurchase authorization, and announced an evolution of the company’s operating model to focus resources behind the company’s highest priorities, accelerate its pipeline and simplify infrastructure.

"Our third quarter was marked by strong commercial execution and solid trends across our products and geographies," said Giovanni Caforio, M.D., chief executive officer, Bristol-Myers Squibb. "While we are disappointed with the results of CheckMate -026, a setback in first-line lung in the short term, our overall strategic focus does not change. Going forward, we see growth in both the near and long term to continue to be driven by Opdivo, Eliquis and Orencia , and by an exciting pipeline of specialty medicines over time. As we focus on the future, we are evolving our operating model to more effectively focus resources on key priorities and simplify execution to deliver sustainable growth and to speed transformational medicines to patients."



Third Quarter
$ amounts in millions, except per share amounts
2016
2015
Change
Total Revenues $4,922 $4,069 21%
GAAP Diluted EPS 0.72 0.42 71%
Non-GAAP Diluted EPS 0.77 0.39 97%

THIRD QUARTER FINANCIAL RESULTS

Bristol-Myers Squibb posted third quarter 2016 revenues of $4.9 billion, an increase of 21% compared to the same period a year ago. Global revenues increased 22% adjusted for foreign exchange impact. Excluding Erbitux , global revenues increased 26% or 27% adjusted for foreign exchange impact.
U.S. revenues increased 36% to $2.8 billion in the quarter compared to the same period a year ago. International revenues increased 5%. When adjusted for foreign exchange impact, international revenues increased 7%.
Gross margin as a percentage of revenues was 73.5% in the quarter compared to 73.0% in the same period a year ago.
Marketing, selling and administrative expenses decreased 3% to $1.1 billion in the quarter.
Research and development expenses increased 1% to $1.1 billion in the quarter.
The effective tax rate was 22.1% in the quarter, compared to 26.0% in the third quarter last year.
The company reported net earnings attributable to Bristol-Myers Squibb of $1.2 billion, or $0.72 per share, in the quarter compared to $706 million, or $0.42 per share, a year ago.
The company reported non-GAAP net earnings attributable to Bristol-Myers Squibb of $1.3 billion, or $0.77 per share, in the third quarter, compared to $648 million, or $0.39 per share, for the same period in 2015. An overview of specified items is discussed under the "Use of Non-GAAP Financial Information" section.
Cash, cash equivalents and marketable securities were $8.6 billion, with a net cash position of $1.8 billion, as of September 30, 2016.
THIRD QUARTER PRODUCT AND PIPELINE UPDATE

Global revenues for the third quarter of 2016, compared to the third quarter of 2015, were driven by Opdivo, which grew by $615 million; Eliquis, which grew 90%; Yervoy , which grew 19%; Orencia, which grew 18%; and Sprycel , which grew 15%.

Opdivo

In October, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) recommended the approval of Opdivo for the treatment of adult patients with relapsed or refractory classical Hodgkin lymphoma (cHL) after autologous stem cell transplant (ASCT) and treatment with brentuximab vedotin, making Opdivo the first PD-1 inhibitor in a hematologic malignancy to receive positive CHMP opinion. The decision was based on overall response rate demonstrated by data from two trials, CheckMate -205 and CheckMate -039. The CHMP recommendation will now be reviewed by the European Commission (EC), which has the authority to approve medicines for the European Union (EU).
In October, the U.S. Food and Drug Administration (FDA) accepted a supplemental Biologics License Application (sBLA), which seeks to expand the use of Opdivo to adult patients with locally advanced unresectable or metastatic urothelial carcinoma (mUC) after failure of prior platinum-containing therapy. The FDA granted the application a priority review and previously granted Opdivo Breakthrough Therapy Designation for mUC in June 2016. The FDA action date is March 2, 2017.
In September, the EMA validated the company’s type II variation application, seeking to extend the current indications for Opdivo to include the treatment of mUC in adults after failure of prior platinum-containing therapy. Validation of the application confirms the submission is complete and begins the EMA’s centralized review process. The application primarily included data from CheckMate -275, a Phase 2, open-label, single-arm study assessing the safety and efficacy of Opdivo in patients with locally advanced unresectable or mUC that has progressed after a platinum-containing therapy.
In October, during the European Society for Medical Oncology Congress in Copenhagen, Denmark, the company announced results from eight studies for Opdivo and the Opdivo + Yervoy regimen:
CheckMate -057 and CheckMate -017: Updated results from these two pivotal Phase 3 studies showed more than one-third of previously treated metastatic non-small cell lung cancer (NSCLC) patients experienced ongoing responses with Opdivo, compared to no ongoing responses in the docetaxel arm. The median duration of response (DOR) with Opdivo versus docetaxel in CheckMate -057 was 17.2 months and 5.6 months, respectively, and in CheckMate -017 it was 25.2 months and 8.4 months, respectively. In CheckMate -057, patients with PD-L1 ≥1% had a median DOR of 17.2 months and in patients with PD-L1 <1%, it was 18.3 months. In both studies, durability of response was observed in both PD-L1 expressors and non-expressors, and in CheckMate -057, one out of the four complete responses occurred in a patient with <1% PD-L1 expression. There were no new safety signals identified for Opdivo in the pooled safety analysis from both studies.
CheckMate -016: Updated results from this Phase 1 trial evaluating the safety and tolerability of the Opdivo + Yervoy regimen in previously treated and treatment-naïve patients with metastatic renal cell carcinoma showed a confirmed objective response rate (ORR) for the combination regimen of 40%. In the updated analysis, durable responses were observed with the combination regimen. The safety profile of the Opdivo + Yervoy combination in metastatic renal cell carcinoma patients is consistent with previous reports of the regimen in other studies.
CheckMate -026: The final primary analysis from this trial investigating the use of Opdivo monotherapy as first-line therapy in patients with advanced NSCLC whose tumors expressed PD-L1 ≥1% showed it did not meet the primary endpoint of superior progression-free survival (PFS) compared to chemotherapy. In patients with ≥5% PD-L1 expression, the median PFS was 4.2 months with Opdivo and 5.9 months with platinum-based doublet chemotherapy (stratified hazard ratio [HR]=1.15 [95% CI: 0.91, 1.45, p=0.25]). The topline results from this study were disclosed on August 5, 2016.
CheckMate -141: New patient-centered quality-of-life data from an exploratory endpoint in this pivotal Phase 3 trial evaluating Opdivo in patients with recurrent or metastatic squamous cell carcinoma of the head and neck after platinum therapy compared to investigator’s choice of therapy showed Opdivo stabilized patients’ symptoms and functioning, including physical, role and social functioning across three separate instruments. Both PD-L1 expressors and non-expressors treated with investigator’s choice of therapy experienced statistically significant worsening of patient-reported outcomes from baseline to week 15 versus Opdivo. In addition, Opdivo more than doubled the time to deterioration for most functional domains measured and significantly delayed the time to worsening symptoms of fatigue, dyspnea and insomnia, compared to investigator’s choice of therapy.
CheckMate -275: In results from the trial, Opdivo had a confirmed ORR, the primary endpoint, of 19.6% in platinum-refractory patients with metastatic urothelial carcinoma. Responses were observed in both PD-L1 expressors and non-expressors. The confirmed ORR in patients expressing PD-L1 ≥1% was 23.8% and 16.1% in patients expressing PD-L1 <1%. In patients expressing PD-L1 ≥5%, the confirmed ORR was 28.4% and 15.8% in patients expressing PD-L1 <5%. The safety profile of Opdivo in this study was consistent with the safety profile of Opdivo in other tumor types.
Two Phase 1 Studies: In these two Phase 1 studies testing lirilumab in combination with Opdivo or Yervoy, respectively, in patients with advanced refractory solid tumors, the safety profile of the combination of lirilumab and Opdivo therapy was similar to that of Opdivo monotherapy, with the exception of an increased frequency of low grade infusion-related reactions in patients treated with the lirilumab combinations. Based on these data, further evaluation of lirilumab in combination with Opdivo is warranted.
In October, during the International Symposium on Hodgkin Lymphoma in Cologne, Germany, the company announced new results from CheckMate -205, a multi-cohort, single-arm, Phase 2 trial evaluating Opdivo in patients with cHL. These results from cohort C of the trial included patients with cHL who had received brentuximab vedotin before and/or after autologous hematopoietic stem cell transplantation (auto-HSCT). After a median follow-up of 8.8 months, Opdivo demonstrated an ORR as assessed by an independent radiologic review committee of 73% overall and median progression-free survival of 11.2 months. The safety profile of Opdivo was consistent with previously reported data in this tumor type, and no new clinically meaningful safety signals were identified.
Yervoy

In October, during the European Society for Medical Oncology Congress in Copenhagen, Denmark, the company announced results of CA184-029 (EORTC 18071), a Phase 3 trial evaluating stage III melanoma patients who are at high risk of recurrence following complete surgical resection. Yervoy 10 mg/kg compared with placebo significantly improved overall survival (OS) (HR=0.72), a secondary endpoint, with five-year OS rates at 65.4% in the Yervoy group and 54.4% in the placebo group. In this updated five-year analysis, the recurrence-free survival (primary endpoint) benefit observed previously with Yervoy was maintained. The safety profile remained consistent with the initial analysis with no new safety signals.
Orencia

In September, the EC approved Orencia intravenous (IV) infusion and subcutaneous (SC) injection, in combination with methotrexate (MTX), for the treatment of highly active and progressive disease in adult patients with rheumatoid arthritis (RA) not previously treated with MTX. Orencia is the first biologic therapy with an indication in the EU specifically applicable to the treatment of MTX-naive RA patients with highly active and progressive disease. The approval allows for the expanded marketing of Orencia in all 28 Member States of the EU.
BUSINESS DEVELOPMENT UPDATE

In September, the company entered into a clinical collaboration to evaluate Nektar Therapeutics investigational medicine, NKTR-214 as a potential combination treatment regimen with Opdivo in five tumor types and seven potential indications. The Phase 1/2 clinical trials will evaluate the potential for the combination of Opdivo and NKTR-214 to show improved and sustained efficacy and tolerability above the current standard of care in melanoma, kidney, colorectal, bladder and NSCLC. An initial dose-escalation trial is underway with Opdivo and NKTR-214.
NEW SHARE REPURCHASE

Bristol-Myers Squibb reported its Board of Directors approved a new $3 billion repurchase authorization for the Company’s common stock. This is incremental to the current repurchase program, announced in June 2012, under which the Company has approximately $1.1 billion remaining.

The stock repurchase program does not have an expiration date. The repurchases may be made either in the open market or through private transactions and may be suspended or discontinued at any time.

The decision reflects the Company’s strong financial position and its balanced approach to capital allocation, including a commitment to its dividend and a disciplined approach to business development.

OPERATING MODEL

Bristol-Myers Squibb announced an evolution of its operating model to drive the company’s continued success in the near and long term through a more focused investment in commercial opportunities against key brands and markets, a competitive and more agile R&D organization that can accelerate the pipeline, streamlined operations and realigned manufacturing capabilities that broaden biologics capabilities to reflect current and future portfolio. The new operating model will enable the company to deliver the strategic, financial and operational flexibility necessary to invest in the highest priorities across the company.

Although GAAP operating expenses may increase initially as charges are incurred related to this evolution, the company expects non-GAAP operating expenses to be roughly flat with 2016 levels through 2020.

2016 & 2017 FINANCIAL GUIDANCE

Bristol-Myers Squibb is increasing its 2016 GAAP EPS guidance range from $2.43 – $2.53 to $2.62 – $2.72. The company is increasing its non-GAAP EPS guidance range from $2.55 – $2.65 to $2.80 – $2.90. Both GAAP and non-GAAP guidance assume current exchange rates. Revised 2016 GAAP and non-GAAP line-item guidance assumptions include:

Worldwide revenues increasing in the high-teens.
Gross margin as a percentage of revenues to be approximately 75%.
Marketing, selling and administrative expenses to remain flat.
Research and development expenses decreasing 30% to 35% for GAAP and increasing in the high-single digit range for non-GAAP.
An effective tax rate between 25% to 26% for GAAP and 22% to 23% for non-GAAP.
Bristol-Myers Squibb expects 2017 GAAP EPS between $2.47 and $2.67 and non-GAAP EPS between $2.85 and $3.05.

The financial guidance excludes the impact of any potential future strategic acquisitions and divestitures, and any specified items that have not yet been identified and quantified. The non-GAAP guidance also excludes other specified items as discussed under "Use of Non-GAAP Financial Information." Details reconciling adjusted non-GAAP amounts with the amounts reflecting specified items are provided in supplemental materials available on the company’s website.

Use of Non-GAAP Financial Information

This press release contains non-GAAP financial measures, including non-GAAP earnings and related EPS information, that are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of future operating results. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including restructuring costs, accelerated depreciation and impairment of property, plant and equipment and intangible assets, R&D charges in connection with the acquisition or licensing of third party intellectual property rights, divestiture gains or losses, pension, legal and other contractual settlement charges and debt redemption gains or losses, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPS prepared in accordance with GAAP.

Statement on Cautionary Factors

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements relating to goals, plans and projections regarding the company’s financial position, results of operations, market position, product development and business strategy. These statements may be identified by the fact that they use words such as "anticipate", "estimates", "should", "expect", "guidance", "project", "intend", "plan", "believe" and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes and results to differ materially from current expectations. These factors include, among other things, effects of the continuing implementation of governmental laws and regulations related to Medicare, Medicaid, Medicaid managed care organizations and entities under the Public Health Service 340B program, pharmaceutical rebates and reimbursement, market factors, competitive product development and approvals, pricing controls and pressures (including changes in rules and practices of managed care groups and institutional and governmental purchasers), economic conditions such as interest rate and currency exchange rate fluctuations, judicial decisions, claims and concerns that may arise regarding the safety and efficacy of in-line products and product candidates, changes to wholesaler inventory levels, variability in data provided by third parties, changes in, and interpretation of, governmental regulations and legislation affecting domestic or foreign operations, including tax obligations, changes to business or tax planning strategies, difficulties and delays in product development, manufacturing or sales including any potential future recalls, patent positions and the ultimate outcome of any litigation matter. These factors also include the company’s ability to execute successfully its strategic plans, including its business development strategy, the expiration of patents or data protection on certain products, including assumptions about the company’s ability to retain patent exclusivity of certain products, and the impact and result of governmental investigations. There can be no guarantees with respect to pipeline products that future clinical studies will support the data described in this release, that the compounds will receive necessary regulatory approvals, or that they will prove to be commercially successful; nor are there guarantees that regulatory approvals will be sought, or sought within currently expected timeframes, or that contractual milestones will be achieved. For further details and a discussion of these and other risks and uncertainties, see the company’s periodic reports, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, filed with or furnished to the Securities and Exchange Commission. The company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

On October 27, 2016 Seattle Genetics, Inc. (NASDAQ: SGEN) reported financial results for the third quarter and nine months ended September 30, 2016 (Press release, Seattle Genetics, OCT 27, 2016, View Source [SID1234516058]).

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The company also highlighted ADCETRIS (brentuximab vedotin) commercialization and clinical development accomplishments, vadastuximab talirine (SGN-CD33A) activities and progress with its pipeline of antibody-drug conjugates (ADCs) and other proprietary programs.

"Seattle Genetics is transitioning into a global, multi-product oncology company, demonstrated by our substantial progress with ADCETRIS both commercially and clinically, our advancing vadastuximab talirine phase 3 CASCADE pivotal trial and the promising data recently presented on enfortumab vedotin for urothelial cancer," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seattle Genetics. "Looking forward, key upcoming activities include a strong presence at the ASH (Free ASH Whitepaper) Annual Meeting in December, reporting top-line data in 2017 from the ECHELON-1 phase 3 trial of ADCETRIS in frontline Hodgkin lymphoma and initiating discussions with regulatory agencies about advancing enfortumab vedotin. In addition, we are generating data from multiple other phase 1 programs and anticipate moving several novel programs into the clinic within the next year."

ADCETRIS Program Updates

ALCANZA Phase 3 Trial: Seattle Genetics and its collaborator Takeda reported top-line data in August 2016 from the phase 3 ALCANZA clinical trial in 131 patients with CD30-expressing cutaneous T-cell lymphoma (CTCL). The trial met its primary endpoint demonstrating that treatment with ADCETRIS resulted in a highly statistically significant improvement in the rate of objective response lasting at least four months (ORR4) versus the control arm as assessed by an independent review committee (p-value <0.0001). Full data from the ALCANZA clinical trial will be featured in an oral presentation at the ASH (Free ASH Whitepaper) Annual Meeting in December 2016, and Seattle Genetics plans to submit a supplemental Biologics License Application in the U.S. for label expansion in CTCL during the first half of 2017.
ECHELON-1 Phase 3 Trial: Top-line data from the ECHELON-1 phase 3 trial in frontline classical Hodgkin lymphoma are anticipated during 2017 (previously expected in the 2017 to mid-2018 timeframe). ECHELON-1 is designed to redefine the way newly diagnosed patients with advanced Hodgkin lymphoma are treated.
ECHELON-2 Phase 3 Trial: Enrollment of 450 patients is ongoing in the phase 3 ECHELON-2 clinical trial in patients with frontline CD30-expressing mature T-cell lymphoma (MTCL). Seattle Genetics and Takeda anticipate completing enrollment during 2016 with top-line data expected in the 2017 to 2018 timeframe.
Leadership in Hodgkin Lymphoma: ADCETRIS was recently highlighted in several data presentations at the 10th International Symposium on Hodgkin Lymphoma (ISHL) in October 2016. The data included an update from the phase 3 AETHERA trial showing a sustained progression-free survival (PFS) benefit approximately four years after the last patient was enrolled.
Collaboration with Bristol-Myers Squibb: Seattle Genetics and Bristol-Myers Squibb recently expanded the companies’ clinical development collaboration to add cohorts to ongoing trials evaluating ADCETRIS combined with Opdivo (nivolumab). In addition to the current trials in second-line Hodgkin lymphoma and relapsed/refractory non-Hodgkin lymphoma, the companies will evaluate the combination of the two agents as frontline treatment for older Hodgkin lymphoma patients, as well as in relapsed/refractory primary mediastinal B-cell lymphoma and mediastinal gray zone lymphoma.
Upcoming ASH (Free ASH Whitepaper) Presentations: In addition to the ALCANZA oral presentation, more than 10 abstracts on ADCETRIS will be featured at the ASH (Free ASH Whitepaper) Annual Meeting. These include preliminary results from a phase 1 trial evaluating ADCETRIS in combination with Opdivo in second-line Hodgkin lymphoma, four-year follow-up from a phase 1 trial in frontline MTCL and five-year follow-up from a pivotal trial in systemic ALCL.
ADCETRIS is not currently approved for use in CTCL, frontline Hodgkin lymphoma, frontline MTCL or in combination with nivolumab.

Vadastuximab Talirine (SGN-CD33A) Program Updates

CASCADE Phase 3 Trial: Seattle Genetics is continuing enrollment in the 500-patient, global, randomized pivotal phase 3 CASCADE clinical trial evaluating vadastuximab talirine in combination with hypomethylating agents (HMAs) in older patients with newly diagnosed acute myeloid leukemia (AML).
Upcoming ASH (Free ASH Whitepaper) Presentations: Data from several ongoing phase 1 trials of vadastuximab talirine will be featured in four oral presentations at the ASH (Free ASH Whitepaper) Annual Meeting. Included are data from a phase 1b trial of vadastuximab talirine in combination with cytarabine and daunorubicin ("7+3") for frontline, younger AML patients as well as follow-up data from a phase 1 trial of vadastuximab talirine plus HMAs in older AML patients.
More information about vadastuximab talirine and ongoing clinical trials can be found at www.ADC-CD33.com.

Pipeline Updates

Enfortumab Vedotin (ASG-22ME) and ASG-15ME: Seattle Genetics and its collaborator Agensys, an affiliate of Astellas, reported data at the European Society for Medical Oncology (ESMO) (Free ESMO Whitepaper) Congress in October 2016 from phase 1 trials of enfortumab vedotin and ASG-15ME in patients with previously treated metastatic urothelial cancer, including those who had received prior checkpoint inhibitors. At the recommended phase 2 dose, enfortumab vedotin demonstrated a 59 percent objective response rate. While both phase 1 studies will continue to enroll patients, Seattle Genetics is working closely with its partner Astellas to define next steps for enfortumab vedotin, including potential later-stage trials and discussions with regulatory agencies.
Denintuzumab Mafodotin (SGN-CD19A): Seattle Genetics recently initiated a phase 2 trial of denintuzumab mafodotin in frontline diffuse large B-cell lymphoma (DLBCL). The trial will assess the activity and tolerability of adding denintuzumab mafodotin to the standard frontline regimen, R-CHOP, as well as a modified regimen, R-CHP. Denintuzumab mafodotin is also being evaluated in an ongoing phase 2 trial in relapsed DLBCL.
SGN-LIV1A: Data from a phase 1 trial of SGN-LIV1A will be presented at the San Antonio Breast Cancer Symposium taking place in December 2016. SGN-LIV1A is in development for metastatic breast cancer, with a focus on triple negative disease.
SEA-CD40: The first clinical data from an ongoing phase 1 trial of SEA-CD40 will be presented at the Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) 2016 Annual Meeting in November. SEA-CD40 is a novel immuno-oncology agent targeted to CD40 utilizing Seattle Genetics’ proprietary sugar-engineered antibody (SEA) technology to produce a non-fucosylated antibody.
SGN-CD123A: The first patient was treated in a multicenter phase 1 clinical trial of SGN-CD123A for relapsed/refractory AML. SGN-CD123A is an ADC, comprising an engineered cysteine antibody (EC-mAb) stably linked to a highly potent DNA binding agent called a pyrrolobenzodiazepine (PBD) dimer. CD123 is expressed across AML subtypes and is particularly prominent on leukemic stem cells.
SGN-CD70A: Based on a portfolio review and evaluation of phase 1 clinical data of SGN-CD70A in renal cell carcinoma and CD70-positive non-Hodgkin lymphoma, Seattle Genetics is discontinuing further clinical development of the program.
Lead Preclinical Programs:
SGN-CD352A is a novel ADC targeting CD352 that utilizes the company’s PBD dimer and EC-mAb technologies. Seattle Genetics plans to initiate a phase 1 clinical trial of SGN-CD352A for multiple myeloma by early 2017.
SGN-2FF is a small molecule immuno-oncology agent that is expected to advance into a phase 1 trial for solid tumors during 2017. Preclinical data from SGN-2FF will be presented in a poster presentation at the SITC (Free SITC Whitepaper) 2016 Annual Meeting.
SGN-CD48A is a novel ADC utilizing Seattle Genetics’ latest technology advances. Preclinical data will be described in a poster presentation at the ASH (Free ASH Whitepaper) Annual Meeting and the company plans to submit an investigational new drug (IND) application during 2017 for a phase 1 clinical trial in multiple myeloma.
ADC Collaborations: Seattle Genetics generated fees and milestones under its ongoing ADC collaboration with AbbVie based on AbbVie’s progress with programs utilizing Seattle Genetics technology.
Third Quarter and Nine Months 2016 Financial Results

Total revenues in the quarter and nine month periods ended September 30, 2016 increased to $106.3 million and $312.9 million, respectively, compared to $84.1 million and $243.3 million from the same periods in 2015. Revenues included:

ADCETRIS net sales in the third quarter were $70.1 million, a 19 percent increase from net sales of $59.1 million in the third quarter of 2015. For the year-to-date, ADCETRIS sales were $195.0 million, compared to $163.0 million for the year-to-date period in 2015, a 20 percent increase.
Royalty revenues in the third quarter of 2016 were $12.2 million, compared to $9.7 million in the third quarter of 2015. For the year-to-date in 2016, royalty revenues were $53.7 million, compared to $28.4 million for the first nine months of 2015. Royalty revenues are primarily driven by international sales of ADCETRIS by Takeda. Royalty revenues for the year-to-date in 2016 also included a $20.0 million sales milestone payment from Takeda earned in the first quarter of 2016.
Amounts earned under the company’s ADCETRIS and ADC collaborations totaled $24.0 million in the third quarter and $64.1 million for the first nine months of 2016, compared to $15.3 million and $51.9 million for the same periods in 2015.
Total costs and expenses for the third quarter of 2016 were $138.7 million, compared to $110.6 million for the third quarter of 2015. For the first nine months of 2016, total costs and expenses were $399.7 million, compared to $339.1 million in the first nine months of 2015. The increase in 2016 costs and expenses was primarily driven by investment in vadastuximab talirine, ADCETRIS collaboration activities for product supply to Takeda, and the company’s pipeline programs.

Non-cash, share-based compensation cost for the first nine months of 2016 was $37.0 million, compared to $28.7 million for the same period in 2015.

Net loss for the third quarter of 2016 was $31.8 million, or $0.23 per share, compared to a net loss of $26.4 million, or $0.21 per share, for the third quarter of 2015. For the nine months ended September 30, 2016, net loss was $85.0 million, or $0.61 per share, compared to a net loss of $95.6 million, or $0.76 per share, for the same period in 2015.

As of September 30, 2016, Seattle Genetics had $631.9 million in cash, cash equivalents and investments.

2016 Financial Outlook

Seattle Genetics tightened its 2016 financial outlook within previously provided ranges as follows:

ADCETRIS net product sales in the U.S. and Canada are expected to be in the range of $260 million to $270 million.
Research and development expenses are expected to be in the range of $370 million to $390 million.