Seattle Genetics reported third-quarter earnings on Thursday. While the biotech does have one drug, Adcetris, on the market, sales aren't enough to offset the high research and development costs to expand Adcetris' label and develop the rest of its pipeline. However, Seattle Genetics isn't going to run out of money anytime soon.
Seattle Genetics results: The raw numbers
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Source: Company press release.
What happened with Seattle Genetics this quarter?
- Adcetris sales in the U.S. and Canada continue to climb, up 22.5% year over year.
- The drug is also doing well elsewhere, where Takeda Pharmaceuticals sells Adcetris and Seattle Genetics collects a royalty.
- In the quest to expand the Adcetris' label, increasing the potential market, Seattle Genetics completed enrolment in two different phase 3 trials and is testing the drug in combination with other drugs in earlier-stage trials.
- The partnership with AbbVie , one of Seattle Genetics many partners, is going extremely well. The companies expanded their relationship to allow AbbVie access to additional technology developed by Seattle Genetics, and AbbVie started a phase 1 trial for a drug developed under the original partnership. Initiating the trial triggered a milestone payment to Seattle Genetics.
- In September, Seattle Genetics raised over $525 million, which gives the company a nice nest egg to reach profitability.
What management had to say"With AETHERA and that newer label, it takes a little bit of time to get to the high market penetration rates -- and we are doing a good job -- and there's expansion there, but it takes some time. We're not up to the level of market penetration that we are at the present time with our first two labels -- it's too quick to get there so that's still growing," said Chairman, President, and CEO Clay Siegall.
AETHERA was a clinical trial testing Adectris in patients with Hodgkin lymphoma at high risk of relapse or progression that have undergone an autologous stem cell transplant. The drug is used as a post-transplant consolidation, essentially betting that there might be cancer remaining after the transplant that Adcetris can kill. As Siegall points out, the launch there is going well, but Seattle Genetics still has a ways to go before it's capturing most of the patients in the new indication.
Eric Dobmeier, Seattle Genetics' chief operating officer highlighted the cash that Seattle Genetics has received from its partners that have licensed its antibody-drug candidate technology, "We received over $325 million under these collaborations with a potential for over $4 billion in milestones plus royalties under the deals." In addition to the cash on hand and profits from Adcetris sales and royalties, Seattle Genetics can use the additional milestone payments to extend its runway to profitability.
Looking forwardManagement slightly raised 2015 guidance for sales of Adcetris in the U.S. and Canada to a range of $218 million to $223 million. That puts fourth-quarter estimate of at least $55 million, or about 19% higher than the year-ago quarter.
On the pipeline front, investors will get data this quarter from multiple clinical trials at the American Society of Hematology meeting. Abstracts will be released on November 5 with late-breakers released on Nov. 16. Then the full data will be presented at ASH in early December.
The article Seattle Genetics, Inc. Earnings: Extending the Runway originally appeared on Fool.com.
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