Seattle Genetics (SGEN) Loss Narrower Than Expected In Q3

Seattle Genetics, Inc SGEN reported a loss of 23 cents per share, narrower than the Zacks Consensus Estimate of a loss of 29 cents but wider than the year-ago loss of 21 cents.

Revenues came in at $106.3 million, up 26.5% year over year, primarily on the back of strong sales of Adcetris. Revenues were also above the Zacks Consensus Estimate of $102.3 million.

Quarter in Detail

Seattle Genetics’ top line comprises product revenues, collaboration and license agreement revenues and royalties.

The company’s only marketed product, Adcetris, generated revenues of $70.1 million, up 18.7% year over year.

Collaboration and license agreement revenues increased 56.6% to almost $24 million. Collaboration revenues included fees earned from the company’s agreement with Takeda Pharmaceutical Company Ltd. TKPYY for Adcetris and other ADC collaborations.

Royalty revenues surged 26% to $12.2 million driven by royalties from Takeda on international sales of Adcetris.

Research and development (R&D) expenses were $92.7 million, up 31% year over year. Also, selling, general and administrative (SG&A) expenses increased 17.4% to $34.8 million. Costs were high primarily due to investment in vadastuximab talirine, Adcetris collaboration activities for product supply to Takeda and pipeline development.

Tightened Outlook

Seattle Genetics tightened its 2016 financial outlook based on the performance to date. Adcetris sales in the U.S. and Canada are now expected to be in the range of $260 million to $270 million (old guidance: $255 million to $275 million), while research and development expenses are projected in the range of $370 million to $390 million (old guidance: $360 million to $400 million).

Pipeline Update

Meanwhile, Seattle Genetics continues to work on expanding Adcetris’ label further. The company and its collaborator Takeda reported positive top-line data in Aug 2016 from the phase III study, ACLANZA, in patients with CD30-expressing cutaneous T-cell lymphoma (CTCL). Seattle Genetics plans to submit a supplemental biologics license application to the FDA for CTCL during the first half of 2017.

The company expects top-line data from the phase III ECHELON-1 study (frontline classical Hodgkin lymphoma) during 2017 (previously expected in the 2017 to mid-2018 time frame) while top-line data from the ECHELON-2 study (frontline CD30-expressing mature T-cell lymphoma) should be out in the 2017 to 2018 time frame.

In addition, the company continues to enroll patients in the phase III study on vadastuximab talirine in combination with hypomethylating agents in older patients with newly diagnosed acute myeloid leukemia.

The company is also progressing with its early-stage pipeline candidates.