Seattle Genetics, Inc. (NASDAQ: SGEN) is a biotechnology company focused on developing and commercializing antibody-based therapies for the treatment of cancer. Yesterday, during the American Society of Clinical Oncology (ASCO) 50th Annual Meeting being held in Chicago, Seattle Genetics revealed several phase 3 data presentations of Brentuximab Vedotin (ADCETRIS) for treatment Hodgkin lymphoma (HL) and in frontline diffuse large B-cell lymphoma (DLBCL). The stock surged about 6% after the presentations reaching new 52-week highs.
The data was highly anticipated as it gives a better insight regarding the approaching Priority Review and the Prescription Drug User Fee Act (PDUFA) scheduled for August 18, 2015, a major catalyst for the company.
First about Seattle Genetics' technology platform - antibody-drug conjugate (ADC).
ADC is an antibody therapy that employs a monoclonal antibody specific for a tumor-associated antigen. The antibody designed to not just attach itself to the cancerous tissue, but also to enter and eventually kill cancer cells. Seattle Genetics claims that after a decade of investing and gathering experience in ADC innovation, they have developed proprietary, industry-leading technology. Over time Seattle Genetics managed to attract 15 collaborators who are now utilizing the ADC technology for their own clinical developments through licensing agreements. Among the collaborators are Pfizer (NYSE: PFE), GlaxoSmithKline (NYSE: GSK), Progenics (NASDAQ: PGNX), Celldex (NASDAQ: CLDX), Genentech (a subsidiary of Roche), AbbVie (NYSE: ABBV), as well as several other over the counter biotech companies. The ADC technology licensing agreements have generated more than $300 million for Seattle Genetics so far.
Now, about Brentuximab Vedotin – the current catalyst is a label expansion, as the drug was initially approved by the FDA back in 2011 and by the EMA for European markets in 2012 for the treatment of relapsed Hodgkin lymphoma and relapsed systematic anaplastic large cell lymphoma. The FDA will make a decision whether or not the drug is beneficial for post-transplant consolidation treatment of Hodgkin lymphoma (HL) patients at high risk of relapse or progression. If the drug is approved once again it is expected to be the first of several label expansions. Brentuximab Vedotin is undergoing 8 additional clinical trials, most of which are in phases 2 or 3, all for treatment of various types of cancer with chemotherapy combination or without.
Seattle Genetics clearly wants to turn Brentuximab Vedotin into a blockbuster drug, but running so many clinical trials is a heavy financial liability, and therefore despite the company’s success with licensing agreements Seattle Genetics still operates at a loss. According to the most recent financial report, the company ended the first quarter of 2015 with a net loss of $21.7 million.
Despite operating on a loss Seattle Genetics has a clean balance sheet, with no debt and about $296 million cash. As always when it comes to biotech investments, it is important to remember that the FDA is unpredictable and approval is not guaranteed.
Stay tune as we continue our coverage on Seattle Genetics.