Seagen Inc.
Q3 2017 Earnings Call Transcript

Published: 27 Oct 2017

[Operator:]

Good day and welcome to the Seattle Genetics Third Quarter Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Peggy Pinkston, Vice President, Investor Relations. Please go ahead, ma'am.

[Peggy Pinkston:]

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seattle Genetics third quarter 2017 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Operating Officer; Jonathan Drachman, Chief Medical Officer and Executive Vice President, Research and Development; and Darren Cline, Executive Vice President, Commercial. Following our prepared remarks today, we will open the line for questions. If we are unable to get to all of your questions, we will be available after the conclusion of the call. Today's conference call will include forward-looking statements regarding future events or future financial and operating performance of the company. Such forward-looking statements are only predictions based on current expectations and actual results may vary materially from those projected. Please refer to the documents that we filed from time to time with the SEC including the company's Form 10-Q for the quarter ended June 30, 2017 for information concerning the risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. And with that, I'll turn the call over to Clay.

[Clay B. Siegall:]

Thanks, Peg, and good afternoon, everyone. We recently marked the sixth anniversary of ADCETRIS' approval by the FDA. It was a transformational milestone for Seattle Genetics, enabling us to successfully transition to a commercial stage oncology company. ADCETRIS is now approved in 68 countries with more than 40,000 lymphoma patients treated worldwide. And today through our ADCETRIS clinical development program, we are on the cusp of bringing this important drug to even more patients in need. Beyond ADCETRIS, we are investing in a strong pipeline towards our goal of becoming a multi-product oncology company. We are advancing two programs in pivotal trials, enfortumab vedotin and tisotumab vedotin. In addition, we have an expanding pipeline of other ADCs and novel immuno-oncology agents directed at unmet medical needs for cancer. I'm pleased to update you today on several significant milestones from recent months. First, with ADCETRIS, we reported U.S. and Canada revenues of $79.2 million in the third quarter and $223.8 million for the first nine months of the year. We estimate global sales in 2017 are tracking to approximately $600 million and we reported royalty revenues for the first nine months of the year totaling $46 million. To realize the full potential of ADCETRIS and drive future growth, we are conducting pivotal phase 3 trials designed to support label expansions. The most important of these is the phase 3 ECHELON-1 trial in frontline Hodgkin lymphoma. As previously reported, this global study in 1,334 patients met its primary endpoint of demonstrating a statistically significant improvement in modified PFS in the ADCETRIS containing arm versus the control arm. The goal in the frontline setting is to obtain the highest number of long-term durable remissions, which usually translate to cures in this typically young patient population. Based on these data, the FDA granted ADCETRIS Breakthrough Therapy Designation in combination with chemotherapy for the treatment of frontline advanced classical Hodgkin lymphoma. This is an important acknowledgment by the FDA that ADCETRIS plus AVD represent a substantial improvement over standard of care. We are on track to submit a supplemental BLA soon. Approval in frontline advanced Hodgkin lymphoma would open up a substantial opportunity for ADCETRIS and we believe could define a new standard of care in this patient population after more than four decades. Our team is preparing for launch in the first half of 2018. The ECHELON-1 data were accepted for presentation at the ASH Annual Meeting in December. We look forward to sharing more details from the E-1 trial at the conference, including primary and secondary endpoints and safety findings. Another important phase 3 trial with ADCETRIS is ALCANZA, which was conducted in patients with CD30-expressing mycosis fungoides and primary cutaneous anaplastic large cell lymphoma, which together account for the majority of patients who receive systemic therapy for CTCL. We received Breakthrough Therapy Designation for ADCETRIS in these subtypes. Our supplemental BLA was filed by FDA in August with priority review and a PDUFA date of December 16. This would be our fourth labeled indication for ADCETRIS in the United States. A third key ADCETRIS phase 3 trial is ECHELON-2 in frontline mature T-cell lymphoma, often referred to as peripheral T-cell lymphoma. Approximately 4,000 patients are diagnosed annually in the U.S. with CD30-expressing MTCL. In the E-2 trial, we are evaluating PFS of ADCETRIS plus CHP compared to standard of care CHOP chemotherapy in newly diagnosed patients. This could be another important driver of ADCETRIS' growth in the future and further establish ADCETRIS as the foundation of care for CD30-expressing lymphomas. PFS events in the E-2 trial continue to occur slower than anticipated. We plan to consult with the FDA and expect to report the E-2 data in 2018. ADCETRIS is an increasingly important drug for oncologists and over the course of the past six years, has significantly improved outcomes for relapsed Hodgkin lymphoma and systemic ALCL patients. Based on our data and anticipated regulatory milestones in CTCL, and importantly, in frontline advanced Hodgkin lymphoma, ADCETRIS is positioned to help even more patients and realize its potential to become a blockbuster drug. In addition to our substantial progress with ADCETRIS, in recent months, we have made important strides with our clinical pipeline, which includes two late-stage ADCs for solid tumors. First is enfortumab vedotin, or EV, which was formerly known as ASG-22ME. We are co-developing EV with Astellas. We recently initiated a single arm, single agent pivotal trial of EV in 120 patients with locally advanced or metastatic urothelial cancer. The primary endpoint is confirmed objective response rate. We are also planning to initiate a trial in the near future, evaluating EV in combination with checkpoint inhibitors in earlier lines of therapy, including the first-line setting. Our next ADC in late-stage development is tisotumab vedotin or TV. This ADC targets tissue factor, which is expressed in multiple types of solid tumors. We are co-developing TV with Genmab. Under the collaboration, we will co-commercialize TV on a 50-50 basis, sharing all future costs and profits. Based on compelling data in cervical cancer and positive feedback from the FDA, we are advancing TV into a pivotal phase 2 single arm, single agent trial for women with advanced cervical cancer. We expect the trial to begin by the first half of 2018. I am pleased that we have identified approval pathways in consultation with the FDA for both enfortumab vedotin and tisotumab vedotin that support our goal of bringing both these ADCs to patients in need as rapidly as possible. In addition to our three lead programs, our earlier stage pipeline includes more than 10 programs in clinical development for a variety of hematologic malignancies and solid tumors, including SGN-LIV1A for breast cancer, CD19-targeted programs for lymphomas, ADCs for multiple myeloma and novel immuno-oncology agents. We will continue to advance a broad portfolio of clinical stage programs and invest in those with the most promise for patients. At this point, I'll turn the call over to Darren to discuss our commercial activities. After that, Todd will discuss our third quarter financial results, and then Jonathan will highlight our research and development progress. Darren?

[Darren S. Cline:]

Thanks, Clay. ADCETRIS net sales were $79.2 million in the third quarter, up 7% versus the second quarter and up 13% compared to the third quarter of last year, making this another record sales quarter. This increase was predominantly driven by vial growth. We continue to see high market share and stable duration in our current indications. Physicians rely on ADCETRIS in the relapsed Hodgkin lymphoma and the post-transplant consolidation settings. We look forward to the anticipated approval of ADCETRIS in CTCL, where approximately 1,000 patients are diagnosed annually in the United States with CD30-positive disease. Based on our market research, we believe that upon approval, ADCETRIS will offer a meaningful treatment for physicians and their patients. The commercial team is well prepared for the launch. We are encouraged by the FDA's Breakthrough Designation of ADCETRIS in combination with chemotherapy for frontline advanced Hodgkin lymphoma patients. These patients are often diagnosed at a younger age, and the goal of treatment is to provide frontline therapy with curative intent. Market research indicates that the increased efficacy of ADCETRIS plus AVD is clinically meaningful and will provide a better option for frontline advanced Hodgkin lymphoma patients. We are also encouraged by feedback that physicians are eager to remove bleomycin from the four decade old frontline Hodgkin lymphoma regimen of ABVD. Physicians continue to share their difficult patient care experiences with bleomycin-associated lung toxicity, which sometimes can be severe and fatal. Commercial preparation is well underway for these new indications. As we have mentioned previously, we're expanding our field force in anticipation of these approvals. I'm pleased to report that nearly all the expansion positions are now filled, bringing our commercial field team to over 100 sales professionals and the entire commercial group to nearly 150. Our new team members bring great talent and experience, enhancing the capability of our already superb commercial organization. I will now turn the call over to Todd to discuss our financial results.

[Todd E. Simpson:]

Thanks, Darren, and thanks, everyone, for joining us on the call this afternoon. In addition to achieving important milestones for ADCETRIS, enfortumab vedotin and tisotumab vedotin, we had a strong quarter financially with record ADCETRIS sales. Today, I'll review our financial results and provide some updates to our guidance for the year. Total revenues in the third quarter were $135 million. This included ADCETRIS net sales in the U. S. and Canada of $79 million. For the first nine months of 2017, total revenues were $353 million, including ADCETRIS sales of $224 million. Sales of ADCETRIS bifurcated in this territory have also been strong. Royalty revenues in the third quarter of 2017 increased to $17 million compared to $12 million in the third quarter of last year. For the first nine months of 2017, royalty revenues were $46 million compared to $54 million in the first nine months of last year. Royalties in the first quarter of 2016 included a one-time $20 million sales milestone from Takeda. Excluding that amount, royalties in 2017 have increased by 36% over last year, reflecting higher sales by Takeda. Based on Takeda's sales growth in its territory and year-to-date performance, we are increasing our 2017 guidance for royalty revenues to be in the range of $60 million to $65 million for the full year. Collaboration revenues were $39 million in the third quarter, driven by amounts earned under our ADC collaboration with Takeda and our ADC deals. Third quarter 2017 revenues included the earned portion of milestones from AbbVie, including a $12 million milestone triggered by their clinical trial progress with ABT-414 in glioblastoma. Collaboration revenues for the first nine months of 2017 were $83 million. We are increasing our guidance for 2017 collaboration revenues to now be in the range of $90 million to $100 million for the full year. R&D expenses were $114 million in the third quarter and $346 million for the year-to-date. ADCETRIS continues to be the primary driver of R&D expense, and the increases over 2016 primarily reflect investment in enfortumab vedotin and our broad pipeline. We are narrowing our full year 2017 R&D expense guidance to a range of $460 million to $480 million. This is within our previous guidance range. SG&A expenses were $40 million in the third quarter and $119 million in the first nine months of 2017, in line with our expectations. This quarter, we reported net income of $50 million. This was the result of the accounting treatment of the warrant we hold to purchase 8.7 million shares of Immunomedics' common stock. In the third quarter, Immunomedics completed a resale registration statement for the shares issuable under the warrant. As a result, it is now mark-to-market. And based on the closing price of Immunomedics' shares at the end of the quarter, we recognized a $79 million gain, and that led to net income for the quarter. In addition to the warrant, we hold 3 million shares of Immunomedics' common stock. We ended the second quarter (sic) [third quarter] with $470 million in cash and investments. This does not include our investment in Immunomedics' common stock or the warrant. Lastly, I wanted to mention that in October, we completed the acquisition of the Bristol-Myers Squibb's biologics manufacturing facility located near our headquarters. As a reminder, the purchase of the land and building was paid for in the second quarter. And in October, we made an additional payment of $26 million for building improvement and equipment, which will be reflected in the fourth quarter. Now, I'd like to turn the call over to Jonathan.

[Jonathan Drachman:]

Thanks, Todd. As Clay highlighted, we've achieved several significant milestones with ADCETRIS recently and look forward to reporting the full ECHELON-1 data at ASH in December. In addition, there are more than a dozen other ADCETRIS data presentations planned at the meeting across both corporate and investigator-sponsored trials. These include data from a trial of ADCETRIS in combination with nivolumab for second-line salvage Hodgkin lymphoma under our collaboration with Bristol-Myers Squibb and five-year follow-up data from our phase 1 trial of ADCETRIS in frontline PTCL, which support our ongoing ECHELON-2 trial. We anticipate another strong presence at ASH this year. I'll now turn to our pipeline programs and the important advances we're making in the clinic. Our lead programs are ADCs for solid tumors, enfortumab vedotin and tisotumab vedotin. Enfortumab vedotin is an ADC that we and Astellas are evaluating as monotherapy in a pivotal trial for patients with locally advanced or metastatic urothelial cancer who have been previously treated with a checkpoint inhibitor. Several checkpoint inhibitors, or CPIs, have been approved for urothelial cancer in the past several years and are improving outcomes for some patients, yet the vast majority of patients do not benefit or relapse and require additional treatment options. There are no approved agents in the post-CPI setting, representing an unmet medical need and potential rapid development pathway. The primary endpoint of the pivotal single-arm trial is the confirmed objective response rate with planned enrollment of 120 patients. We also plan to initiate soon a phase 1b trial of enfortumab vedotin in combination with CPIs initially, pembrolizumab, an anti-PD-1 inhibitor, for patients with locally advanced or metastatic bladder cancer. This trial will explore the tolerability and antitumor activity of these combinations. In addition, it enables investigation of enfortumab vedotin in earlier lines of therapy, including first-line patients who are ineligible for the standard first-line chemotherapy regimen. The trial will enroll up to 85 patients, and we'll inform our future plans for enfortumab vedotin in combination with checkpoint inhibitors. The next program I'd like to discuss is tisotumab vedotin or TV. This is a promising ADC that targets tissue factor, which is expressed on many types of solid tumors. As reported at the European Society of Medical Oncology (sic) [European Society for Medical Oncology] meeting in September, the interim results of the phase 1/2 trial in women with metastatic cervical cancer appears promising. In an expansion cohort of 34 patients, the response rate was 32% with a median duration of confirmed responses of more than eight months. Standard therapies for previously treated recurrent and/or metastatic cervical cancer generally result in response rates of less than 15%. Despite improvements in detecting and preventing metastatic cervical cancer, this is still a devastating disease with approximately 13,000 women diagnosed in the U.S. annually and 4,000 deaths. Based on the encouraging phase 1/2 data and positive feedback from the FDA, we and Genmab recently announced our plans to begin a pivotal phase 2 trial in the first half of 2018. The trial will be an international single-arm study in approximately 100 women with recurrent or metastatic cervical cancer. Eligibility will include patients who relapsed or progressed after standard therapy, including platinum and Avastin, if eligible. The primary endpoint is overall response rate. Data were also reported at ESMO from a phase 1/2 dose-escalation trial of TV in other types of solid tumors that express tissue factor, including ovarian and lung cancer. We will be further exploring the activity of tisotumab vedotin in other solid tumors and look forward to keeping you updated on these activities. Beyond enfortumab vedotin and tisotumab vedotin is a robust pipeline of other programs. They include our proprietary ADC SGN-LIV1A, which we're evaluating in metastatic breast cancer, in particular, patients with triple-negative disease. We previously reported activity and tolerability of SGN-LIV1A as a single agent, and we plan to report additional monotherapy data in a presentation at the San Antonio Breast Cancer Symposium in December. In addition, we're expanding the clinical evaluation of SGN-LIV1A into three new trials. First, in combination with atezolizumab under a clinical collaboration with Roche. Second, in combination with pembrolizumab under a collaboration with Merck. And third, as part of a neoadjuvant regimen in the phase 2 I-SPY trial conducted by a consortium, including the FDA, industry and major cancer research centers. Our collaborators are also making strong progress with ADCs using our technology. Today, I'll highlight three collaborator programs that are advancing with promising data. First, Roche is evaluating an anti-CD79b ADC called polatuzumab vedotin in diffuse large B-cell lymphoma. They recently announced this program. It has received both Breakthrough Therapy Designation from the FDA and PRIME Designation from the EMA. In addition, the phase 3 trial evaluating polatuzumab vedotin in frontline DLBCL is expected to begin this quarter. Second, AbbVie is advancing ABT-414, an anti-EGFR ADC for glioblastoma. And third, GlaxoSmithKline is developing an anti-BCMA ADC for multiple myeloma, which has promising early data. Recently, GSK announced that this program received PRIME Designation from the EMA. ADCs are continuing to advance as an important therapeutic modality, both as single agents and as part of various combination regimens for hematologic malignancies and solid tumors. Notably, we believe that through targeted killing of tumor cells and immunogenic cell death, ADCs could become the preferred partner for immuno-oncology agents, which we are testing with multiple programs with a goal of inducing deep and durable remissions in a high percentage of patients. With that, I'll turn the call back over to Clay.

[Clay B. Siegall:]

Thanks, Jonathan. I'll close with a summary of key upcoming activities and our highest priorities. For ADCETRIS, this includes working with FDA on the supplemental BLA for CTCL and preparing for the commercial launch; submitting the E-1 supplemental BLA for frontline advanced Hodgkin lymphoma and preparing for approval in 2018; reporting the full E-1 dataset at ASH in December; and preparing to report data from E-2 in 2018. Across our pipeline, key highlights include enrolling patients to the pivotal trial of EV in urothelial cancer; initiating a phase 1b trial of EV in combination with checkpoint inhibitors in urothelial cancer; preparing to initiate the pivotal trial of TV in cervical cancer; reporting additional phase 1 data from SGN-LIV1A in triple-negative breast cancer; and initiating multiple trials of SGN-LIV1A, including with checkpoint inhibitors or as neoadjuvant therapy. We look forward to seeing many of you at the ASH meeting in December and to keeping you updated on our progress. At this point, we will open the line for Q&A. Operator, please open the call for questions.

[Operator:]

And we'll take our first question from Michael Schmidt with Leerink Partners. Please go ahead. Your line is open.

[Michael Schmidt:]

Hey, guys. Thanks for taking my questions and congrats on all the progress. I had a couple of questions on SGN-LIV1A, and I was wondering if you could help us with expectations heading into the San Antonio Breast Cancer Meeting. What do you expect to present there from the phase 1 study? And then second part of the question, I was wondering, you guys obviously did a great job in advancing EV and TV into rapid approval trials based on promising early data. I was wondering what the gating factor is for SGN-LIV1A to advance that program into potentially pivotal studies. Thanks.

[Clay B. Siegall:]

All right. Thanks, Michael, for the data. Maybe I'll talk a little bit and see if Jonathan wants to add some color to what I said. So let me remind you that SGN-LIV1A is a program that we're very excited about, but it is not as advanced at the present time as both enfortumab vedotin and tisotumab vedotin. And we're really excited with the fact that with SGN-LIV1A, we have seen in very heavily protruded patients notably with triple-negative breast cancer, we've seen multiple objective responses. So that's exciting. And we do expect to report some more data at the San Antonio Breast Cancer Symposium in December, as you noted. As far as you asked what to expect there, it's just a continuing analysis of our trial that is ongoing. It's with a single agent. There's nothing that you should expect in combination. Those are all new and recently announced. So it's additional single agent data at the conference. And we view this as a multi-pronged attack, and there's really four different prongs here, one being single agent and the other being combinations. And Jonathan, could you talk a little bit about the combinations?

[Jonathan Drachman:]

Sure. So, as Clay said, we've been working very hard on identifying what is the appropriate dosing schedule to move forward into later-stage trials, and that's something that I think you can expect to see some of later this year. Where we really see excitement around the use of ADCs is this ability to potentially combine very well with checkpoint inhibitors and immuno-oncology agents to not only have very high response rates, but also very durable and deep remissions. And I'll remind you that we have data of ADCETRIS in combination with nivolumab, which has demonstrated high response rate and good activity. We'll have more data on that at ASH this year. And we're doing that across our portfolio. So you'll notice that there's now two trials, one with Roche, one with Merck looking at this combination of SGN-LIV1A in a very difficult population using the combination with checkpoint inhibitors to try to enhance outcome. And also, going into the neoadjuvant setting where you have potential cures of these very difficult diseases to treat.

[Michael Schmidt:]

Great. Thanks for the added information.

[Operator:]

Thank you. And we'll take our next question from Geoff Meacham with Barclays. Please go ahead. Your line is open.

[Geoffrey Meacham:]

Hi, guys. Thanks for the question. Just wanted to drill a little bit more when we think about next year, I guess, will ASH be kind of definitive enough for some of the hematologists, oncologists that have been somewhat, say, cynical and willing to say adjust the dose of bleo. Do you feel like we'll have enough information from that to really be convincing to them? And maybe just go over any other barriers that they may have looking to the launch or to the label expansion next year?

[Clay B. Siegall:]

Sure. So you said ASH next year. I think you're referring to ASH in December and how...

[Geoffrey Meacham:]

Yeah, yeah, so ASH in December and then the launch in obviously next year.

[Clay B. Siegall:]

Right. And that's what I thought you referred to. So, thanks for the question. Certainly, at ASH, we're going to be presenting key data on the trial. And we have our primary endpoints. We have secondary endpoints. We have safety. We have demographics. We're actually real excited to come out and lay out all the data and have all the physicians, the hematology oncologists at the conference look at that. So that's something we're pretty excited with. We were also very pleased with our interactions with FDA to gain Breakthrough Therapy Designation for the E-1 data. And we are working really hard to get our submission in to FDA and look forward to going for our goal of approval in the first half of 2018 and getting this launched. You asked the question about what do docs say about this. And I think that we've certainly talked to a lot of docs about our data with ADCETRIS and E-1, and docs are very comfortable with ADCETRIS. They've been using ADCETRIS for quite a number of years now in relapse setting. And Darren, maybe you could comment a little bit about our market analysis of what docs think about with E-1?

[Darren S. Cline:]

Yeah, Geoff. As you can imagine, we've done quite a bit of work in anticipation of the label expansion post the data. And there still is while ABVD has been a very good treatment for the last four decades, there still is some dissatisfaction with the therapy. Again, you're talking about a younger patient population and the physicians have a curative intent on. And to Clay's point, there's a comfort level with a targeted therapy such as ADCETRIS and removing the bleomycin and some of the dissatisfaction there. So we believe that in that advanced Hodgkin lymphoma patient population, physicians see a real advancement here of bringing ADCETRIS, which now is going to set the new bar in frontline treatment.

[Geoffrey Meacham:]

Great. Okay, thank you.

[Operator:]

Thank you. We'll take our next question from Kennen MacKay with RBC. Please go ahead. Your line is open.

[Slanix Alex:]

Hi. Good afternoon. This is Slanix Alex on for Kennen. Thanks for taking the question, and congrats on the quarter. Just wanted to dive a little bit more into the market research you've done based on ECHELON-1. I was wondering if you could provide any color into the potential use of ADCETRIS caveating towards patients with either favorable or unfavorable disease and any feedback you've got in that regard?

[Clay B. Siegall:]

Sure. So when you think about ECHELON-1, our focus has been on patients with advanced Hodgkin lymphoma. And if you want to consider what advanced patients are, I think that's sort of where your question is going toward, the way Hodgkin lymphoma is defined is in terms of stages, and Stage III and Stage IV are certainly advanced Hodgkin lymphoma. Stage IIb bulky is also considered by most docs to be advanced Hodgkin lymphoma. Stage IIa is maybe a little bit more gray as to what doctors categorize it. And Stage I is certainly called early-stage Hodgkin lymphoma. As we looked at market research and spoken with doctors, and what we're – while we don't know today that our label will say advanced Hodgkin lymphoma until we submit and get label, we're pleased that our Breakthrough Therapy Designation has advanced Hodgkin lymphoma in the title that came from FDA. So that's certainly our goal, is to have it – and put the advanced Hodgkin lymphoma in the hands of the doctors to make the assessment as they could look at the whole patient and determine all the different characteristics of a patient to determine if they have advanced Hodgkin lymphoma. And we think that's the right way to go, and that's what we're going to strive and work with the FDA to get that in the label.

[Slanix Alex:]

Great. Thanks, Clay, for that color. If I could just ask a quick follow-up question. As it relates to the exclusion of bleomycin, based on the market research you've conducted, what has the feedback been towards excluding that in the context of a world where now modified AVBD (sic) [ABVD] regimens, if you will, are now being used where bleo can be eliminated potentially after the second cycle?

[Clay B. Siegall:]

Thank you for the question. For 40 years now, docs have been using ABVD, and they have not liked bleomycin at all. So the first thing that docs did, and this has nothing to do with Seattle Genetics, is they said – because it was never really tested clearly, they said could we just drop bleomycin? So docs did in a consortium a big trial comparing AVD with ABVD. And what they found was depending on what stage of cancer, what stage of Hodgkin lymphoma it was, you could see 6% or even up to 10% difference in the efficacy. So you have – definitely, you lose efficacy with bleomycin. And while only about 1% or so of patients have some very serious and mortally connected toxicity due to pulmonary or lung toxicity with this, docs were unwilling to give up that six-and-higher percent efficacy loss for the safety. So then docs said, well, gee, if we can limit the use of bleomycin, wouldn't that be better. And you can limit the use of bleomycin and you can get less toxicity, but you also start losing efficacy. And so it's a balance. And there's no way to have a freebie here where you give up something and it doesn't affect the outcome. What we're doing is once and for all saying you don't need bleomycin. And not only do you not need bleomycin and that the percentage of patients that have some really severe toxicity, including death, would not happen, that's due directly to the bleomycin, but you would get 5% greater long-term, disease-free response, which, in this disease, where there's curative intent, it almost always in these patient populations becomes cure once it's passed the five-year disease-free survival. So at the same time, we can finally get rid of it rather than trying to get rid of bleomycin and failing or using a little bit less and sprinkling it on, we can get rid of it and get a higher rate of response that are likely to become cures with time. I think it's a pretty exciting outcome.

[Slanix Alex:]

Great. Thanks for all that color, Clay. And again thanks for taking the question and congrats on the quarter.

[Operator:]

Thank you. We'll take our next question from Salveen Richter with Goldman Sachs. Please go ahead. Your line is open.

[Salveen Richter:]

Thanks for taking my questions. Clay, just following up on your comments earlier about the market research and stages, what proportion of the market is Stage IIb on in the frontline setting? And then, can you just clarify for us how radiation therapy treatment would impact PFS and modified PFS metrics and what this means for the ADCETRIS effect in the first-line setting? Thank you.

[Clay B. Siegall:]

Sure. So as far as the market research in Stage IIb and beyond, it's probably – Stage IIb, Stage III and Stage IV, it's probably about 60% of Hodgkin lymphoma. That's a rough number for that. Jonathan, do you want to comment on effect of radiation?

[Jonathan Drachman:]

Well, I think that – the main difference, I think, is in bulky Stage II disease. The radiation is often felt to be required in order to consolidate the response, whereas in more disseminated disease or where you don't have bulky disease, that's often not required. And that's really the main difference in the way the patients are treated. Was that your main question?

[Salveen Richter:]

Yeah, that's helpful. Thank you.

[Jonathan Drachman:]

Okay.

[Operator:]

Thank you. We'll take our next question from Adnan Butt with Guggenheim. Please go ahead. Your line is open.

[Adnan Shaukat Butt:]

Thanks for the question. Clay or maybe Jonathan, in terms of ECHELON-1 details at ASH, can you shed some light on where we could see some details and if there could be differences maybe in terms of the force plots (38

[Clay B. Siegall:]

Sure, Adnan. Thanks for the question. Like I said earlier, we're very much looking forward to putting out all the data in front of the doctors in a peer-reviewed fashion at the ASH conference. The abstracts, I believe, are coming out soon, maybe even next week, from ASH themselves. And so we don't control the date, of course, on that. Jonathan, could you give a little bit of color here? Obviously, Adnan, we can't give you full color because we have to wait for the ASH conference, but I think Jonathan can give you a few items.

[Jonathan Drachman:]

Yeah. So I think there are pre-specified subgroups that we'll be looking at. I can't go into the details of exactly what those are, but those are the kinds of details that we would definitely be sharing. Obviously, we'll be talking about safety, primary and secondary endpoints and other key findings from the trial, including the pre-specified subgroup analyses.

[Adnan Shaukat Butt:]

Jonathan, the abstracts will have those pre-specified groups, maybe geographic differences, et cetera?

[Jonathan Drachman:]

I don't want to speak to the details of what would be in the abstract, but you'll be seeing those very soon.

[Adnan Shaukat Butt:]

Okay. Then just one on enfortumab. For a single-arm study, is it typical to have an agreed upon efficacy hurdle with the FDA?

[Clay B. Siegall:]

Adnan, with that, there's really not a – something written in stone. I mean, there is certainly response rate, but there's certainly duration. And if you have a very high response rate but a horrible duration or a very low response rate with a fantastic duration, FDA looks at all the above. I mean, look at checkpoint inhibitors and they were approved in urothelial cancer with ranges – there's five of them approved that range from 14% response rate to 21%. But the issue is that they have good duration because you would think that's kind of a low response rate. We're at a much higher response rate in our phase 1 study, and we're accruing to the pivotal study. So we'll see what happens there. We think we're in a good shape. But certainly, we did not hear nor is it normal to hear a set line in the sand. And before I forget, Adnan, I'd like to welcome you back from your trip gardening.

[Adnan Shaukat Butt:]

Thank you, and congrats on the two new – well, tisotumab going into pivotal as well.

[Operator:]

Thank you. We'll take our next question from Boris Peaker with Cowen. Please go ahead. Your line is open.

[Boris Peaker:]

Great. Thank you for taking my question. So my first question is on ADCETRIS and frontline Hodgkin's lymphoma. I'm just curious, what is the duration of treatment in the trial in E-1? And what do you anticipate it to be in practice? Since we know that if we look at the advanced patients where it's currently approved, the real-world duration is shorter than what we saw in the pivotal trial. So I just want to kind of get a sense how that would compare E-1 versus real world?

[Clay B. Siegall:]

Yeah. So thanks for the question. As you indicated in the relapse setting, in our trial, we had an average of eight doses of ADCETRIS. And they ended up in the real world getting about 6 doses, 6.5 doses, and so that was lower. But frontline could be different. And Jonathan, do you want to talk about the differences in frontline?

[Jonathan Drachman:]

Sure. So the regimen calls for 12 doses to be given over six cycles every two weeks. And that is very much ingrained into the curative intent in treating Hodgkin lymphoma. So ABVD is given 12 doses over six months, and ADCETRIS is now worked into that same schedule and regimen being given 12 times over six cycles or six months, so every two weeks. I think that this will be different and the patients are going to be trying to go for a long-term disease-free survival. And the best way to do that is to get as much treatment as they can upfront and not have to deal with a relapse or salvage setting. So I wouldn't expect there to be a huge drop-off over what was in the trial.

[Boris Peaker:]

Great. And my second question also on Hodgkin lymphoma, I guess. We have two approved checkpoint inhibitors now in Hodgkin lymphoma. I'm just curious, are they having any notable impact on ADCETRIS, whether it's in new patient starts or duration of treatment? I mean, what are you seeing from the marketplace?

[Clay B. Siegall:]

Thank you for that question. They've been on the market – both Opdivo and KEYTRUDA have been on the market now for some time period. It's been like a year and a half or if not more. And each quarter, we keep on coming forward with record revenues for ADCETRIS. So certainly, we're doing well there. Darren, do you want to comment a little bit and give a little bit of color on any impact?

[Darren S. Cline:]

Sure. And to echo Clay, they've been on the market and actually do benefit some patients. But we find over and over physicians' go-to treatment in the relapsed/refractory is ADCETRIS and then most often will use the CPI after that. So I think just our clinical data supports that. And then their comfort and ability to use the product over the six years since approval.

[Clay B. Siegall:]

Right. The other thing, Boris, that I'd like to point out is that we are doing a combination study. And Jonathan, can you briefly tell him a little bit about that and what we're doing?

[Jonathan Drachman:]

Sure. So in collaboration with Bristol-Myers, there's a phase 3 trial ongoing looking at the relapsed and refractory patients, where patients are randomized, either get ADCETRIS or ADCETRIS and nivolumab. And I think that's a really great opportunity when we look in this relapsed/refractory population to see can we put these two great drugs together and get even better outcomes for patients.

[Boris Peaker:]

And when should we get data from that study? When do you anticipate the results?

[Clay B. Siegall:]

We recently, with Bristol, started that. So we're not going to give any timing on that right now.

[Boris Peaker:]

Yeah.

[Clay B. Siegall:]

But what I will point out is that the phase 1 data that we have done, which combined ADCETRIS and Opdivo was pretty strong. I mean, when you really look at it, there was a high CR rate as a result. So when you see the ADCETRIS data in relapsed patients that we were approved based on, we have somewhere in the 30% – close to 35% CR rate and then there was also a high PR rate. But in Hodgkin lymphoma, CRs are what's really critical because there's curative intent. So we had about a 35% CR rate in our approved indication in the relapsed setting for Hodgkin. And in Opdivo, they had a CR rate that was, I think it was around 7% or 8% CR rate and a lot of PRs and good duration. But the CR rate, like I said, which was ultra important, is single-digits. And then you take these two drugs together in a pretty decent-sized phase 1 combination study, and we had a 60%, six-zero-percent CR rate. And so, that's the excitement that led to the checkpoint 812 trial, just to remind you of the underlying data.

[Boris Peaker:]

Great. Thank you very much for taking my questions and the detailed answers.

[Operator:]

Thank you. We'll take our next question from Yatin Suneja with SunTrust. Please go ahead. Your line is open.

[Unknown Speaker:]

Hey, guys. This is David (46

[Clay B. Siegall:]

Sure. Well, with E-2, any time you do a study where you're taking a regimen that's been around for more than three decades and in this case, CHOP with T-cell lymphoma, it's hard to get exact data because all the data is prehistoric. And so we did our best to evaluate how we could judge this. And so what you don't know, based on looking at these trials is, is the control arm doing better than history? Is the treated arm doing really well? And I'll remind you that our phase 1 lead-in trial, we did ADCETRIS plus CHP, and we had an 88% CR rate. And we've been tracking that and watching how patients are doing over time, and they're doing fantastic. And the data is really looking in our lead-in trials, looking very strong. At this point, I'm not really concerned if it takes a little longer. We've had this happen before with our AETHERA trial, if you recall, which was the post-transplant consolidation trial. And in that trial, the events were slower than we initially thought. And so what happened is we went to – and we said this on the conference call, we were very open about it, just like we are with E-2, that said they were a little slower. And we went to FDA who we have a very collegial working relationship with, and two BTDs under ADCETRIS. And at that point, we went to FDA and what happened out of it is we came out with an agreement at that point for that trial of a landmark, meaning a certain time point. And when we hit that time point, which we publicly talked about, we unblinded and the data was a strong success, and now that's a label. And we got approval and a great label for that. So I think we've seen this before. We've worked in a collegial manner with FDA, and it's actually worked out really well and so we feel good about E-2, and we just want to be transparent and talk about what we're seeing right now.

[Unknown Speaker:]

Great. And if I may, just wondering about have you guys spoken with Takeda on the ex-U.S. regulatory strategy for E-1? What is the opportunity there in international? And how's the response for KOLs overseas?

[Clay B. Siegall:]

We meet and speak with Takeda constantly. They're a fantastic partner and have been for many, many years with ADCETRIS. As far as their specific comments and their interactions with KOL and their perspective and their guidance, we cannot provide that. That's their territory. But we have a great relationship with them, and I would encourage you to speak with them.

[Unknown Speaker:]

Okay. Have you guys spoken with the KOLs overseas? Or is that mainly (49

[Clay B. Siegall:]

We speak with KOLs about – concerning Hodgkin lymphoma around the globe, of course. But our territory is where we focus on.

[Unknown Speaker:]

Sure.

[Clay B. Siegall:]

But certainly, we're involved in meetings around the globe and understand how ADCETRIS is used.

[Unknown Speaker:]

Great. Thank you.

[Operator:]

Thank you. We'll take our next question from Andy Hsieh with William Blair. Please go ahead. Your line is open.

[Andy Tsan-Yu Hsieh:]

Yeah, thanks for taking my question. Just wondering if you could remind us, one, how common is tissue factor expressed in cervical cancer; and two, is there an expression threshold for enrollment in that pivotal trial?

[Clay B. Siegall:]

Thank you for the question. We are really excited about tisotumab vedotin. And Jonathan, may I turn this over to you and you address a little bit about tissue factor and expression?

[Jonathan Drachman:]

Sure. I think the exact percentage is hard to define because it's not clear that there is a threshold that you need. It's on the vast majority of cervical cancer and in fact, many other solid tumors. So it's actually a very exciting target. And we haven't commented on whether or not there would be any requirement for expression for enrollment into the trial.

[Andy Tsan-Yu Hsieh:]

Got it. Thank you.

[Operator:]

Thank you. We'll take our next question from Tazeen Ahmad with Bank of America.

[Tazeen Ahmad:]

Hi. Good afternoon. Thanks for taking my questions. Clay, just wanted to get your thoughts. Roche has been talking a bit more recently about polatuzumab. They might even have some data upcoming at ASH. Wanted to get your thoughts on how you're thinking about that molecule and if you've ever revealed what the terms of your collaboration agreement with Roche are? And then I have a couple of follow-ups.

[Clay B. Siegall:]

Sure. Well, you know what, Eric Dobmeier is here, and Eric can talk a little bit about our terms and relationship with Roche. We also have excitement with GSK and AbbVie and some programs. And Eric, maybe you could give a little overview?

[Eric L. Dobmeier:]

Sure. Yeah, so polatuzumab vedotin is an ADC that targets CD79b, so it's in development for B-cell lymphoma. Roche has reported some data over the years. I can't talk about the latest data. That's for them to do, but they did disclose they've received Breakthrough Designation and PRIME Designation for the program. So it's something that's obviously encouraging, and it would be for them to answer the question about timing for more data. But it's certainly an attractive asset and another option for B-cell lymphoma patients.

[Tazeen Ahmad:]

And then the terms that you have with them, financially?

[Eric L. Dobmeier:]

Oh, the terms. Yeah, the terms – it's one of our earlier deals. The deal was done in 2002 with Genentech. So it's fees, milestones and low-to-mid single-digit royalties on product sales.

[Tazeen Ahmad:]

Okay, perfect.

[Clay B. Siegall:]

Tazeen, we've done a number of ADC deals. Over the years, our terms increased a lot. Genentech came and did a deal ahead of validation of our technology. It's a great deal with upfront milestones and royalties and other fees. And then we have, with GSK, they did a deal at a later time, and it was a little stronger of a deal. And then AbbVie, who has some really exciting data with their brain tumor ADC, it's a little bit of stronger deal. So as we were putting a lot of time and effort and resources into getting ADCETRIS approved and expanded and other programs going, we were able to command higher prices on each of the deals. But basically, the answer to your question is upfront milestone and royalties.

[Tazeen Ahmad:]

Okay. Great. And then just going back to ASH for a second. I know you can't really say the specifics, but is it a possibility that we would see the non-modified PFS numbers there?

[Clay B. Siegall:]

Thanks for the question. We're planning on showing at ASH is our primary endpoint and our secondary endpoint and demographics and safety. And regular PFS is not a primary or secondary endpoint. So we're going to focus on what was agreed upon in our SPA, and we're excited to share the data.

[Tazeen Ahmad:]

Okay. Great. And then the last question for me is historically, Clay, how has uptake happened for ADCETRIS as you got it on indication, has it been more driven by KOLs or community docs? And I guess, I ask that in terms also of the frontline setting, do you think you'll see more initial uptake from community docs and a broader-based patient setting relative to how KOLs might think about using it frontline?

[Clay B. Siegall:]

Yeah. I think you're on to something there. Darren, do you want to make a little comment here?

[Darren S. Cline:]

Yeah, sure. I think as you look at the opportunity with frontline, we see a majority of these patients were diagnosed in the community setting. And therefore, we anticipate they used to be there. As you know, we've been – ADCETRIS has been on commercially available for six years. And so there's a great degree of comfort in using the therapy. So we do see uptake in the community setting right out of the gate.

[Tazeen Ahmad:]

Okay. Thanks.

[Operator:]

Thank you. And we have no further questions at this time. I would like to turn the program back over to our speakers.

[Peggy Pinkston:]

Okay. Thanks, operator. That's all we have today. Thanks everybody for joining us, and have a good evening.

[Operator:]

This does conclude today's program. You may disconnect your line at any time, and have a wonderful day.