Seagen Inc.
Q3 2016 Earnings Call Transcript

Published: 28 Oct 2016

[Operator:]

Good day, everyone, and welcome to the Seattle Genetics Third Quarter 2016 Financial Results Conference Call. Today's call is being recorded. Later, we will conduct a question-and-answer session. At this time, I would like to turn the conference over to Peggy Pinkston, Executive Director, 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 2016 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 & Development; and Darren Cline, Executive Vice President, Commercial. Following our prepared remarks today, we will open the line for questions. If we're 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 the 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 file from time to time with the SEC, including the company's Form 10-Q for the quarter ended June 30, 2016, for information concerning the risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. With that, I'll turn the call over to Clay.

[Clay B. Siegall:]

Thanks, Peg, and good afternoon. Thank you for joining us. This quarter marks the five-year anniversary of the U.S. approval of ADCETRIS. Since then, more than 30,000 lymphoma patients have been treated worldwide, and we have made a meaningful impact on patient outcomes. The approval has also enabled Seattle Genetics to transition from an R&D company to a commercial oncology organization. Over the past five years, we have been steadily growing the ADCETRIS business, while also advancing important phase 3 trials designed to address additional unmet medical needs and expand the market opportunity. In parallel, we have continued our commitment to expanding and advancing our pipeline. Now, in addition to ADCETRIS, we have a proprietary phase 3 clinical program, vadastuximab talirine, or SGN-CD33A, for acute myeloid leukemia. And we recently reported promising data from enfortumab vedotin, or ASG-22ME, in urothelial cancer. These programs are in addition to nine other clinical and late-stage preclinical programs for both hematologic malignancies and solid tumors. Our progress is moving us closer to our goal of becoming a global multiproduct oncology company. This afternoon, I'll highlight recent activities across our lead programs. First, we have made substantial commercial progress with ADCETRIS and reported record net product sales in the third quarter. Total revenues in the third quarter were $106 million. This includes ADCETRIS net sales of $70 million, up 19% compared to the third quarter of 2015. Based on our performance to-date, we are tightening our guidance, and now expect 2016 ADCETRIS net sales in the U.S. and Canada to be in the range of $260 million to $270 million. And clinically with ADCETRIS, we reached another exciting milestone during the third quarter. In August, we reported positive top line data from the phase 3 ALCANZA clinical trial in CD30-expressing cutaneous T-cell lymphoma. This represents the fourth consecutive positive outcome from an ADCETRIS pivotal trial. We reported that the trial met its primary endpoint, demonstrating a highly statistically significant improvement in the rate of objective response lasting at least four months, or ORR4, versus the control arm as assessed by an independent review committee. The ORR4 was 56.3% in the ADCETRIS arm compared to 12.5% in the control arm. The p value was less than 0.0001. Key secondary endpoints, including progression-free survival, complete response rate and reduction in the burden of symptoms during treatment were all highly statistically significant in favor of the ADCETRIS arm. The safety profile of ADCETRIS was generally consistent with the existing prescribing information. We are pleased that the full dataset from ALCANZA will be featured in an oral presentation at ASH in December. We plan to submit a supplemental BLA to the FDA in the first half of 2017 seeking an indication for ADCETRIS in CTCL. Now, I'd like to turn to the ECHELON-1 phase 3 trial in frontline Hodgkin lymphoma. Today, we're updating our expected timeline for top line data from ECHELON-1 to be during 2017, an update from our previous expectation of data in the 2017 to mid-2018 timeframe. ECHELON-1 was designed to redefine the way newly diagnosed advanced Hodgkin lymphoma patients are treated. Our goal is to improve progression-free survival among these generally young cancer patients by establishing an ADCETRIS-containing regimen called A plus AVD as the new standard of care. Lastly on ADCETRIS, very soon we expect to complete enrollment of 450 patients to the ECHELON-2 phase 3 trial in frontline mature T-cell lymphomas. The unmet need in T-cell lymphoma is significant, as these are generally aggressive forms of non-Hodgkin lymphoma that are currently underserved by existing chemotherapy regimens. Our goal with ECHELON-2 is similar to ECHELON-1, to redefine the frontline standard of care for mature T-cell lymphomas to be an ADCETRIS-containing regimen called A plus CHP. We plan to complete enrollment soon, and we expect top line data in the 2017 to 2018 timeframe. I will now turn to our next most advanced clinical stage program, vadastuximab talirine. We are conducting trials in AML and myelodysplastic syndrome, both of which broadly express CD33. Our planned initial registration pathway is in frontline older AML, which we are evaluating in a global phase 3 trial called CASCADE. This randomized trial is comparing SGN-CD33A plus decitabine or azacitidine to either of these hypomethylating agents alone with planned enrollment of 500 patients. We believe SGN-CD33A has the potential to improve overall survival in a disease setting where outcomes have not meaningfully changed in decades. Our SGN-CD33A program also includes several earlier-stage trials in AML and MDS. Notably, we are evaluating SGN-CD33A in combination with the chemotherapy regimen known as 7+3 in younger AML patients. We are pleased that the first data from this trial as well as three other SGN-CD33A abstracts were accepted for oral presentations at the ASH meeting in December. I'll move on now to two ADC programs that we are co-developing with Astellas

[Darren S. Cline:]

Thanks, Clay. Q3 was a strong quarter, reaching $70 million in ADCETRIS net sales for the first time. We delivered sales growth of 6% over the second quarter of 2016 and growth of 20% for the year-to-date compared to the first nine months of 2015. In addition to sustained high patient shares in our initial launch label indications, we are pleased with the results of our ongoing efforts to establish ADCETRIS consolidation as standard of care for Hodgkin lymphoma patients at high risk of relapse following transplant or the AETHERA setting. The commercial team is continuing to raise awareness among physicians of the importance of assessing patient risk of relapse as well as supporting the transition of patients on ADCETRIS consolidation from the transplant center back to their referring oncologist. Our commercial team continues to prepare for the launch of the potential new ADCETRIS indication in CD30-expressing CTCL, based on the strong results of the phase 3 ALCANZA clinical trial. While ADCETRIS was added to the NCCN guidelines for CTCL in early 2015, we believe that being able to promote ADCETRIS in this indication will increase the number of patients treated with this rare disease and deliver incremental ADCETRIS revenue. With our vision for ADCETRIS to be the foundation of care for CD30-expressing lymphomas in mind, we look forward to the results of our ECHELON-1 and ECHELON-2 trials, which could bring ADCETRIS into the frontline treatment of advanced HL and CD30-expressing MTCL. We plan to be commercially prepared for these additional indications, subject to approval. In closing, the ADCETRIS business is strong, and we look forward to updating you on our progress as we continue to support and grow the brand. Now I'd like to turn the call over to Todd to discuss our financial results.

[Todd E. Simpson:]

Great. Thanks, Darren, and thanks everyone for joining us on the call this afternoon. In addition to significant pipeline progress, we once again had a very strong quarter financially with record ADCETRIS sales. Total revenues in the third quarter increased by 26% to $106 million and by 29% to $313 million for the year-to-date in 2016. Revenues included record ADCETRIS net sales of $70 million for the quarter and $195 million for the year-to-date. As Clay mentioned, we have tightened our guidance for 2016 ADCETRIS net sales in the U.S. and Canada to a range of $260 million to $270 million. Collaboration revenues in 2016 increased to $24 million for the year-to-date. And royalties increased to $12 million in the third quarter and to $54 million for the year-to-date. Excluding the $20 million milestone payment recorded in the first quarter, royalty revenues for the first nine months of 2016 increased by 19%, reflecting strong ADCETRIS sales growth by Takeda in its territory. R&D expenses increased to $93 million in the third quarter and to $271 million for the first nine months of 2016. The year-to-date increase over 2015 reflects investments in ADCETRIS, SGN-CD33A and our growing pipeline. We are narrowing our 2016 R&D expense guidance to be in the range of $370 million to $390 million, which is within our previous guidance. SG&A expenses were $35 million for the third quarter and $98 million for the year-to-date. We ended the quarter with $632 million in cash and investments, and now are in a strong financial position to drive our key initiatives forward. With that, I'll now turn the call over to Jonathan.

[Jonathan Drachman:]

Thanks, Todd. Good afternoon, everyone. As Clay discussed, we've made tremendous progress at Seattle Genetics, and there are important developments and data disclosures with our lead programs, ADCETRIS, SGN-CD33A and ASG-22ME, as well as our growing clinical pipeline. I will begin with ADCETRIS, which continues to generate impressive clinical data, including more than 20 presentations just this past week at the International Symposium on Hodgkin Lymphoma in Cologne, Germany. Data were featured from studies that span the entire range of treatment for Hodgkin lymphoma, from frontline elderly to salvage, consolidation and relapsed/refractory settings. And at ASH in December, there will be many more ADCETRIS presentations highlighted by the first disclosure of the complete results from the positive phase 3 ALCANZA trial and interim results from our ADCETRIS plus nivolumab trial in relapsed Hodgkin lymphoma. Importantly, as patients from earlier trials continue to be followed, multiple datasets demonstrate that ADCETRIS can achieve durable long-term remissions, either as monotherapy or as part of novel combination regimens. As published last quarter in the journal Blood, the five-year overall survival rate was 41% in our pivotal trial of ADCETRIS monotherapy for relapsed/refractory Hodgkin lymphoma patients who had failed in autologous stem cell transplant. And earlier this week in Cologne, we reported updated data from the phase 3 AETHERA trial, demonstrating sustained benefit approximately four years since the last patient was enrolled. Also at ISHL, we showed that the combination of ADCETRIS and dacarbazine appeared to increase the durability of response without increasing toxicity in this frail population. The current data demonstrate an estimated PFS of 49% and survival of 95% after two years. And finally, at ASH, we will present four-year survival and durability data from our phase 1 trial of ADCETRIS plus CHP in frontline MTCL and five-year survival data from our pivotal phase 2 monotherapy trial in relapsed and refractory systemic ALCL. Taken together, in the five years since approval, we've accumulated substantial data suggesting that ADCETRIS is improving long-term outcomes for patients with CD30-expressing lymphomas. Another exciting development is our clinical collaboration with Bristol-Myers Squibb, under which we're evaluating ADCETRIS in combination with nivolumab. In addition to the two ongoing clinical trials, one in second-line Hodgkin lymphoma and one in relapsed and refractory non-Hodgkin lymphoma, we recently expanded our collaboration to evaluate the combination of ADCETRIS and nivolumab in frontline older Hodgkin lymphoma patients, continuing our efforts to identify a well-tolerated and curative regimen in this frail population. We're also expanding the non-Hodgkin lymphoma trial that Bristol-Myers is conducting to evaluate the combination of ADCETRIS and nivolumab in primary mediastinal B-cell lymphoma and gray zone lymphoma, two subtypes of large B-cell lymphomas that generally express CD30. We are enthusiastic about the progress under our collaboration with Bristol-Myers and pleased to be extending our investigation into these additional disease areas. Now, turning to acute myeloid leukemia, vadastuximab talirine continues to be a major focus of our clinical group with five ongoing clinical trials. The CASCADE phase 3 trial is off to a strong start, with investigator enthusiasm and patients being enrolled around the world. SGN-CD33A will be featured prominently at ASH with four oral presentations, including the first interim data for SGN-CD33A in combination with 7+3 for younger frontline AML. As Clay discussed, we recently reported at ESMO that ASG-22ME has demonstrated promising phase 1 data for patients with relapsed and refractory urothelial cancer, which remains a population with significant unmet need. We look forward to working closely with our partner, Astellas, and talking with regulatory agencies to define next steps for this program. Turning now to the rest of our pipeline, there are a number of upcoming events. In November, the first clinical data from SEA-CD40 will be presented at the Society for Immunotherapy of Cancer Annual Meeting or SITC. SEA-CD40 is a novel immuno-oncology agent targeted to CD40 utilizing our proprietary sugar-engineered antibody technology. In December, we'll present additional data on SGN-LIV1A at the San Antonio Breast Cancer Symposium. LIV1A is in a phase 1 trial for metastatic breast cancer, in particular, triple negative disease. And we're continuing to advance innovative and exciting programs from our research group into clinical trials. These include three ADCs and a novel immuno-oncology small molecule. First, we recently initiated a phase 1 trial with SGN-CD123A in AML. CD123 is expressed across AML subtypes, and is particularly prominent on leukemic stem cells, which are difficult to kill and may be responsible for high relapsed rates. Second, we're on track to initiate a phase 1 trial with SGN-CD352A for multiple myeloma within the next few months. Third, we're advancing SGN-CD48A towards clinical trials for multiple myeloma. SGN-CD48A utilizes our latest ADC technology, including a new highly stable hydrophilic linker more drugs per antibody and increased antitumor activity in vitro and in vivo. Preclinical data will be described in a poster presentation at ASH, and we plan to submit an IND for a phase 1 trial during 2017. And fourth, we're advancing SGN-2FF into a phase 1 trial for solid tumors during 2017. SGN-2FF is a small molecule immuno-oncology agent that can enhance activity of multiple arms of the immune system by inhibiting the addition of fucose to proteins. Preclinical data from SGN-2FF will be presented at the SITC meeting next month. Finally, we've decided to discontinue further development of SGN-CD70A. This anti-CD70 ADC was evaluated in a phase 1 trial for non-Hodgkin lymphoma and renal cell carcinoma. While treatment resulted in objective responses, these data did not meet our criteria for advancing to later-stage development within our robust portfolio. We're excited to have encouraging data in multiple programs across both hematologic malignancies and solid tumors. Our R&D team continues to perform innovative cutting-edge research to maintain our leadership in the ADC field as well as expanding into the area of immuno-oncology through both proprietary programs and novel combinations of checkpoint inhibitors with our ADCs. Now, I'll turn the call back over to Clay.

[Clay B. Siegall:]

Thanks, Jonathan. Before we open the line for questions, I'd like to recap a few of our key upcoming activities. For ADCETRIS, these include

[Operator:]

Thank you. We'll take your first question from Michael Schmidt with Leerink Partners.

[Michael Schmidt:]

Hey, good afternoon. Thanks for taking my questions. Clay, one on ASG-22ME. What is your latest thinking here on the potential path to market? I saw you expanded the trial to look more in checkpoint inhibitor, experienced patients. Is that sort of a more likely scenario that you could envision the drug to achieve registration then?

[Clay B. Siegall:]

Yeah. Thank you for the question. And you've seen correctly. We have a partnership with Astellas on this program. The partnership is strong. And our interpretation of it is that both of the partners are really excited with the data. We presented at ESMO, as you know. And both programs, ASG-22ME and ASG-15ME, had exciting data, with ASG-22ME being prioritized. And I think that our priority is to try to go into later-stage trials. One of the areas, as you noted, we're expanding into even more than we already started were in patients that have previously seen immuno-oncology agents, particular PD-L1 and PD-1 inhibitors, which are obviously benefiting patients. And it's exciting that these immuno-oncology agents are available now for these patients with urothelial cancer. But that's the good news. The bad news is, it's 20% or less of the patients that actually respond well. And so, the vast majority of patients still need therapy. So, it really makes sense for us to look at patients that have experienced immuno-oncology agents and then need something else.

[Michael Schmidt:]

Okay. Great. Thanks. And then one on the ECHELON-1 trial where the data is coming up in 2017, as you said. So, as I understand it, the trial is conducted in stage 3/4 patients in frontline. And my question is, it's obviously an early question, but would you expect the label to potentially reflect the studied patient population? And I'm asking because in speaking with KOLs, it appears there is a potential for the drug in a broader patient population, potentially in the frontline setting. How do you think about that constellation?

[Clay B. Siegall:]

It really depends on data and depends on working with regulators on that. We're excited for ECHELON-1 to – now our guidance will be 2017. I think that we might be able to look at the AETHERA label. And see that with AETHERA, while we did have different patient populations entering the label in working with regulators was in advanced Hodgkin lymphoma. And so that is something that may occur here. It depends on a lot of factors, but I certainly wouldn't be – it wouldn't be surprising to see a label saying advanced Hodgkin lymphoma. I mean, it also is possible it could say, stage 3 and stage 4 as well, but I think that's something we'll be keeping a very close eye on going forward.

[Michael Schmidt:]

Okay. Great. Thank you very much.

[Operator:]

Next question will come from Kennen MacKay with Credit Suisse. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Hi. Thanks for taking my questions. Maybe one for, gosh, Darren or maybe for Clay. So, in CTCL, I was just wondering if you could walk us through where we should be anticipating growth based on inclusion of this indication in the label as opposed to off-label usage from NCCN guidelines. Is this going to be more focused on sort of patient identification and screening, or how should we be thinking about that?

[Clay B. Siegall:]

Yeah. Thanks for your question, Kennen. It's a very good question. Darren, do you want to take a stab at that?

[Darren S. Cline:]

Sure, Kennen. Yeah, we're really excited about the dataset and actually further validates ADCETRIS making a difference in patients' lives. And I think in the CTCL patient population, this patient population is being treated by a more specialty hematologist or oncologist in large centers. And we think by having the label, will give us, the commercial team, the opportunity to really focus-in on who those treating physicians are and be able to raise awareness of the dataset, identify the patients and really talk about the data that we have. And by doing that with our commercial team, we'll be able, we think, to drive incremental revenue of what we're potentially already seeing without a label with just NCCN guidelines. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Got you. Thanks, Darren. And maybe just one additional question sort of commercial focused here. So, on the narrowed guidance, it looks like the sort of low end of the guidance can actually imply sort of a slight decline in next quarter ADCETRIS, quarter-over-quarter. Just wondering if you could help me sort of get a sense as to what kind of scenario that could lead to something like that. I'm just trying to wrap my head around it. And then obviously, on the high end, that would imply about a sort of 7% growth.

[Clay B. Siegall:]

Yeah, business with ADCETRIS is strong. And we guided early on in the year, we're still in our target guidance range. So, I don't want you to read too much into that. There are quarterly variables that happen at end of year, and at different years we've seen different variables. But, overall, keep in mind that this is a 20% year-over-year growth. And that's really important, and that's what's important here ahead of getting data for E1 and then later for E2. Darren, do you have anything else you want to...?

[Darren S. Cline:]

Yeah. No, I think, Clay, you said it. We feel very confident in hitting the new refined guidance range of $260 million to $270 million, Clay alluded to. The business is strong. We do see quarter variability based on seasonal buying factors, selling days in a quarter. But we remain very confident in the guidance range that we've narrowed down here. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Okay.

[Todd E. Simpson:]

Yeah, Kennen, this is Todd. If you just look at our exit rate from Q3 that would essentially put us kind of right in the middle of our guidance. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Yeah, yeah. Okay. Got you. Thanks so much. No, I was just trying to get a sense of whether something else could be coming into play here. Thanks so much for taking my questions.

[Operator:]

From RBC Capital Markets, we'll go to Adnan Butt.

[Adnan Shaukat Butt:]

Thanks, folks and congrats on all that clinical progress. So, first, I have to ask ECHELON-1, when in 2017, and do you expect to tighten that timing further? And assuming results are positive, is there any commercial or manufacturing cut that needs to be done before you expand into the frontline population?

[Clay B. Siegall:]

Yeah. So, as far as the manufacturing and all that, we are ready to go. So, we are ready to support patients in need, so that is not an issue. As far as the timing goes, we will not confirm or deny that we will be changing or updating this. I think that the timing is pretty good and it may stay the same. So, I wouldn't say that there's any expectations for us to change guidance at this point, because we'll be in 2017 within two months. So, we're happy that we have been able to narrow the guidance for when E1 comes out, and really looking forward to hitting our goal of changing the life history of Hodgkin lymphoma patients by increasing the activity of the frontline therapy with the addition of ADCETRIS and the removal of bleomycin.

[Adnan Shaukat Butt:]

Okay. And then, if I can get a question on SGN-CD33A. The company made a decision pretty quickly for older patients. Do you think the decision for a next pivotal for SGN-CD33A, how close is the company for deciding something like that?

[Clay B. Siegall:]

So, yeah, we're excited with the program. We're excited that CASCADE is underway. And the trial so far has been strong. We're pleased with how the trial had been initiated, and all the trial sites opening and accruals. So everything is doing great with CASCADE. As far as doing additional trials, I think it's a goal of ours to have multiple phase 3 trials with this program, but the rest of our data are a little earlier. We intend to present at ASH the younger patients with 7+3 in combination with SGN-CD33A. We have a trial going on in myelodysplastic syndrome amongst many different trials. So, I think that to us, it's a very important program in an area where it is one of the largest unmet medical needs of any cancer. And so, we are really excited to be trying to really make progress for all those patients that need additional therapies.

[Adnan Shaukat Butt:]

Okay. Thank you.

[Operator:]

And we'll go to Cory Kasimov with JPMorgan.

[Cory W. Kasimov:]

Hey, good afternoon, guys. Thanks for taking the questions. I guess, first, to follow up on the SGN-CD33A program. With the data that we're going to see at ASH in combination with 7+3, are you able to say roughly how many patients or how much follow-up we might see in San Diego?

[Clay B. Siegall:]

I'll turn that over to Jonathan and see what Jonathan is willing to tell you.

[Jonathan Drachman:]

All right. So, Cory, thanks for the question. We can't disclose exactly the details of the number of patients or the follow up. The study has been going on for a while, not a huge amount of time. And just as a reminder to people about the frontline younger patients and what the goal is. This is really an area where more than half the patients are treated aggressively with 7+3 or a similar regimen with an intent to try to cure those patients. There're pretty high CR rates, and there is a substantial number of patients who are cured with 7+3 consolidation with or without allogeneic transplant in remission. So, it is a complicated space. It's really like trying to redefine frontline therapy with curative intent. So it's something that we're looking at really closely. We're excited about our interim data. And when we present it, I think it'll be a good time to evaluate whether we feel like we're making a difference at that time and then what our next steps will be.

[Cory W. Kasimov:]

Okay.

[Clay B. Siegall:]

We're also going to be presenting data on type of endpoints such as minimal residual disease. And I think that that's something that, along with CRs, how good is the CR? And that's been an emerging force in AML that I think regulators are looking at and doctors are looking at is, what matters? What is a real good response? And it goes back to are CRs all the same, or is an MRD-negative CR better, which a lot of people conjecture. So, we're on the leading edge of that, and we're trying to really work at that. We've talked about this before at various venues. But that's something to continue looking at with our data and looking at what our MRD-negative CR data look like.

[Cory W. Kasimov:]

Okay. Okay. That's helpful. And then I had one other follow-up, another upcoming clinical question. That's for the SEA-CD40 trial at SITC. Just curious if that's an all-comers type of study, or did you enrich for a particular tumor type?

[Jonathan Drachman:]

Yeah. So that trial was opened for patients with solid tumors. And the data that we'll be presenting at SITC are going to be interim data during dose escalation. So, it, at this point, has not been particularly enriched for any population. We have recently expanded the trial to open it to lymphoma patients as well.

[Cory W. Kasimov:]

Okay. All right. Perfect. Thanks, guys.

[Operator:]

From Barclays, we'll go to Geoff Meacham.

[Geoff Meacham:]

Hey, guys. Thanks for taking the question. One on ECHELON-1, then I have a follow-up. I know a lot has been made of the timelines for data. I'm assuming the update today is based on the event rate. So, Clay, was there anything that implied there that was surprising, or maybe not within what you guys were thinking? And obviously, you win on efficacy, but what can you tell us so far about the tolerability assumptions with the ABVD and discontinuations, in particular?

[Clay B. Siegall:]

Well, first of all, keep in mind that when we started with our guidance of 2017 through 2018, we had – the number of patients in that trial was initially a little more than 1,000. And then we decided and made an announcement to add 300 additional patients to now be over 1,300 patients in the trial. And we didn't change our assessment, or our guidance, I should say, of 2017 through 2018 until we started to get a handle on the trial and how it was progressing in total. And so, we've made that change. So I think considering the addition of the patients into the trial, this makes a lot of sense to us. And so, this is not surprising to us. It's really the intention of expanding a trial is to try to bring in a trial. So, I think it totally makes sense. The second part of your question – oh, yeah, the safety. We can't report data on this trial while it's ongoing. I can tell you that from our lead-in trial in ECHELON-1, the safety was as expected. And we know ADCETRIS incredibly well. We've now treated more than 30,000 patients with this drug. We've put it in combination with probably a dozen different regimens. We know its safety profile; docs know its safety profile. And from the lead-in study, there was nothing that was surprising or differentiated that we didn't already know about this drug. And so, while I can't tell you anything about the trial, we certainly had a data safety monitoring group with the trial. And we are now no longer treating anybody. Everyone has been treated and off drug. So, that is all done.

[Geoff Meacham:]

Got you. Okay. That's helpful. And then, second question is, our brand ImpactRx data, it says very limited uptick so far for Opdivo in Hodgkin's. Is that surprising to you guys? When you think about combination therapy, you called out older patients if you go to a combination in first-line, but are there any other subpopulations that you feel like you can get a trial done in a reasonable timeframe?

[Clay B. Siegall:]

First of all, we are doing a combination with ADCETRIS and Opdivo. And we're very proud of our collaboration with Bristol-Myers Squibb. We're excited about, I believe based on their comments, they are. They've even recently expanded it. As we pointed out in our prepared remarks that the trial now has additional – or there are additional trials going on within our collaboration. So that's exciting. We expect to present data on first of our trial at the ASH conference, so you could see that. In fact, we are also expecting that there's going to be a second presentation at ASH from investigators that are combining the drugs, because both are commercial. So there's a lot going on there. I think there are opportunities to test these and move them into populations of patients that are perhaps underserved. But our vision is that for frontline, ADCETRIS plus AVD will be what is the dominant regimen. And that our expectation is that our data will be good. And obviously, we don't have the data yet. But our lead-in trial, the data was superb. And if it's anything remotely close to that, we think that we will change the frontline therapy of Hodgkin lymphoma after 40 years of using ABVD. And at that point, after that, there'll be much less patients to treat, so that our hope is the cure rate goes up substantially. And so for those patients that still need additional therapy, one opportunity could be ADCETRIS/nivolumab. And I think that that is something that we're excited to pursue. And that's why we're doing this -- part of the reason we're doing the collaboration with Bristol. And you will see data of ADCETRIS plus nivolumab in second-line. Additionally, we have some really nice data of ADCETRIS plus bendamustine in the second-line. And so, I think that there are going to be options for the patients, and, hopefully, the very few patients that don't go into long-term CRs with ADCETRIS AVD. Jonathan, do you have anything you would like to add to these comments?

[Jonathan Drachman:]

Well, I think in Hodgkin lymphoma, we are looking at opportunities to combine with checkpoint inhibitors or nivolumab in the population that aren't addressed by the ECHELON-1 trial. So, those would be the frontline elderly, the salvage population and relapsed/refractory with the ECOG study that Clay referred to. So I think we're looking at all those populations, as well as in non-Hodgkin lymphoma.

[Geoff Meacham:]

Got you. Thanks, guys.

[Operator:]

We'll go next to Tazeen Ahmad with Bank of America.

[Tazeen Ahmad:]

Hi. Good afternoon. Thanks for taking my question. One on SGN-CD33A, if I might, just to follow up on some of the conversations we've been having so far on the call. Obviously, this is going to be something that we're all going to be looking for at the ASH meeting, but in terms of how you're thinking of its profile versus other drugs that are in development, there are few companies that are trying to go for similar populations in AML, whether it be AbbVie, Otsuka, Boehringer or a number of other companies. What should we really be looking for? Should we be looking for differences in efficacy or safety at this early stage?

[Clay B. Siegall:]

Well, thanks for the question. Clearly, there are a lot of companies out there working in cancer, and there's other companies working in the leukemia space and looking at AML. We're very pleased that they are quite frankly, because we're AML patient supporters, and this is a tough disease. And it may not just take any one of these drugs. We may need many drugs to really impact them, like has been seen with other diseases, where having multiple ways to treat is always a benefit for the patient. So, we're pleased that there are other drugs. And I think that we are very pleased with our program. We're pleased that we're able to transition exciting data into phase 3 and get this trial open and enrolling. There are quite a number of drugs like you bring up AbbVie with venetoclax. That's a very interesting drug that they have approved for CLL. And we know that they have made presentations in AML space. We've not yet heard any specifics of a phase 3 trial, but they certainly presented data showing that the drug is active at AML. There're other drugs that are also active in AML. There's other hypomethylating agents. There is HDAC inhibitors. There're BCL-2 inhibitors. So, there are few, but as far as a drug targeted with an antibody and delivering cytotoxic like our antibody-drug conjugate, we're very happy with our positioning in this field and think that this could make a big difference for patients. And because SGN-CD33A is expressed on all these tumors that with AML, basically all of them could be very user-friendly from a combination standpoint, much like ADCETRIS is user-friendly from a combination standpoint in Hodgkin lymphoma. Because CD30 is expressed on all Hodgkin lymphoma, basically, and we could use it in combination with other types of therapies, whether they be old-school therapies, like cytotoxics or newer therapies like some of the checkpoint inhibitors. So, we think that ADCs make extraordinary regimen partners, if you will, with other drugs. And we're going to continue doing that.

[Tazeen Ahmad:]

Okay. And then one question on ADCETRIS, if I might. Are you able to give us a little more granularity on the quarter-over-quarter impact from price hike versus volume demand?

[Clay B. Siegall:]

I'm sorry.

[Peggy Pinkston:]

Yeah. Just the impact of demand versus price.

[Todd E. Simpson:]

Yeah. Oh, sure. It was majority driven by volume. We really had a really strong quarter, driven mostly by demand. It was really true demand.

[Tazeen Ahmad:]

Okay. Thanks.

[Operator:]

Moving on, we'll hear from Andrew Berens with Morgan Stanley.

[Andrew Scott Berens:]

Hi. Thanks guys for taking the question. Two questions. One on ADCETRIS as a consolidation setting. Just wondering if you could give us some color around the usage pattern you're seeing, like the number of cycles on the docs you're using currently relative to where the data in the trials were. And then I wanted to ask a question to follow up on Opdivo plus ADCETRIS.

[Clay B. Siegall:]

Sure. Darren, would you like to talk a little bit about what we call the AETHERA regimen or consolidation?

[Darren S. Cline:]

Absolutely. Yeah. We're really pleased with the progress thus far. We've got the label a little over a year ago. This is a new treatment paradigm for physicians, for transplanters that really had nothing, that really watched and waited and see what patients' outcome prior to the AETHERA setting. We're pleased with the progress. Our market penetration rate is about 50% in the AETHERA label patient population. Our duration is about nine to 10 cycles. But we still have plenty of opportunity ahead of us. We're pleased, but we continue to raise awareness with the transplanters around the risk of relapse for these patients. As well as when the treatment decision's been made, that we ensure that once it's been decided at the transplant center that it gets transitioned back to the community of physician, and we keep duration going. So, again, really pleased with our progress. But we feel we're well on our way to make it the standard of care in this post-transplant setting.

[Andrew Scott Berens:]

Okay, great. And then in regards to Opdivo and ADCETRIS, at ASH, is that going to be an oral presentation or a poster presentation?

[Darren S. Cline:]

Oral presentation.

[Andrew Scott Berens:]

It will be oral. Okay.

[Darren S. Cline:]

Yeah.

[Andrew Scott Berens:]

Yeah. Congratulations on that. You have a lot of orals, it seems. In terms of Bristol's incentive to do this, is it driven – I mean, I know you're doing it in elderly patients who probably can't tolerate chemotherapy, but is it driven by difficulty combining Opdivo with AVD, do you think? Is that part of the reason they want to test it in this setting? Or do they feel like it'd be very difficult if ECHELON-1 is positive to ever penetrate the frontline setting? I'm just curious to why you guys think they're expanding that cohort or going into that new indication, I guess.

[Darren S. Cline:]

Right. So, I think that you're talking specifically about the elderly?

[Andrew Scott Berens:]

Well, in the frontline.

[Darren S. Cline:]

In frontline elderly? Yeah, I think that's an important unmet need. And I think that in the younger patients, it's not clear that there will be an unmet need after ECHELON-1 reads out. I mean, that's at least our perspective. I can't speak for where Bristol-Myers is.

[Andrew Scott Berens:]

Right. Okay. Is there any concern, though, that AVD plus Opdivo may not be as effective, given the impact on the immune system?

[Darren S. Cline:]

I can't speak to that. Yeah.

[Clay B. Siegall:]

We don't have data on AVD/Opdivo, if that's what you're referring to. And whether or not checkpoint inhibitors need an intact immune system to have full power or not is also – is uncertain. I don't know that there's a ton of studies on that. Certainly, you could combine Opdivo with a number of drugs, but AVD is heavy-duty chemotherapy.

[Darren S. Cline:]

But, maybe I'll just take a moment to speak to the general feeling that ADCs might be ideal partners for checkpoint inhibitors, not just with ADCETRIS, but across the field of cancer, because they do in a targeted way kill the tumor cells, release antigen and we've shown now that the auristatin payload can also cause an immunogenic cell death, which helps cause a more inflammatory microenvironment. So, we're really excited about the whole concept of combining ADCs with checkpoint inhibitors going forward.

[Andrew Scott Berens:]

Okay. Thanks a lot. I appreciate it.

[Operator:]

From Goldman Sachs, we'll hear from Salveen Richter.

[Thomas Trimarchi:]

Hey. This is actually Tom on for Salveen. Thanks for taking the question. I just wanted to come back to the commercial side for ADCETRIS, following up on a prior question. So, if we look at the narrowed ADCETRIS guidance, can you confirm whether you're seeing any kind of pressure on underlying demand from commercial PD-1s or PD-1 clinical trials as those start to ramp up?

[Clay B. Siegall:]

What I could tell you is that we just had a record quarter for ADCETRIS, and on top of the quarter before that was a record quarter. And the PD-1s are out there, and they've been out there all quarter and/or at least nivolumab. And so, we still see ADCETRIS being a very important drug that is widely used for its labels. We also have ADCETRIS that's in guidelines for a number of different indications. And so, we do not see what you are suggesting is some kind of sell-off or decrease or impact on there. We hear that the checkpoints are used a lot according to their label, which is after ADCETRIS. And so, we don't hear a lot different than that, but the sales of ADCETRIS have been very strong. And so, we're delighted to say quarter-after-quarter record ADCETRIS sales.

[Thomas Trimarchi:]

Okay. Great. Thanks again for the question.

[Operator:]

Next we'll hear from Mara Goldstein with Cantor Fitzgerald.

[Mara Goldstein:]

Thanks very much for taking the question. I had a question on the SGN-CD33A trial with the hypomethylating agents. And I'm just curious as to given the diversity of the datasets regarding hypomethylating agents in AML, how this might affect the powering of the trial, and how you came to the conclusions around the power for the trial, if you're able to speak to that?

[Clay B. Siegall:]

Sure. Jonathan, do you want to take that?

[Jonathan Drachman:]

Sure. So, Mara, we can't speak to the exact statistical underlying assumptions in the trial. The other thing I would say about, as you look across AML at different datasets in older unfit patients, it's very hard to compare from one trial to another, because the exact patients that get enrolled are quite variable. And we really felt like – that's why we felt like it was important to move to a randomized setting to really understand the impact of SGN-CD33A with hypomethylators.

[Mara Goldstein:]

And within the context of the study and defining it out, and again, sort of this issue around the diversity of the trials and the datasets, we've seen different things, particularly as it relates to different histologies. And is that something that we should expect to look at upon sort of subset analysis of this trial?

[Jonathan Drachman:]

I'm not quite sure what you mean by histologies. There's lots of different subtypes of AML.

[Mara Goldstein:]

Subtypes, excuse me, sorry.

[Jonathan Drachman:]

Yeah. I think in the older patients, you tend to see patients who are unfit due to either advanced age or frailty or underlying myelodysplasia or other things that are poor risk factors. So, because SGN-CD33A is expressed on essentially all AML, we're able to enroll that broad group of patients who are not eligible for intensive therapy.

[Mara Goldstein:]

Okay. All right. Well, thank you. I appreciate it.

[Operator:]

From SunTrust Bank, Yatin Suneja.

[Yatin Suneja:]

Hi, guys. Thank you for taking my question. Just a couple questions on the bladder cancer program. You touched on the efficacy profile for both the programs. Could you maybe talk about your comfort with regards to the safety profile and what about the ocular AEs that we saw earlier in the trial? Thank you.

[Clay B. Siegall:]

Yeah. Thanks for the question, Yatin. So, with ASG-22ME and ASG-15ME, we certainly outline the efficacy. With ASG-22ME, we saw 59% objective response rate; with ASG-15ME, we saw 50%. So, both of them have outstanding, with ASG-22ME being a little bit higher in the expansion cohort. As far as safety goes, they both are well tolerated. Now, the ocular toxicity that we reported at ESMO was really seen more in the ASG-15ME trial. And so, when you look at the data – they had some different toxicities. All cancer drugs have some sort of toxicity that you look at and you balance, and you see what the benefit/risk profile of that is. And I think that we said in this call that we're prioritizing ASG-22ME. And that, at least on two fronts, you can see from our ESMO data. One is that we have a slightly higher objective response rate with ASG-22ME. And on the safety front, it's a much reduced, if any, ocular toxicity issue that you see with the ASG-15ME. So, just from that standpoint, it made sense to us to prioritize ASG-22ME. And I hope that makes sense to you.

[Yatin Suneja:]

Sure, definitely. And then, so, on ASG-15ME, could you study that compound in any other indication? And then we read some literature and there is some expression in the eyes. Could that be a problem in future development, if you plan to study ASG-15ME in, let's say, any other indication?

[Clay B. Siegall:]

That's something what we have not announced what we're specifically doing. I think when we started this and had these two products for urothelial cancer, I think that if you had told me before we did that we would have both of them having a 50% or greater objective response rate, I'd have been delighted, because that is way higher than anything else reported. And the fact that both of these, as antibody-drug conjugates, one targeted to Nectin-4, which is ASG-22ME, and one targeted to ASG-15ME to SLITRK6, both had that kind of efficacy and a relatively safe profile. I would be delighted. And the fact is that, like I said, ASG-22ME may have slightly better attributes in the efficacy and safety standpoint. So, we're focusing on that. So, as far as what we're going to do with ASG-15ME going forward, that's something that we're not prepared really to discuss. That would be something we'd have to discuss with our partners at Astellas. But let's just focus on ASG-22ME as really what we're going to be prioritizing.

[Yatin Suneja:]

Great. Thank you very much.

[Operator:]

And we'll hear from Tony Butler with Guggenheim Partners.

[Tony Butler:]

Yes. Thanks very much for including me. The question is around LIV1A, which I find very fascinating, and more importantly, will we actually have only triple-negative breast cancer data? Will there be some HER2 negative data as well at San Antonio? Moreover, will you actually have not only objective response rates, but any PFS rates that will have occurred in this particular study? Thanks very much.

[Clay B. Siegall:]

Yeah. So we have two different cohorts with LIV1A. One is triple-negatives, and then we added a separate cohort of patients that are HER2 positive. And this is done in combination with Herceptin. And so, we were excited to add that second cohort, but that is newer. So, as far as what we plan to present this year at a conference like San Antonio would be focused on the triple-negative data. And as far as the specifics of the data and what type of responses, that we'll just have to wait till the conference.

[Tony Butler:]

And, Clay, just one additional point there. Will we actually get responses? Will we actually see that other than just safety data?

[Clay B. Siegall:]

Absolutely. I mean, look, we've already reported that there is efficacy with this, objective responses with LIV1A. We've not treated more patients. The drug is an active drug. There is no doubt. You'll be seeing additional activity, anti-tumor activity, and additional safety data and things. So, it's something that we're just broadening out what we're doing and trying to really understand this exciting drug. We're especially excited, because more than 90% of breast cancer patients, if you get tumor samples from those patients, they're positive for LIV1A. That gives us a big opportunity to help people. And so, we are studying this. We've made a very effective antibody-drug conjugate that clearly has activity. And it's not as advanced, so I don't want to tell you too much about this. We're not saying, like, we did with SGN-CD33A, we're putting it into the phase 3 today. But it is absolutely a drug of big interest within Seattle Genetics.

[Tony Butler:]

Thank you. And then lastly, how is the enrollment for the HER2 positive cohort coming along?

[Clay B. Siegall:]

What I've heard from the project team is that we are doing very well with the entire program. And so, I think we should leave it just at that.

[Tony Butler:]

Thanks for your time.

[Operator:]

And we'll take the follow-up question from Kennen MacKay. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Hey, thanks for taking my follow-up question. I guess, Clay, this is probably a question for you, and it's relating again to development of ASG-22ME. We've had a lot of conversation about sort of potential development in either sort of post-PD-1 and post-PD-L1 landscape, given atezolizumab's approval. But, I guess I wanted to get an understanding why you wouldn't sort of develop this post-progression on adjuvant or new adjuvant therapy, given that this 59% ORR really is sort of the highest that we have – and is sort of even double what we've seen with the PD-L1s, even in sort of high expressing patients.

[Clay B. Siegall:]

I think it's a really good question. And we're not trying to rule out anything, first of all. We had a question earlier of that we're expanding because you can see on ClinTrial.gov, we were expanding treating patients that have previously seen immuno-oncology agents, PD-L1s and PD-1s, because as you know, also the PD-1 data with Keytruda and Opdivo also look good in urothelial cancer. So, it is our expectation that there'll be multiple checkpoint inhibitors approved in the not-too-distant future for urothelial cancer. So, it's sort of kind of when you treat most patients, they will have pretty quickly seen these drugs. So, one thing as a practical standpoint is, going ahead and treating patients, and in a population where more than 80% of these patients are going to need therapy really fast. So, to us, that seems like a very expedient way to consider looking at development of this. But absolutely, we're going to be looking at other ways and combinations. And Jonathan, would you have anything you like to add to this?

[Jonathan Drachman:]

Yeah. So, Kennen, I think it's a good question. And we're definitely looking at various places where enfortumab vedotin could be useful in bladder cancer. And after chemotherapy, in combination with checkpoint inhibitors or after are all things that we're very interested in. As I mentioned before, the combination with the checkpoint inhibitor may be able to get the response rate that we're seeing with the high durability that is seen in a small percentage of patients with checkpoint inhibitors, and that could be very exciting. Kennen MacKay - Credit Suisse Securities (USA) LLC (Broker) Got you. Okay. Thanks for the follow-up.

[Operator:]

And at this time, there are no questions. I'd like to turn the conference over to management for any additional or concluding remarks.

[Peggy Pinkston:]

Thank you, Operator. And thanks, everybody, for joining us this afternoon. Have a good evening.

[Operator:]

That does conclude today's presentation. We do thank everyone for your participation.