Seagen Inc.
Q1 2015 Earnings Call Transcript

Published: 3 May 2015

[Operator:]

Good day, and welcome to the Seattle Genetics' First Quarter 2015 Financial Results Conference Call. Please note today's conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Peggy Pinkston. Executive Director, Corporate Communications. 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' first quarter 2015 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, Senior 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 based on current expectations. Such statements are only predictions and actual results may vary materially from those projected. Please refer to the documents that we file from time to time with the SEC which are available on our website for information concerning the factors that could affect the results. At this point, I’ll turn the call over to Clay.

[Clay Siegall:]

Thanks, Peg, and good afternoon, everyone. Thank you for joining us today. I'm pleased to update you on our many recent accomplishments and the substantial opportunities both near and long-term for Seattle Genetics. We are increasingly well positioned to continue delivering value from our ADCETRIS program, our deep product pipeline and our leadership position in the ADCs. In the first quarter, we achieved record ADCETRIS net sales of $48.9 million in the U.S. and Canada. Our commercial team is delivering on our goal of ensuring access to ADCETRIS for patients in need Globally, we’ve treated more than 15,000 patients and our partner Takeda continues to make progress in securing additional approvals in its territory. ADCETRIS is now approved in 55 countries worldwide and increased from 50 countries at the end of 2014. To achieve our vision of building ADCETRIS into a blockbuster franchise and establishing as the foundation of care for CD30-positive malignancies, we are executing on the clinical development strategy designed to drive multiple label expansions beginning this year and continuing over the next two to three years. We’ve had several recent regulatory accomplishments. The FDA filed our AETHERA supplemental BLA with priority review and a PDUFA date of August 18, 2015. This is an important milestone towards our goal of expanding the ADCETRIS label and is the first of four Phase 3 trials of ADCETRIS to read out. We’re working with the FDA during their review of this submission and are preparing for a potential label expansion in the third quarter. In Europe, Takeda has submitted the AETHERA data to EMA for approval. The AETHERA trial results were published in the Lancet in March reflecting the scientific importance of these data. The AETHERA data and publication led to the addition of ADCETRIS to NCCN treatment guidelines for use in the setting. This is the fourth addition to guidelines for ADCETRIS in the past 18 months. Another important accomplishment is that we have completed regulatory discussions and agreed on amended SPAs with the FDA for both our ECHELON 1 and ECHELON 2 trials. We are pleased by the outcome of these interactions. The only changes in these two SPAs is to increase enrolment, which are intended to enable the trials to reach the target number of progression events within our original timelines. Data read outs for both trials are expected in the 2017 to 2018 timeframe. As a reminder, ECHELON 1 is comparing ADCETRIS plus AVD to ABVD in front line Hodgkin lymphoma. As a result of the SPA amendment, the target enrolment for ECHELON 1 has been increased by 200 patients to a total of 1240. To date, we have enrolled more than a 1000 patients in these trials. We expect to complete enrolment to ECHELON 1 later this year. ECHELON 2 is a Phase 3 trial comparing ADCETRIS plus CHP to CHOP in front line CD30 positive mature T-cell lymphoma. As a result of the SPA amendment, the target enrolments for ECHELON 2 has been increased by 150 patients to a total of 450. To date, we’ve enrolled nearly 300 patients in this trials. We expect to complete enrolment to ECHELON 2 next year. With ALCANZA, our Phase 3 trial of ADCETRIS for CD30-positive cutaneous T-cell lymphoma, we expect to complete enrolment this year. This would position us for data read out in 2016 and could be the basis for our next label expansion after AETHERA. Beyond ADCETRIS, our pipeline is stronger than ever, our strategy for the past several years to advance multiple targeted agents each year into the clinic is generating results. We’ve reported encouraging clinical activity and tolerability and are planning broader development activities for our most advanced programs SGN-CD33A, and SGN-CD19A. With SGN-CD33A, given the depletion of blasts in bone marrow and tolerability observed in Phase 1, we’ve expanded our clinical program both as a single agent and in combination with other drugs used in the treatment of AML. We expect to report additional data on SGN-CD33A in AML and to discuss potential registration strategies for this promising program later in 2015. With SGN-CD19A, the single agent response rate and lack of significant hematologic toxicity or neuropathy in our Phase 1 non-Hodgkin lymphoma trial enables us to evaluate this anti-CD19ADC with standard combination regimens. We’re particularly encouraged by data in relapsed DLBCL patients where we saw a single agent response rate of 55%. During 2015, we plan to initiate a randomized Phase 2 trial in second-line DLBCL, the study will evaluate the standard second line regimen of Rituxan-ICE plus or minus SGN-CD 19A. The trial is designed to evaluate the ability of SGN-CD19A to increase the completely measured rate in this setting thus enabling patients to receive potentially curative stem cell transplants and to inform potential registration studies. It’s an exciting time for us at Seattle Genetics with multiple opportunities to grow ADCETRIS, identify additional product candidate from our pipeline and continue to impact the way cancer is treated. At this point, I’ll turn the call over to Darren Cline to discuss commercial results of the quarter. After Darren’s remarks, Todd Simpson will discuss our first quarter financial results, then Jonathan Drachman will highlight research and clinical activities. Afterwards, we’ll open the line for questions. Darren?

[Darren Cline:]

Thanks Clay. ADCETRIS revenue for the first quarter was $48.9 million, a 26% increase over Q1 2014. The ADCETRIS franchise is strong and well positioned to meet our expectations in 2015. Seattle Genetics along with our global partner Takeda are executing well on our strategic commercial initiatives. The commercial team continues to focus on identifying appropriate patients and increasing duration of therapy in our labelled indications. During the first quarter, we saw record number of accounts ordering ADCETRIS, this suggest a broadening base of business in both the community and academic settings and further substantiate ADCETRIS as the standard of care in our labelled indications. As Clay mentioned, we’re excited about ADCETRIS being granted priority review in AETHERA consolidation setting, we continue to prepare for commercialization for this potential label expansion and will be ready to launch upon approval. Positioned to identify reducing the risk of post-transplant relapse as an unmet medical need and their interest in utilizing ADCETRIS in this line of therapy is high. With the potential AETHERA approval on the U.S. this year and given our plans to submit these data for approval in Canada this quarter, we intend to increase our presence in Canada to ensure we’re adequately staffed to support our current and future needs. This includes an expanded sales and medical affairs presence in Canada that we will implement this year. Now I’d like to turn the call over to Todd.

[Todd Simpson:]

Thanks Darren and thanks to everyone for joining us on the call this afternoon. Our financial performance in the first quarter of 2015 was driven by record ADCETRIS sales as well as strong royalties in collaboration activities. We ended the first quarter with $296 million in cash investments and this enables us to continue investing in our broad ADCETRIS settlement program as well as our substantial pipeline of clinical stage programs. Total revenues in the first quarter of 2015 were $82.2 million, this is a new quarterly record and included ADCETRIS net sales of $48.9 million, increasing ADCETRIS sales is consistent with our goal of continued growth in our labelled indications while we pursue additional approvals in other CD30-positive malignancies in an earlier lines of therapy. This effort is supported by four Phase 3 trials including the AETHERA trial that is currently under review by the FDA and EMA. Revenues in the first quarter 2015 included royalties of $11.1 million primarily from international sales of ADCETRIS by Takeda in its territory during the fourth quarter of last year. Takeda’s sales surpass $100 billion again in 2014, this increase is the royalty rate, we received on sales above that level from the mid-teens to the high teens which resets annually. With approval now in 55 countries, ADCETRIS has become an important global brand. Collaboration revenues were $22 million in the first quarter of 2015 and increased from $16.9 million in the first quarter of 2014. These revenues were driven by amounts earned under our ADCETRIS collaboration with Takeda and our ADC deals. 2015 revenues included a milestone achieved under our ADC collaboration with AbbVie triggered by its initiation of a Phase 2 trial. R&D expenses were $63.4 million in the first quarter of 2015 and increased from $54.5 million for the same period in 2014. This primarily reflects investment in ADCETRIS and our pipeline programs. SG&A expenses increased in the first quarter of 2015 to $32.1 million from $24 million in 2014. This primarily relates to increased legal expenses during the quarter. Based on these increased cost as well as commercial activities that we plan to accelerate as a result of the AETHERA priority review, we are slightly increasing our 2015 guidance for SG&A expenses to be in the range of $115 million to $125 million. Non-cash share based compensation cost for the first quarter of 2015 was $7.7 million compared to $9.3 million for the first quarter of 2014. With that I’ll stop and turn the call over to Jonathan.

[Jonathan Drachman:]

Thanks Todd. As Clay discussed, our broad ADCETRIS clinical program is going very well. In addition to our four ongoing Phase 3 trials, we’re continuing to study the use of ADCETRIS in other CD30-positive lymphomas end settings. We look forward to presenting several of these trials at ASCO and ICML in June. In particular, we will report data on ADCETRIS in front line DLBCL, relapsed DLBCL, and additional subset analysis from the AETHERA trial. There will also be multiple presentations from investigator sponsors clinical trials. In addition, we’re making great progress on our pipeline programs and we plan to present clinical data for multiple programs including SGN-CD33A and SGN-CD19A later this year. Today I’d like to like a highlight a few other recent accomplishments by our clinical and research teams. First I’d like to spend a few moments discussing the role of ADCETRIS in modifying the tumor micro environment and immune cells. At AACR, we showed preclinical data for the first time suggesting that ADCETRIS induces immunogenic cell death. A pattern of cytotoxicity in which tumor cells activate immune responses within the tumor micro environment. This includes expression of Calreticulin on the cell surface, infiltration of CD11 positive cells and up-regulation of intratumoral cytokines associated with antitumor activity. These preclinical data provides strong rationale for combining ADCETRIS with immunooncology agents such as nivolumab to maximize cancer cell death and provide a favorable environment for immune activation within the tumor micro environment. Under our collaboration with Bristol-Myers Squibb two clinical trials are planned to begin in 2015 to evaluate ADCETRIS in combination with nivolumab in relapsed Hodgkin lymphoma and relapsed CD30-positive non-Hodgkin lymphoma. Additionally, we’ve been interested in the fact that CD30 is up-regulated in certain subsets of activated lymphocytes which may play a pathologic role in autoimmune disease. Now that many thousands of patients have received ADCETRIS for CD30-positive lymphomas, we conducted a U.S. physician survey to see if any of these patients were reported to have improvement in concomitant inflammatory conditions. Interestingly, there were quite a few anecdotal reports of clinical improvement in autoimmune diseases during treatment with ADCETRIS including lupus, inflammatory bowel disease, rheumatoid arthritis and scleroderma. When possible these reports were confirmed through physician interviews and chart reviews. Thus we have decided to initiate an exploratory clinical trial for patients with systemic lupus erythematosus. This is our first clinical evaluation of an ADC in rheumatologic diseases and we anticipate trial initiation around the middle of 2015. In February, we initiated a Phase 1 clinical trial with SEACD-40, a new immunooncology program for solid tumors that utilizes our novel SEA technology. At the recent American Association for Cancer Research Annual Meeting, we presented preclinical data showing that SEACD-40 is a potent stimulator of immune cells and may be able to harness the power of a patient’s own immune system to fight their cancer. The data showed increased cytokine production, activation of antigen presenting cells and stimulation of antigen specific T-cell responses. This is an exciting addition to our pipeline that we believe could work as monotherapy or in combination with other targeted approaches including ADCs and other immunooncology agents. At ASCO, we will present preclinical data on the enhanced immune stimulatory activity of SEACD-40 alone and in combination with CKLA-4 and PD-1 immune checkpoint inhibitors. And finally our scientists continue to lead the way developing new and exciting advances in ADC technology, in addition to our proprietary engineered cysteine antibodies and PBD dimers, we are creating innovative ways of enhancing our ADC platform and look forward to introducing these powerful molecules into clinical testing in the future. At this point, I’ll turn the call back over to Clay.

[Clay Siegall:]

Thanks Jonathan. Before we open the call to questions, I’d like to summarize our key upcoming milestones to expand ADCETRIS and advance our pipeline. They include first obtaining FDA approval for ADCETRIS in AETHERA setting, second completing enrolment in the ECHELON 1 and our cancer trials later this year and in the ECHELON 2 trial next year. Data from ALCANZA is planned in 2016 and data from ECHELON 1 and ECHELON 2 is expected in the 2017 to 2018 timeframe. Third broadening the clinical investigation of ADCETRIS in front line and relapsed DLBCL, fourth initiating clinical trials in combination with nivolumab under our collaboration with Bristol-Myers Squibb. Fifth, reporting emerging data on SGN-CD33A in AML and discussing registration strategies and lastly initiating a Phase 2 trial of SGN-CD19A in second line DLBCL. At this point, we will open the line for Q&A. Operator please open the call for questions.

[Operator:]

[Operator Instructions] We will take our first question from Jason Kantor with Credit Suisse.

[Jason Kantor:]

Thanks for taking my question, and congratulations on completing your discussions with the FDA on E1 and E2. I was wondering on that front, why did you stick with the same statistical analysis, rather than taking a strategy like you did with AETHERA? Is there a statistical or scientific reason that that made more sense, or was that just what the FDA was more comfortable with? Can you give us a little more color on how you came to your conclusion?

[Clay Siegall:]

Sure Jason. Thank you for the question, we can’t be exactly specific on our FDA interactions but we’re very pleased with them, they were very strong and very collegial. It’s the simplest and best approach really adding patients, we kept the integrity of the trial, we kept our timelines, the timelines that we’ve been stating are 2017 through 2018 and we kept those. So we’re very pleased with the outcome of this and keeping the SPAs and keeping the integrity of the trials.

[Jason Kantor:]

And is that the difference between 2017 and 2018 is that more of a factor of the time to enroll, or is that sort of the breadth of your assumptions in terms of when you might get the events? In other words if the drug is working better than you expect, could we be in a situation two years from now, where we're pushing it out another year or two because the drug is working really well, or is this very, very conservative in the assumption?

[Clay Siegall:]

Jason it’s good question, we’ve modeled this in a lot of different ways and we think that likely and based on the events that it will be in the 2017 to 2018 timeframe but as we get closer to that, it will be easier for us to give more specific items.

[Jason Kantor:]

Okay. Terrific. Thanks so much.

[Operator:]

And we’ll take our next question from Adnan Butt with RBC Capital Markets.

[Adnan Butt:]

Thanks. So two questions. First, on AETHERA does the Company expect an FDA advisory committee? And then secondly sort of commercial bent here, since NCCN guidelines now reflect ADCETRIS post-transplant, how do you expect the actual label expansion to affect usage? Thanks.

[Clay Siegall:]

Yes so first of all on ODAC, ODAC is up to the FDA and what I can tell you that is we are preparing internally very strong and in event that the FDA asked for an ODAC panel. So they have not notified us as of yet, we would have announced that and we don’t – we can’t speculate as to whether they will or not but we are very, very ready to go to an ODAC if that still happen. We feel that our package of data is very strong and we’re delighted with priority review and so we’re really ready to go there. Now on your second question on commercial Darren maybe I can turn it for you.

[Darren Cline:]

Sure good question. So we’re – we’ve done a lot of market research, the commercial team continues to prepare. We work with the NCCN adding it to the Compendium. That really wasn’t surprising and I think the impact, we do the market research, we’ve done, physicians are very pleased to have this as a potential approved option for their patients, this has been an unmet medical need for them and the opportunity to get it on the ADCETRIS label is one that there physician community is excited about.

[Adnan Butt:]

Okay, thanks.

[Operator:]

Thank you. And our next question comes from Matt Roden with UBS.

[Unidentified Analyst:]

Hi thanks for taking the question. This is [Jeff Ung] [ph] in for Matt. For CD30, three combos and what do you need to see as basis for go/no go for registration open? And I have a follow-up question.

[Clay Siegall:]

Yes so Matt, we’re doing a number of different studies with SGN-CD33A and they include single agent studies and they include combinations and so far the combinations include with 7 plus 3 which is front line for fit patients. And also a separate study with SGN-CD33A plus hypomethylating agents for what they call unfit patients. So both of those are ongoing and we look forward to putting out data in the future on what we’re doing with single agent as well as in combinations. And we’re looking at the data very closely and from those data, we will make decisions on going forward toward registration, it’s I don’t want to draw lines in the sand as to what the specifics that we need but we certainly know like for instance how well hypomethylators work and we know that there is a small CR rates and we know that a lot of different factors with hypomethylating agents. And I’ll turn the call over to Jonathan in a minute but I think we know because they have been used for years what we need to see that’s better than for that setting. Jonathan?

[Jonathan Drachman:]

Yes, thanks Clay. I would agree with what Clay said, the combinations are ongoing in studies that have initiated and with the front line fit patients, the first part is really coming up with the dose and showing the tolerability when you’re adding to high dose induction and consolidation therapy and we’re also looking at maintenance in that setting. So that study is ongoing and we’ll report data when it’s available, with the hypomethylators as Clay said the data are pretty well known 15% to 20% CR, CRI rates are kind of what you see with monotherapy and front line. We know that patients live for about eight months and they can stay on therapy for maybe four months or so. So those are sort of goal post but as we have more data to look at, we’ll be reporting that.

[Unidentified Analyst:]

Thanks. And then based on the ADCETRIS sales in the first quarter, you’re analyzing $196 million while the previous guidance was $210 million, is there any reason to think it will go down over the course of the year?

[Clay Siegall:]

No we’re happy with our guidance that we’ve given and we think it’s still very solid.

[Unidentified Analyst:]

Thank you.

[Operator:]

Next we will move on to Cory Kasimov with JPMorgan.

[Unidentified Analyst:]

Hi guys thanks for taking the questions. This is [Brittany] [ph] in on for Cory. Can you give you in insight into the clinical trial design for the ADCETRIS trial, and evaluating SLE and can you comment on how you view the market opportunity? And also just to confirm you said that we shouldn't expect data for 33A and 19A at ASCO? Thank you.

[Clay Siegall:]

Yes. Okay. So starting with the second question yes 33A we’re not planning to present at ASCO that’s a quick one. Most of the docs that treat AML patients I mean they all go to – not all the docs goes to ASCO. It’s not really the best place to present AML data. But I can assure you that the ASH or ASCO conference or any conference for that matter are just they’re just lines in the sand of dates that our development goes forward as fast as possible and we’ll present that when it’s appealing to present it with all our docs there. So I look toward the end of year for 33A. Now going to your first question is about SLE and trial design which we have not released at this point and maybe Jonathan could give some color there and then as far as and I’ll turn it over to Jonathan in a second but you asked about the opportunity, the commercial opportunity there. These autoimmune diseases that we discussed at our call that we saw on the chart readings including SLE and others are potentially very large market opportunities and bigger than Hodgkin lymphoma for that matter and as a potential because of this patient numbers. But at this point it’s way too early, we’re looking at exploratory studies at autoimmune disease at present times. So we just want to make sure set the right scene at the right level for what we’re doing. Now we’re very pleased, we love seeing the data in the chart studies but those were not prospective trials as we need to do prospective trials to know if we have something that is really exciting there. Jonathan, do you want to make any comments on the type of trial or endpoints that you want to look out with SLE?

[Jonathan Drachman:]

Sure. So I think that as Clay said we’re really was provocative, we’re seeing reports from individual patients showing that their autoimmune disease was getting better and these are anecdotal reports and we obviously don’t know the denominator, we didn’t specifically enrolled patients we had inflammatory or autoimmune conditions. But it’s data which based on the biology of the target makes a lot of sense for us to follow up on. So this initial study is in exploratory study, it’ll be in a relatively small number of patients with Lupus. We’ll be using the systemic lupus response index, which is a well-established way of following lupus response, it’s a composite of many different scores. One of the very nice things about lupus is that patients with lupus have a great variety of organs involved there is joints and kidneys and skin and other things and so it gives you an opportunity to look at the effect on inflammation in different parts of the body as well as looking at well-established blood markers like ANA levels. So I hope that’s helpful.

[Clay Siegall:]

Does that answer your question?

[Unidentified Analyst:]

Yes, thank you very much.

[Operator:]

Thank you. And we’ll go on to our next question from Chris Marai with Oppenheimer.

[Chris Marai:]

Hi good afternoon guys. Thanks for taking the questions. First, really just with respect to bringing ADCETRIS into the clinic with Nivo, I was wondering if you could elaborate perhaps on the trial design there, and the dose schedule, and perhaps number of cycles with ADCETRIS. I mean I think I'm wondering do you think with combination strategy you need more or fewer cycles, particularly if the immune system would be doing perhaps more of the heavy lifting on the efficacy side? Thanks.

[Clay Siegall:]

Yes I’ll start that and once again I’ll turn it over to Jonathan, I can tell you that we’re delighted to be collaborating with Bristol-Myers Squibb on the program of ADCETRIS plus nivolumba. We’re doing in a two different diseases, one is in Hodgkin lymphoma and one is in non-Hodgkin lymphoma. And so they both of those trials should start later this year and on the specifics dosing, I don’t think we’re looking for something that’s using less ADCETRIS that we normally use in the relapsed patients but Jonathan would you like to provide any other information on what you see as the combination of ADCETRIS in nivolumab?

[Jonathan Drachman:]

No I don’t think we’ve spoken about the specifics of the dosing and schedule nor the number of cycles that we would be using. The goal here is using the what we believe is the centrepiece for treating CD30-positive lymphoma ADCETRIS and adding a very highly active drug to try to get even better complete response rates. So our hope is that by combining these two drugs, we’re going to see tremendous activity but we also need to understand tolerability and it’s one of the first times that these agents well to our knowledge the first time these agents will be combined. So it’s going to be very important that we understand the safety, tolerability and ultimately the efficacy and how the two drugs interact and can be used best together for patients.

[Chris Marai:]

Great. And any update on the timing exactly when we'll hear about the trial design, at an upcoming conference, or the like? Thanks.

[Clay Siegall:]

Yes, the trials are plan to start later this year, so when they start they certainly get listed in ClinicalTrial.gov and they’ll have the full trial design is there. So that’s really what you can expect that later this year.

[Chris Marai:]

Great, thanks.

[Operator:]

Thank you. [Operator Instructions] We’ll take our next question from Boris Peaker with Cowen.

[Boris Peaker:]

Great. Thanks for taking my question. So my first one ADCETRIS in the autoimmune disease, you said that you saw signal in a number of diseases, I'm just curious why you decided to go with lupus given the heterogenative disease, and I guess some of the other drugs that haven't been successful in that indication?

[Clay Siegall:]

Boris, thank you for the question, we saw activity in a number of diseases and lupus is going to be the first clinical trial to start. But it’s highly unlikely that that will be the last one. So I think we’ll be evaluating an exploratory studies ADCETRIS in some other autoimmune disease, we just don’t want to take the specifics today until we’re ready to do it. But the lupus trial is going to be underway shortly, so that’s why we wanted to introduce and that one just went faster. So it’s certainly not the only one we will do and we do realize that lupus is a complicated disease but as Jonathan said there is a standard way to using the systemic lupus response index which was used to approve Belista, that’s something that is standard and was used by the FDA. So we’re going to use that as well as we can assess a lot of different tissues. So I think that right now with an exploratory study, lupus is an excellent disease to take a look at.

[Boris Peaker:]

Got you. And my second question is, more kind of longer term strategic question on the CD19 space, clearly we're all seeing the CAR T therapy and the efficacy there, and then several companies competing there. I'm just curious how do you see positioning yourself there? Would you try to do some kind of a collaboration with a CAR T therapy with an ADC, do you want to just carve out a niche, or what are your thoughts there?

[Clay Siegall:]

I think it’s a good question with CAR T cells what you see in a lot of the data and the best data I’ve seen is in ALL. And what we’re focusing on is NHL here and these are patients that are relapsed DLBCL I haven’t seen a ton of data with CAR T cells in the relapsed DLBCL space. There is a little bit of data out there but not a ton, it’s much more in the ALL space and so we think with our 55% response rate and the ability to combine this with real chemotherapy because we don’t have hematologic toxicity with our CD19A. We don’t have neuropathy. We can combine that, it’s unclear to me that you can combine at this point a CAR T with real chemotherapy. So I think that’s a good thing for an ADC that you can do that. Now looking forward to your other comments can we use an ADC to combine with the CAR T cell I actually think that’s a very interesting idea, something we’ve bandied about in discussions, we haven’t yet started anything or announced something but it’s certainly something that is not lost on us, so I think it’s a really good thought.

[Boris Peaker:]

Okay. Well great, thanks for taking my questions.

[Operator:]

And our next question comes from Mara Goldstein with Cantor Fitzgerald.

[Mara Goldstein:]

Thanks for taking the question. I'm hoping you can give us a little bit more granularity on just the discussion around ADCETRIS and the community versus academic setting, and how we should think about that from a market penetration perspective, and the changes that you're seeing there?

[Clay Siegall:]

Yes we’re actually with ADCETRIS in our labelled indication we have very high market penetration both in the community and in the academic setting. Darren, do you want to make any further comments on that?

[Darren Cline:]

Yes and I think as Clay alluded to in our labelled indications, we’re at standard of care market shares and we as we’ve talked about in the past across the three indications and we kind of see an even split amongst community and academic. As we think about AETHERA moving forward, we would be focusing on the transplant centers and then hand on back to the academic or back to the community setting. So that’s something we’re preparing for if we’re fortunate enough to get the label expansion.

[Mara Goldstein:]

Okay. And you had discussed earlier in the call just the increase in spending as it relates to pre-commercial activities, is that where you're spending your sort of dollars and time and effort on that transplant setting?

[Clay Siegall:]

Yes. So we’re with the priority review being granted, we’re able to pull forward some of the promotional spend at we anticipate to support the launch of AETHERA and also looking at some of our internal commercial functions and increasing support there. Todd I don’t know if you want to add anything else?

[Todd Simpson:]

Yes just maybe to add a little bit, so one of the reasons we’re increasing the guidance as Darren just mentioned was to prepare ourselves for with a little bit quicker FDA review then we had planned for. It was terrific to get a priority review, so pulling some activities for as well as we will be as Darren mentioned during the call spending some resources on building out our Canadian infrastructure.

[Mara Goldstein:]

Okay. Thank you.

[Operator:]

Thank you. And that will conclude today’s question-and-answer session. At this time, I would like to turn the conference back over to Peggy Pinkston for any additional or closing remarks.

[Peggy Pinkston:]

Thank you operator and thanks everybody for joining us this afternoon. Have a good evening.

[Operator:]

And this will conclude today’s conference. We thank you for your participation.