Seagen Inc.
Q2 2015 Earnings Call Transcript

Published: 31 Jul 2015

[Operator:]

Good day and welcome to the Seattle Genetics Second Quarter 2015 Financial Results. At this time, participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Today's conference is being recorded. At this time, I would like to turn the conference over to 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' second 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'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, specifically the company's quarterly report on Form 10-Q for the quarter ended June 30, 2015, which is available on our website for information concerning the risks factors that could cause the actual results to differ materially from those contained in our forward-looking statements. At this point, I'll turn the call over to Clay.

[Clay B. Siegall:]

Thanks, Peg, and good afternoon, everyone. Thank you for joining us today. The second quarter of 2015 was productive on many fronts. We head into the second half of the year with several anticipated milestones. ADCETRIS achieved record net sales in the U.S. and Canada for the second quarter and year-to-date up more than 20% compared to the same periods last year. Based on year-to-date results, we are increasing our total 2015 guidance for ADCETRIS net sales in the U.S. and Canada to a range of $210 million to $220 million, an increase of $10 million from our prior range of $200 million to $210 million. Looking ahead, in the near term, we anticipate an approval decision from the FDA on our AETHERA Supplemental BLA by the PDUFA date of August 18. A positive outcome would result in a third indication for ADCETRIS and represent a key step in our goal of expanding ADCETRIS beyond relapsed Hodgkin lymphoma and systemic anaplastic large cell lymphoma. We've also submitted a supplemental NDS for the AETHERA indication to Health Canada. Our market research suggests that there has already been some use of ADCETRIS in the AETHERA setting following the addition to treatment guidelines and compendia earlier this year. We have factored this market research and potential label into our updated ADCETRIS net sales guidance. We and our partner Takeda remain on track to complete enrollment this year in our Phase 3 ECHELON-1 in frontline Hodgkin lymphoma, and our Phase 3 ALCANZA trial in CTCL. And we expect to complete enrollment in our Phase 3 ECHELON-2 trial in frontline MTCL next year. Data from ALCANZA are planned in 2016 and data from ECHELON-1 and ECHELON-2 are expected in the 2017 to 2018 timeframe. With these Phase 3 trials combined with more than 30 other ongoing trials, we remain strongly positioned to deliver on our goal of establishing ADCETRIS as the foundation of care for CD30-positive malignancies. I'm also excited that the investment in our product pipeline is generating results with data anticipated from several programs over the next six months to nine months. This includes data expected this year from SGN-CD33A, an acute myeloid leukemia where we have expanded our clinical program both as a single agent and in combination with other drugs used in the treatment of AML. We are particularly interested in the potential role of SGN-CD33A in combination with hypomethylating agents such as Vidaza and Dacogen based on encouraging Phase 1 data that we plan to present later this year. More than 20,000 people are diagnosed with AML annually in the United States; most are over the age of 60 and the vast majority have CD33 expression on their leukemic cells. This differentiates SGN-CD33A from other agents that target subsets of AML patients based on cytogenetic abnormality or underlying mutational heterogeneity. The prognosis for AML is grim, particularly among unfit patients, and outcomes have not meaningfully changed in decades. We plan to have an end of Phase 1 meeting with the FDA and to seek scientific advice in Europe before the end of the year to determine next steps toward a global registration strategy for this program. We are also conducting a Phase 1 trial of SGN-CD33A combined with standard of care in frontline AML patients who can receive intensive therapy, and we are evaluating other opportunities including as a bridge to transplant for relapsed AML patients and in myelodysplastic syndrome or MDS. Another pipeline program with expanding clinical activities is SGN-CD19A. We are building upon our Phase 1 data in non-Hodgkin lymphoma by initiating a randomized trial in second-line DLBCL later this year. The Phase 2 study will evaluate the standard second-line regimen of Rituxan, ICE, plus or minus SGN-CD19A. Our goal is twofold, to increase the pre-transplant complete remission rate in this setting thereby enhancing the number of patients eligible for autologous transplant and to improve the outcomes after transplant. I'm proud of the progress we're making with ADCETRIS, our product pipeline and our innovative and powered approaches to treatment of cancer. At this point, I'll turn the call over to Darren Cline to discuss commercial activities. Then Todd Simpson will discuss our financial results. After which, Jonathan Drachman will highlight research and clinical activities. At the end of our prepared remarks, we'll open the line for questions. Darren?

[Darren Cline:]

Thanks, Clay. During the second quarter of 2015, we saw continued growth of our ADCETRIS franchise. ADCETRIS revenue for the second quarter was $55.1 million, a 13% increase over Q1 2015. Year-to-date ADCETRIS revenue through of end of Q2 was $104 million, a 25% increase over the first half of 2014. During the quarter, ADCETRIS maintained its position of standard of care in the relapsed Hodgkin lymphoma and systemic anaplastic large cell lymphoma settings. Duration remains approximately six cycles. Although we do not promote outside our label indications, physicians continue to identify increasing numbers of patients with CD expressing lymphomas, who may benefit from ADCETRIS therapy. Looking ahead, we are prepared for the potential AETHERA label expansion, and the commercial team has identified four strategic imperatives upon approval. First, patient identification, helping physicians to identify eligible patients will be important in driving patient starts on therapy. Second, transition of care. Patients are typically referred to an academic institution for their transplant. Some patients will transition back to their referring community physician. Ensuring that ADCETRIS dosing continues through this transition of care will be critically important. Third, ensuring payer coverage and reimbursement. A quantitative analysis presented at ASH in December 2014 showed that ADCETRIS reached key cost effectiveness measures as consolidation therapy. Upon approval, our managed markets team will work with payers to ensure appropriate coverage and reimbursement of ADCETRIS in the AETHERA setting. And lastly, educating on duration of therapy. It will be important to provide information on the AETHERA trial design and treatment duration to physicians and patients. As you recall the study was designed for up to one year of treatment or 16 cycles. And the average duration on study in the ADCETRIS arm was 12 cycles. Upon approval, our goal is to make ADCETRIS the standard of care for high risk patients in the post-ASCT consolidation setting. We look forward to updating you on our progress in future calls. Now, I would like to turn the call over to Todd to discuss our financial results.

[Todd E. Simpson:]

Thanks, Darren, and thanks to everyone for joining us on the call this afternoon. Our financial performance in the second quarter of 2015 was driven by record ADCETRIS sales. The business is strong and we ended the first quarter with approximately $250 million in cash and investments. Total revenues in the second quarter of 2015 were $77.1 million, which had included ADCETRIS net sales of $55.1 million. This represents significant growth over the previous quarter and over the second quarter of last year. For the first half of 2015, total revenues were $159.3 million, including $104 million in ADCETRIS net sales. As Clay mentioned, based on strong sales to-date, we are increasing 2015 ADCETRIS guidance to a new range of $210 million to $220 million. Royalty revenues were $7.6 million in the second quarter and $18.7 million for the first six months of 2015, primarily related to international sales of ADCETRIS by Takeda in its territory. While Takeda sales of ADCETRIS have increased in 2015, year-to-date royalties are lower than 2014 due to a $5 million sales milestone in the first quarter of last year. With approval now in 56 countries, ADCETRIS has become a global brand. Collaboration revenues were $14.4 million in the second quarter and $36.6 million for the year-to-date in 2015. These revenues are driven by amounts earned under our ADCETRIS collaboration with Takeda and our ADC deals. R&D expenses were $85.7 million in the second quarter of 2015, an increase from $53.7 million for the same period in 2014. This increase primarily reflects the upfront payment of $25 million under the Unum collaboration, as well as increased investment in our pipeline programs. For the year-to-date in 2015, R&D expenses were $149.1 million compared to $108.2 million for the first half of 2014. Given the new Unum collaboration announced last month, we now expect that 2015 R&D expenses will be in the range of $275 million to $300 million. This is an increase of $25 million over our previous guidance. SG&A expenses increased for the year-to-date in 2015 to $62.5 million from $49.5 million in the first half of 2014. This is consistent with our guidance. Non-cash share-based compensation costs for the first six months of 2015 was $17.6 million compared to $18.7 million for the first half of 2014. And with that, I'll now turn the call over to Jonathan.

[Jonathan Drachman:]

Thanks, Todd. The ADCETRIS program continues to be a major focus of clinical effort as we seek to establish ADCETRIS as the foundation of therapy for CD30 positive lymphomas. Clay discussed our ongoing Phase 3 trials, which are all doing well in terms of recruitment and investigator enthusiasm. Now I would like to spend a few moments discussing the potential role of ADCETRIS in the treatment of DLBCL, the most common type of aggressive non-Hodgkin lymphoma. Our data, presented in the second quarter at ASCO and ICML, highlight opportunities both in the relapsed/refractory and frontline settings to develop important new therapeutic options for the subset of DLBCL patients who express CD30. Our single agent data showed that ADCETRIS is active in both relapsed and refractory patients, and in the patients who express CD30, there was a promising objective response rate of 44% and complete remission rate of 17% as monotherapy. Earlier this year, ADCETRIS was added to NCCN guidelines for relapsed CD30 positive DLBCL. Building on these data and our previously reported results for ADCETRIS combined with Bendamustine in relapsed Hodgkin lymphoma, we are now initiating a randomized Phase 2 trial of Bendamustine and Rituxan with or without ADCETRIS in CD30 positive relapsed and refractory DLBCL. And in the frontline setting, our data for ADCETRIS combined with RCHOP in patients with high risk and intermediate high-risk DLBCL are encouraging, especially in the CD30 positive population in which we reported a CR rate of 76% and the estimated 12 months PFS of 86%. We have expanded the trial to evaluate ADCETRIS plus RCHP dropping vincristine from the standard regimen, and we are considering a possible registrational trial to demonstrate the value of integrating ADCETRIS as a potential new standard of care for CD30 positive DLBCL regardless of cell of origin or other molecular subsets. We also recently announced the initiation of a clinical trial for ADCETRIS in patients with lupus, our first corporate trial in autoimmune disease. In part this trial was based on retrospective data demonstrating that some patients who are treated with ADCETRIS for lymphoma reported improvement in concomitant inflammatory conditions. This is consistent with published data showing that CD30 is upregulated in certain subsets of activated lymphocytes and may play a pathological role in autoimmune diseases. While the lupus trial is a relatively small exploratory initiative as compared to our efforts in oncology, inflammation could represent a significant future opportunity. As Clay described, our proprietary SGN-CD33A and SGN-CD19A pipeline programs are continuing to generate exciting data, and we're expanding into later stage clinical trials and exploring new indications and novel combination regimens. In particular, we are encouraged by emerging data with SGN-CD33A and look forward to presenting additional data later this year. In addition, we anticipate upcoming data presentations from several of our other clinical stage programs. SGN-LIV1A is an ADC targeted to LIV-1, which is expressed on more than 90% of breast cancers. Our ongoing Phase 1 trial is in several types of metastatic breast cancer, including triple negative disease. We anticipate data from this program later this year. ASG-22ME and ASG-15ME are ADCs in Phase 1 trials from bladder cancer and other solid tumors under our collaboration with Astellas. We are accumulating a significant amount of data from these programs, particularly in bladder cancer. We're looking forward to presenting data from both of these programs in 2016. Our ADC collaborators are also making continued progress with programs employing our technology. Most recently AbbVie initiated a Phase 1 trial for an ADC in hematologic malignancies, which triggered a milestone payment to us, and several collaborators including Genentech, Roche, AbbVie, Genmab, Progenics and Astellas all reported clinical data at ASCO on ADCs using Seattle Genetics' technology. To build upon our expertise in ADCs, we have begun evaluating complementary antibody based approaches in the immuno-oncology space. This includes SEA-CD40, which utilizes our proprietary sugar-engineered antibody technology. We started a Phase 1 trial with SEA-CD40 for solid tumors earlier this year. Preclinical data showed that this agent stimulates antigen-presenting cells and may work well in combination with checkpoint inhibitors. We are focused initially on evaluating SEA-CD40 as a single agent and look forward to developing novel combination regimens, including with ADCs and other immuno-oncology agents. In addition, during the second quarter we entered into an early-stage collaboration with Unum giving us another opportunity to explore a novel mechanism for treating cancer. This partnership leverages our expertise in antibodies and targets and serves to broaden and diversify our research pipeline. We and Unum will initially develop two antibody coupled T-cell receptor products incorporating our antibodies. Seattle Genetics has an option to expand the collaboration to include a third product. With this collaboration, our pipeline now includes three approaches to empower antibodies, ADC, SEA and ACTR technologies. In the future, we believe these mechanisms of action will be combined to significantly improve outcomes for cancer patients. Along these lines we have presented preclinical data providing strong rationale for combining ADCETRIS with checkpoint inhibitors such as nivolumab to maximize cancer cell death and increase immune activation within the tumor microenvironment. 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. We look forward to continuing our strong momentum into the second half of 2015 across our portfolio. At this point, I'll turn the call back over to Clay.

[Clay B. Siegall:]

Thanks, Jonathan. Before we open the call to questions, I'd like to summarize our key upcoming goals to expand ADCETRIS and advance our pipeline. They include

[Operator:]

Certainly. And we'll go ahead and take our first question from Matt Roden with UBS. Please go ahead. Your line is open.

[Matthew M. Roden:]

Great. Thanks very much for taking the question. Congratulations on the nice quarter here. Nice step-up in sales. I assume it's related to the compendia listings as a driver here. And if that's the case, should we assume there isn't much more room for a step-up once you formally get the AETHERA label? To what extent do you think that you have the ability to promote the label will actually help you commercially once you do have the approval in that setting in the post-transplant setting?

[Clay B. Siegall:]

Matt, thanks for the comments and the question. First of all, I'll take a step back and just say that our new guidance of $210 million to $220 million projects an 18% to 23% increase over last year. So what it says is our business is strong. Now within that our, on label business is strong. We've said literally almost every quarter that our market penetration for on label is very strong and high. Now as you've said and as we know, we do have four guideline listings now. And these four guideline listings are market assessments and research say that there is some use in those areas, so we include that. But when we look at our guidance, we've done the best we can to look at all of the information and take everything into account and we'll certainly keep you updated in the future.

[Matthew M. Roden:]

Okay, thanks very much, and then quick one on the pipeline. You mentioned the SGN-CD33A end of Phase 1 meetings with regulators. Usually, you were talking about end of Phase 2 meetings, but just understanding that the path here on AML on the unmet medical need, would it be too aggressive to assume that you might be in a position to disclose sort of global registration pathway by ASH? It sounds like if these meetings are here in the second half, just trying to understand what the gating factors are to getting that program up and running and when investors may have a better understanding of what the plans are there. Thanks very much.

[Clay B. Siegall:]

Sure, thanks again for the question, Matt. So first of all, AML is a really big unmet medical need. So, that's something that we have been working on for some time now, and we are really trying to do what we can for patients with this terrible disease. The second thing I'd say is this – SGN-CD33A is an active drug. We presented data already at ASH 2014 single agent data, showing with waterfall plot showing the rate of response, showing a lot of regression of the tumor blasts in the bone marrow, so this is an active drug. We've already demonstrated that and presented at a conference. And one of the goals is really to look at how the drug is used in AML patients and there's really two sets of AML patients. There is fit patients and there's unfit. The fit ones are generally younger, not always, but generally younger, and the unfit ones are generally older and. The fit patients get – they get something called 7 plus 3, which is standard of care, two cytotoxic drugs. It's very toxic to give – you have to go in the hospital for a week to get it. And then the patients that are unfit, they get hypomethylating agents. And these are Vidaza, Dacogen, and they're standard of care. They're used widely. And we think that there's a really good opportunity to go ahead and combine this drug, SGN-CD33A, which we've shown already is active as single agent, with the standard of care in both of the indications. Now, you asked specifically a little bit about what our goal is at the end of Phase 1, having a meeting with the FDA; and certainly, our goal would be to try to see if we could get this drug into a global registration strategy as soon as possible. I don't want to commit that it would be before ASH or after ASH. I could just tell you that our goal is to do it as soon as possible, but we really are still collecting data. We're still in Phase 1, but we're encouraged by what we see to-date.

[Matthew M. Roden:]

Great. Thanks very much and congrats on the progress.

[Operator:]

And we'll go ahead and take our next question from Adnan Butt with RBC Capital Markets. Please go ahead. Your line is open.

[Adnan S. Butt:]

Hey, thanks and nice uptick on ADCETRIS as well. Following up on the question that Matt just asked on the SGN-CD33; Clay, is it too soon to determine if the approach would be a monotherapy approach, combination approach, or is it going to be multiple modalities for AML?

[Clay B. Siegall:]

We're looking at all of this right now. So, what we've said is there's a lot of different indications

[Jonathan Drachman:]

I think Clay did a really good summary there of the opportunities, Adnan. And we continue to enroll in the Phase 1 trial monotherapy in relapsed or untreated patients. We're looking at combination with hypomethylators as we talked about. We have a separate trial looking at combination with patients receiving intensive care, and there's other opportunities to explore in the future. So I think that there's multiple opportunities to move forward with SGN-CD33A.

[Clay B. Siegall:]

And one of the things that we like about it is 33 – the target is expressed very broadly on almost every patient that has AML. And it's not focused on any different cytogenetic or sub-unit or mutational unit. And so it's something where you look at the development of AML products that are coming out there in the world now and a lot of them are focused on very narrow swaths of patients, 10%, 15% of patients, where we think this could treat the vast majority of patients because they express the target. So, it's something that is of strong interest to us.

[Adnan S. Butt:]

Okay, thanks, I'll get in line.

[Operator:]

Thank you. And we'll go ahead and take our next question from Cory Kasimov with JPMorgan. Please go ahead. Your line is open.

[Brittany R. Terner:]

Hey, guys, this is actually Brittany on for Cory. Thanks for taking the questions. I just wanted to ask you about your latest thoughts on how we should be thinking about CD30 testing going forward in DLBCL based on some of the discussions that took place at ASCO. And I just wanted to confirm, does the updated ADCETRIS guidance include AETHERA? Thank you.

[Clay B. Siegall:]

Sure. Let's start with the first question on DLBCL, and then we'll get to the AETHERA and guidance question. So, for DLBCL, we – first of all, we're excited when we saw our single agent data in relapsed/refractory patients that we've now presented. And the data were strong and in fact, the guidelines committee noticed our data and put it into guidelines. So that's something where we feel that whenever you have a third party looking at your data and seeing that it's strong, it makes you feel good that you've done something that's important. So, we're glad for that. We've also presented data showing strong data in combination in DLBCL with chemotherapy regimens. So, those are – where we are initially working on. Now, you're asking about testing there and maybe I'll turn it over to Jonathan. You could talk a little bit about what we know about CD30 expression and how it relates to DLBCL treatment.

[Jonathan Drachman:]

Sure, Brittany. Yeah, there is – we haven't talked about exactly what our strategy would be in future studies. In our trials, we've looked at multiple ways of measuring CD30, including mRNA, of course, immunohistochemistry, computer-enhancing histochemistry, and other methods. The data that we used to collect when we were talking about CD30 positive versus negative was traditional immunohistochemistry and that would probably make the most sense as sort of a standard, easy-to-apply technology moving forward. We haven't commented on exact cut-offs that we would use, although in the data we presented with any positive cells versus no positive cells. So, I hope that's helpful.

[Clay B. Siegall:]

So, Brittany, your second question is about AETHERA and guidance. First of all, I'd like to say that we're very much looking forward to the FDA decision, I mean, this would represent our third label, and it's really our goal to expand ADCETRIS use into more patients that can benefit from this drug. But I do want to point out that AETHERA specifically is a new area of treatment. There's never been a drug approved in Hodgkin lymphoma in this setting, which is consolidation after transplant. It's just been watchful waiting. So, it's hard to know exactly. Now, as far as our guidance, we incorporated and factored in some assumptions about AETHERA into that. The market research we've done shows that there already has been a modest use toward the AETHERA regimen in patients. But we'll really know more in the future in this brand new area of treatment. So, it's a hard thing to be exact with guidance.

[Brittany R. Terner:]

Okay, great. Thank you.

[Operator:]

We'll go ahead and take our next question from Howard Liang with Leerink. Please go ahead. Your line is open.

[Richard G. Goss:]

Hi. This is Rich Goss calling in for Howard. Thanks for taking my question. I was just wondering if you give us some more insight into the Unum deal such as what targets or tumor types you might expect to focus on initially, and what sort of timeline we should expect? Thank you.

[Clay B. Siegall:]

Sure. I'm going to turn this over to Eric Dobmeier, our Chief Operating Officer, to tell you a little bit about the deal, what we're thinking about with the deal. And, Eric, do you want to comment on it?

[Eric L. Dobmeier:]

Yeah, sure. So let me give a quick overview of the deal. So, we made a $25 million upfront payment and a $5 million equity investment in Unum. I think it was about a month ago or so. This collaboration leverages our strengths in cancer targets and antibody-based therapies and their novel ACTR technology. So we think it's a really interesting approach for certain of the targets that we have. We haven't disclosed the specific targets in the collaboration other than to say that it encompasses both solid tumors and hematologic malignancies, and the way the deal works is we'll develop two initial products. Unum will do the preclinical and Phase 1 work and we'll fund that work. And then at that point either party can decide to opt out or we would continue together co-developing. We would have 50/50 in the U.S., and then Seattle Genetics would have full rights outside the U.S. So, as Jonathan said in the script, we think it's a great addition to our pipeline. It gives us three approaches to empowering antibodies through ADC technologies, SEA technologies, and ACTR. So we're excited about it. It's an early-stage collaboration, so we haven't given out any timelines, but we've started working with them on the preclinical work necessary for these two programs forward.

[Richard G. Goss:]

Okay, great. Thank you.

[Operator:]

And we'll go ahead and take our question from Mara Goldstein with Cantor Fitzgerald. Please go ahead. Your line is open.

[Mara Goldstein:]

Thanks very much for taking the question. I just wanted to get back to this SGN-CD33A in AML around the concept of an accelerated registration strategy. And what I guess I'm curious about is given this is a landscape that has seen so many clinical failures, so the risk reward, if you will, of taking an accelerated strategy and not maybe being able to fully characterize all of the data that you need going forward into a larger registration study and how you triangulate around that?

[Clay B. Siegall:]

Sure. Well, first of all, I think you are making a few statements beyond what we made about doing an accelerated strategy where you can't characterize certain endpoint or things like that. I think that we're encouraged by our data in total.

[Mara Goldstein:]

Okay.

[Clay B. Siegall:]

We presented data that shows that SGN-CD33A is active, absolutely. And some of the patients that we used in that first trial that we presented at ASH, these are patients that had a lot of prior drugs and failed and had estimated life spans that were in less than six months predicted. And we got responses out of these patients. So, in our data set that we presented was I think strong and so, those data are out there. So, now going into these combinations and you look at the unfit patients. I mean, they used to be treated with cytarabine and that's an older drug and it's used in 7 plus 3 at high dose, but at the low dose, they were using it in these unfit patients and getting five months to six months survival, and that's the way it was for a long time. And then with hypomethylators, they initially figured out it was like 7.5 months to 8 months, 9 months, there's one reported 10 months. So, we get a little longer with hypomethylators. So, one of the thoughts we had was, hey, can we take what's the best now with hypomethylators and can we do better than that. Can we get higher response rate, longer duration of therapy, patients staying on drug, better overall survival, so that's really our goal, and we're encouraged by our data. And you're right AML is a tough disease. It is a tough unmet medical need right now. Mara, it kind of reminds me about 10 years ago of multiple myeloma. And I sat in meetings and I heard everybody say the companies that were going after myeloma, gee, everything failed there. It's tough. It's a tough registrational pathway. Nothing works there. And now we have some phenomenon drugs in Revlimid, in Velcade and others that have changed patients' lives, and I think AML is right for that. I think the technology has caught up with it. CD33 is a great target. We're encouraged by our early data here, and we're going to be meeting with the FDA to have discussions. So I think this is well worth our effort.

[Mara Goldstein:]

Okay. Well, thank you for the clarification. I appreciate that.

[Operator:]

Thank you. And we'll take our next question, our last question from Tony Butler with Guggenheim Partners. Please go ahead. Your line is open.

[Tony Butler:]

Yes, thanks very much. Clay, I just wanted to go back yet again to the same theme that Mara and others have brought up, and so SGN-CD33A. The combination with HMA in the unfit patients, is that 225 number of patients fully enrolled in that trial and as ClinicalTrials designates it reads out in January, so I guess I'm back to Matt's original question, do we see that data earlier than January? Will that be later? And is that the subject of the discussion with the FDA, that data itself, or is it what you already have presented on both unfit and fit patients? And I have two more follow-ups, please.

[Clay B. Siegall:]

So, first of all, what you're quoting here on 225 patients with this trial is something that I'm not completely familiar with. So, we didn't state that, nor is that something that we were talking about on this call. So, right now we're in a Phase 1 trial, and I could tell you that we look forward to presenting this later this year. Now, the kind of conference where this is appropriate for is a conference like ASH. The abstract for ASH are not due until next week. So, I think it's August 4 or 5. So, Seattle Genetics normally, for the last number of years, has had a pretty large number of presentations at ASH. And so, I expect this year to be no difference. And I also expect there to be some strong presentations on SGN-CD33A. As we've said, we're encouraged by the data. So, I think that that's what we're looking at, and so you quoted 225 patients in the January timeframe, and both of those are something that I'm not familiar with.

[Tony Butler:]

I apologize, it is ClinicalTrials, certainly at the beginning.

[Clay B. Siegall:]

Okay. One comment. Jonathan?

[Jonathan Drachman:]

So, Tony, I think that you may be quoting the maximum number of patients on the Phase 1 trial on clinicaltrials.gov, is it correct?

[Tony Butler:]

Well, no, it doesn't say max. It says estimated enrollment and if you actually go and punch in CD, what you would normally do, CD33A AML and you come up with two trials

[Clay B. Siegall:]

Okay. Let me just clarify, there's two ongoing trials right now. One is the original Phase 1, which includes both the monotherapy, multiple dose levels, multiple patient subset as well as the HMA combination cohort. So we're not talking about – so that's everyone in Phase 1, including the patients that were presented last ASH. And then there's a second trial, which is a Phase 1b combination in the unfit patients, which includes patients who are eligible for intensive therapy and that includes combinations with the induction regimen or the consolidation or maintenance, for patients in remission. So...

[Tony Butler:]

Thank you. So the former was with the azacytidine and or decitabine plus CD33A, is that correct?

[Clay B. Siegall:]

Correct. That's a subset of that Phase 1 trial.

[Tony Butler:]

Okay, okay, thank you for the clarity. I'm grateful.

[Clay B. Siegall:]

Sure.

[Tony Butler:]

Two additional questions if I may. One is, is Bristol helping you fund the nivolumab studies, which will go into clinical trials? And then one follow-up again.

[Clay B. Siegall:]

The nivolumab combination trials are jointly funded. Todd, do you want to add anything to that?

[Todd E. Simpson:]

Yeah, Clay is right. They're jointly funded. We haven't gotten into the specifics, but there are two trials that are envisioned, one in Hodgkin lymphoma and another in non-Hodgkin lymphoma, and we're just working together on those trials and co-funding the cost associated with them.

[Tony Butler:]

That's great. It's just an exciting theme around the tumor microenvironment.

[Todd E. Simpson:]

It is.

[Tony Butler:]

The last question really is around – and applause to that, but the notion of ADCETRIS (41

[Clay B. Siegall:]

Yeah. Thanks, Tony, for the question. That's something we talk about a lot at the executive management level and with our board. Now, it goes back to really what our goal and strategy is for the company and where we're going as a company. And the goal that we have in the company is to build a big strong profitable biotech company. And we think that to do that what we want to do is a couple of things that are key to that. First of all, develop ADCETRIS in a very broad way to get it to as many patients as we need, and we believe ADCETRIS will become a blockbuster product. And so, that's one thing that we're doing. Another thing we're doing is we're going forward in a very strong clip on our pipeline. We have, I think it's seven products in clinical trials and I think a total of a dozen products that we're developing that some are on the way to clinic that we don't even talk about yet but are exciting from a preclinical standpoint. So, we are developing a series of products that are coming forward, which includes some of the ones we talked about like SGN-CD33A and SGN-CD19A, but others. And the reason we're doing a series of products there is our preclinical data is strong and our packaging is strong. So, we want to bring them to patients in need, but also we understand that there's a lot of attrition in the biotech business that we are in and it's hard to treat cancer patients. So, developing a full and robust pipeline will be the best way that we know how to get drug 2 and drug 3 that we believe will be commercial successes and really help patients going forward. And to do that you have to invest in it. And so when you take – I've been around for a long time now, and I've seen companies like Celgene and Regeneron and other ones, when they were small, and saw how they invested in their drugs and their pipeline and became big successful companies. That's really our goal, what to do going forward, and that's how we've assessed the balance between the dollars and the expenditures.

[Tony Butler:]

Clay, thanks very much.

[Operator:]

And we'll go ahead and take our last question from Christopher Marai with Oppenheimer. Please go ahead. Your line is open.

[Michelle Gilson:]

Hey, guys. This is actually Michelle in for Chris Marai. And we're wondering if you could help us understand your strategies for growth going forward with respect to potential new collaborations. And more specifically will you look at something more defensive to say augment your approach in Hodgkin's lymphoma or are you looking at something more innovative like your Unum deal? And finally, how do you look at the size of these collaborations, do you anticipate raising additional capital like this sort of a follow-up to the last question to fund either the Unum deal or the next collaboration?

[Clay B. Siegall:]

So, I will answer the first question and then I'll turn the – or I'll answer the second question on the size and dollars, and then I'm going to turn the strategy of our business development where we look at to Eric Dobmeier, who leads those efforts. But as far as these collaborations and the size of them, it depends on the collaboration. I'll let Eric really refer to that and you ask about the dollars that was needed for that, we have a very good cash position in $250 million in cash. We have no debt. We have as a company always been and will continue to be opportunistic to do the right thing for the company and whether that is raising capital, not raising capital, doing partnering deals, doing ADC technology deals, we have always done the right thing and we think been very good stewards of our capital. And whenever we have chosen to raise capital, we have a great use of proceeds story. So, we've been very clear, and I think we've been clear to Wall Street on what we've done there and how we're being opportunistic, and we'll continue to be that for financial reasons. Now, Eric, do you want to comment on the strategy behind business development deals?

[Clay B. Siegall:]

Sure. So our BD strategy is an extension of our overall corporate strategy; and our priorities, which have been consistent for a number of years, are to build ADCETRIS into a major global brand, to advance our product pipeline and to enhance our leadership position in ADCs. So, while we'll be opportunistic about looking for in-licensing our acquisition opportunities that can help what we're doing especially around the pipeline, Unum as I said earlier, leverages our experience with novel oncology targets in antibodies and utilizes a different technology to exploit some of these targets. So, we think that certainly helps with that second goal of broadening and diversifying our pipeline. We're also doing work with Bristol-Myers combining with nivolumab, which is again another way to expand our first priority of making ADCETRIS into a major global brand. So, there's a number of different types of licensing deals or acquisitions that could fit into those buckets, but we're really not looking to do something transformational. What we're looking to do is supplement what we're already doing. We're very optimistic about our strategy and our priorities as they are. So BD can help us achieve those goals.

[Operator:]

And we'll go ahead and take our last question from Nathan Sidegy (48

[Unknown Speaker:]

Hi, Clay, could you just remind me, please, of any price hike history for ADCETRIS over the last 12 months? Thanks.

[Clay B. Siegall:]

What history for ADCETRIS?

[Unknown Speaker:]

Just if there have been any price hikes? Thanks.

[Clay B. Siegall:]

Oh, price hikes, sorry, yes. So, yeah, in fact, Todd, could you take this question?

[Todd E. Simpson:]

Yeah. So in the last 12 months we've done two price increases. They were about 3.9%, 4% each. One was just recently at the end of June, and then before that right at the beginning of the year.

[Unknown Speaker:]

Okay, great. Thank you.

[Operator:]

And that does conclude the portion of our question-and-answer session. I will now hand it back over to Peggy 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 that does conclude today's program. We like to thank you for your participation. Have a wonderful day, and you may disconnect at any time.