Seagen Inc.
Q1 2014 Earnings Call Transcript

Published: 2 May 2014

[Operator:]

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Seattle Genetics First Quarter 2014 Financial Results Call. [Operator Instructions] I would now like to turn the conference over to Peggy Pinkston, Senior Director of Corporate Communications. Please go ahead.

[Peggy Pinkston:]

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seattle Genetics First Quarter 2014 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; Chris Boerner, Executive Vice President, Commercial. Following our prepared remarks today, we will open the line for questions. If you'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 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 and which are available on our website for information concerning the factors that could affect the company. With that, I'll turn the call over to Clay.

[Clay B. Siegall:]

Thanks, Peg, and good afternoon, everyone. Thank you for joining us. I'm pleased to update you today on our progress thus far in 2014. We continue to deliver upon each of our top 3 priorities

[Christopher S. Boerner:]

Thanks, Clay. ADCETRIS net sales in the first quarter were $38.7 million, which represents a modest increase over Q4. The underlying dynamics of the U.S. business remained favorable for ADCETRIS. Our primary objective's to continue to be insuring that ADCETRIS stays the standard of care in our current indications and that patients are treated consistent with our label. To that end, the team is focused on reminding customers about the impressive clinical data seen in our pivotal studies and working to ensure patients goes to progression or unacceptable toxicity. In addition, we have begun commercial planning efforts to support a potential 2015 U.S. label expansion associated with the AETHERA study, which as Clay noted, will read out later in the latter half of this year. In Canada, the majority of key Canadian provinces have now implemented funding for ADCETRIS. We remain in discussions with Québec, which has its own unique coverage and funding process. We expect to complete this process later this year. In the meantime, patients are accessing ADCETRIS in Québec through local case-by-case funding decisions. Overall, the commercial team continues to execute well. Customer interest in and support for ADCETRIS remain strong, and we continue to expect net sales in 2014 to be in the range of $155 million to $165 million. Now I'd like to turn the call over to Todd.

[Todd E. Simpson:]

Thanks, Chris, and thanks, everyone, for joining us on the call this afternoon. Our financial results in the first quarter of 2014 were in line with guidance, and we ended the quarter in a strong financial position with more than $355 million in cash and investments. We are well positioned to continue investing in our ADCETRIS program and in advancing our robust product pipeline in ADC technology initiatives. Total revenues were $68.3 million for the first quarter of 2014, which included ADCETRIS net sales of $38.7 million. We also reported royalty revenues of $12.7 million in the first quarter, reflecting a strong progress by Takeda with launches in its territory. Because we report royalties 1 quarter in arrears, our first quarter royalties reflect sales activity by Takeda in the fourth quarter of last year. Our first quarter royalties include a $5 million sales milestone, triggered by Takeda's surpassing $100 million in ADCETRIS net sales in 2013. Exceeding $100 million in annual sales also resulted in an increase in the royalty rate we received from Takeda from the mid-teens to the high teens. Both of these factors led to increased royalties for the quarter. Collaboration revenues totaled $16.9 million in the first quarter of 2014, which included the earned portion of milestone and reimbursement payments. R&D expenses were $54.5 million in the first quarter of 2014 compared to $47.7 million in the first quarter of last year. The year-over-year increase reflects ADCETRIS' clinical development activities and in continued investment in our 5 other clinical stage ADCs and our preclinical pipeline. SG&A expenses were up modestly year-over-year, primarily attributable to increased staffing levels. Noncash share-based compensation cost for the first quarter of 2014 was $9.3 million compared to $6.6 million in 2013. So in summary, we had a strong first quarter and expect to be within our guidance for the year. Our collaborators also have continued to make significant progress, achieving milestone events so far this year that have triggered nearly $30 million in cash payments to us. With that, I'll now turn the call over to Jonathan.

[Jonathan Drachman:]

Thanks, Todd. I'm pleased to update you today on our clinical and research activities. Our efforts are focused on fully defining the potential of ADCETRIS to help patients, on developing future meaningful therapies from our pipeline programs and on bringing innovative new technologies and programs into clinical testing as rapidly as possible. I'll start today with ADCETRIS, which we're evaluating across a broad array of malignancies. Beyond the Phase III update that Clay provided, I want to highlight some compelling data reported in February at the Bone Marrow Transplant Tandem Meetings from an ongoing Phase I/II clinical trial combining ADCETRIS and Bendamustine for the treatment of second-line Hodgkin lymphoma. The data from this trial are promising, showing a complete remission rate of 77% with another 15% of patients who are still on treatment, achieving early partial remissions. The trial has been amended to add routine premedications to address infusion reactions, and no dose-limiting toxicities of the combination have been observed. These data are another example of the progress we're making towards our goal of moving ADCETRIS into earlier lines of Hodgkin lymphoma therapy. We also continue to evaluate ADCETRIS in diffuse large B-cell lymphoma, or DLBCL. We are conducting a single-agent Phase II trial in relapse DLBCL. We've previously reported encouraging activity and tolerability in advanced stage patients, who expressed CD30 by traditional methods. Enrollment is ongoing in patients whose tumors do not express detectable CD30 using standard immunohistochemistry methods. We have also added an ARM to the Phase II trial to assess the activity and safety of the combination of ADCETRIS plus Rituxan in relapse DLBCL. And in frontline DLBCL, we're conducting a Phase II trial to evaluate ADCETRIS plus R-CHOP. We plan to report data from these studies later in 2014, and these evolving data will inform our future plans for ADCETRIS in DLBCL. Another important therapeutic area of investigation with ADCETRIS is peripheral T-cell lymphoma. ADCETRIS was recently added to compendia for relapse CD30-positive PTCL, following its inclusion late in 2013 in NCCN Guidelines. We also plan to report data this year from some of our pipeline programs. Notably, we'll have an oral presentation on our SGN-CD19A Phase I trial in non-Hodgkin lymphoma at ASCO. As a reminder, this is an anti-CD19 ADC that is in 2 Phase I trials, one for acute lymphoblastic leukemia and one for aggressive T-cell non-Hodgkin lymphoma. Patient enrollment and dose refinement are ongoing in both Phase I studies. Later in 2014, we expect to report data from SGN-CD33A of CD33-targeted ADC that is currently in a Phase I trial for acute myeloid leukemia. AML represents a significant unmet medical need. This is the first clinical trial of an ADC that utilizes our proprietary highly potent cell-killing agent, a PBD dimer, and our site-specific conjugation technology. Accrual to this trial is strong, and we are continuing dose escalation. Our third wholly-owned ADC in early clinical trials is SGN-LIV1A. This ADC is targeted to LIV-1, which is expressed on more than 90% of breast cancers. SGN-LIV1A is an auristatin-based ADC that uses the same drug linker as ADCETRIS. Our ongoing Phase I trial is for patients with multiple subtypes of metastatic breast cancer, for which there are currently no curative therapies. We remain on track to submit INDs for 2 additional programs during 2014, including SGN-CD70A and ADC targeted to CD70 that utilizes the same PBD-based ADC technology as SGN-CD33A. The potential of our technology is underscored by the progress of our collaborators through clinical data, trial initiations and milestones. Of the roughly 30 ADCs in clinical development, more than 20 utilize our technology. This reflects more than 16 years of research that we have invested in this field and the substantial expertise of our team. Some recent highlights include Genentech (Roche) reporting interim data at AACR from their anti-endothelin B receptor ADC for melanoma. Genentech also have an anti-CD79b ADC in late stage development for lymphoma. Celldex initiated a pivotal trial with its GPNMB ADC for breast cancer. AbbVie initiated a Phase I trial with a second ADC for cancer. Bayer submitted an IND for an ADC using our technology. And multiple collaborators reported preclinical data at AACR including GSK, Takeda, Agensys, Bayer, Pfizer, Celldex, Progenics and Genentech. As the leader in developing ADC technology, we along with our many collaborators are at the forefront of changing the way cancer is treated. We're very pleased by the work in innovation taking place within our research group to ensure that we remain the leader in the field of ADCs. The site-specific conjugation technology and potent PBD payload utilized in SGN-CD33A and SGN-CD70A are examples of this commitment to innovation. And some of the ongoing advances we're making were apparent at the recent AACR annual meeting, where more than 15 abstracts were presented, highlighting data with our ADC technology. We described novel auristatin-based drug linkers that lead to enhanced potency, greater stability and uniform drug loading, technologies that could be applied to future ADC candidates. Our translational research is helping us design potentially better drugs for tomorrow, while testing the state-of-the-art in clinic today. 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 milestones

[Operator:]

[Operator Instructions] And our first question comes from the line of Matt Roden with UBS.

[Matthew Roden:]

First question, I guess, is on AETHERA. Jonathan or Clay, can you talk about what you think the minimum benefit would be on 1-year PFS and AETHERA that would be clinically and statistically significant to where it would not be controversial that you could file the FMDA and see utilization in the clinic? And then I have a follow-up.

[Clay B. Siegall:]

Right. Matt, we're not going to lay out a specific number that we think would be beneficial. And looking at curves, there's always a lot of different data that comes on curves in these types of studies, looking at the 1-year time, but also looking at longer-time points and the tail of a curve. And so, there's a lot of data there, and anything specific is something that will be between us and the regulators. You have a follow-up question?

[Matthew Roden:]

Yes, I did on -- when you look at the ASCO abstracts -- I'm sorry, the titles that are out, I was a little bit intrigued by, I think, it's IST abstract 8507 pilot Phase II study of ADCETRIS followed by ABVD in patients with previously untreated Hodgkin's. I'm just wondering, to sort of start with ADCETRIS upfront and followed by ABVD, in the frontline, does this work into your clinical development or commercial plans? Should we be thinking about that as a potential path forward?

[Clay B. Siegall:]

Matt, we do a lot of different investigator-sponsored trials, and they're very, very interesting and informative. At the present time, I would not include that in a model. Now having said that, if data are very exciting in any of our ISTs, we absolutely reserve the right to consider following them up and doing some potential registration to work and things like that. But for now, where this is, I think it would be too premature to put in a model. Jonathan, would you like to comment on any of this?

[Jonathan Drachman:]

Well, I'd say that based on our Phase I trial, we're very pleased with the ADCETRIS plus ABVD combination that we've taken forward into ECHELON-1. And we like the fact that not only is it including the most potent single agent that I know of, that's ever never been studied in Hodgkin lymphoma, but also removing bleomycin, which has the potential for pulmonary toxicity. So that's -- we're excited about that. We're also excited to see that physicians are interested in continuing to use ADCETRIS in different ways, and seeing how new data evolve is also of interest to us.

[Operator:]

And our next question comes from the line of Cory Kasimov, JPMorgan.

[Unknown Analyst:]

This is actually Britney [ph] on for Cory. I actually have 2. First, what's your take on the competitive landscape for CD19-targeted compounds and in particular, Sanofi's ADC and Novartis' CAR-T, and then also curious what the level of investigator interest is at this point for SGN-CD33A given the unmet medical need?

[Clay B. Siegall:]

I'm sorry [Audio Gap]

[Unknown Analyst:]

The second one is just the level of investigator interest in SGN-CD33A?

[Clay B. Siegall:]

Okay. Thank you. I'm trying to write down your stuff pretty quickly here. Okay, first one, the competitive landscape, Britney [ph]. With CD19, our CD19 program, SGN-CD19A, it is a competitive area. NHL and ALL are the 2 areas we've been studying, and those are competitive areas, especially NHL. And Sanofi, Novartis with the CAR-Ts, Juno, many other groups are working on different molecules. There's also molecules that Genentech is looking on using our technology. There is ibrutinib, which is in -- approved in certain lymphomas, but being tested in others. So there's quite a few molecules. So I think your point is, how does what we have fit into that? And that's exactly what we look at and we talk about internally all the time. We try to make sure that our drugs are not only effective for patients and have good safety profile and can be used, but how competitive they are in the landscape and would docs use them and would they benefit patients in a way and are they differentiated from other folks' drugs. So I don't want to tell you specifically how ours compare because that's internal information, but the question you're asking is a very good one, and we discuss it internally a lot. And your second question on investigator interest in 33A, the accrual has been very strong with that product. AML is a devastating disease and really needs some more therapies. We think CD33 is a great target. We love that we're using our newest technology, our newest payload an engineered cysteine antibody. I mean, this is really the newest and next generation of ADCs in the world, and we think that the preclinical data was very special. And we're excited to be in clinic and investing in this program and to; see if we could help AML patients and very much look forward to presenting data at the end of the year. As far as the investigator interest, they're substantial. Jonathan, would you like to make comments on either of the 2 questions?

[Jonathan Drachman:]

Sure. So one thing, Britney [ph], I'd say is that on all the competition in the field of lymphoma is something that we keep a very close eye on, but it's nice to know that CD19 is such a promising and exciting target. It's one we've been interested in quite a while and continue to feel that, that's a great way to address B-cell malignancies. As far as CD33 goes, as Clay said, AML is just such a horrible disease, and there's so few good options for these patients that it's a tremendous need and excitement to physicians.

[Operator:]

And our next question comes from the line of Jason Kantor with Crédit Suisse.

[Jason Kantor:]

Just wondering, can you talk a little bit about the possible changes to the protocol that you're talking about sort of the Phase III trials? I guess, what changed in your view? I mean, these trials weren't started that long ago, and you knew you had an active compound at the time. I mean, is something really demonstrably different at this point? And then what are some of the variables you might look to change? Is it lowering the patient number or the type of analysis that you would consider doing in the ECHELON trials? And then also, if you could just comment on how enrollment is actually doing in those studies? Are they -- can you give us any kind of numbers or percent completion or anything like that?

[Clay B. Siegall:]

Sure. Thanks for the question, Jason. Okay. Here's what's going on. First of all, ADCETRIS is really a great drug, and it's helping a lot of people, and the data is great, I mean, with ADCETRIS in many different clinical trials, and I'll ask Jonathan to comment on them in a little while. ADCETRIS is an important drug. Docs are employing this drug. It's really helping patients. And we designed the ECHELON trials based on preliminary response rates that we had at the time. And the Phase I frontline trials were still ongoing. And we had yet to combine ADCETRIS with other agents. Since then, we have seen increasing evidence of the positive activity of ADCETRIS in combination with multiple types of chemotherapies and encouraging trends in PFS. And that makes us think that it's important to factor in these positive emerging data, as well as that we know we have slower-than-expected progression events in AETHERA and we've reported that multiple times in quarterly calls. And so we think about all these when we think about our event rate assumptions for the ECHELON trials. So we're in ongoing discussions with our partner, Takeda. It's too early to provide specifics. I appreciate your asking questions on the variables and patient numbers and analysis and all that stuff, but it's just too early to, but we wanted to be very transparent. We think that with AETHERA, we try to be, quarter after quarter, very transparent about what we were thinking, that there might need to be changes because of the slow PFS rate. We then said we were going to speak with our partners, we then said we were going to speak with the regulatory agencies and we did all that. We wanted to give a little foreshadowing and be transparent saying we're looking at E-1 and E-2, as we call ECHELON-1 and 2, E-1 and E-2, and we're looking at them very closely working with our partner and in the future, potentially regulatory agencies and we just want to let you know that we're thinking about it and we're trying to do what's best for the company, the drug and for our patients.

[Jonathan Drachman:]

Okay. And I'll just add a little bit, Jason. So first of all, as you know, we are blinded to any data from ECHELON-1 or ECHELON-2, so nothing that we talked about has anything to do with efficacy data or any emerging data from those trials. It's really based on the lead in Phase I trials. I'll also just mention that we're not going to comment on enrollment or how that's going, but investigators are enthusiastic about trying to conduct trials that can potentially change and redefine frontline therapy for these CD30-positive diseases. When we designed the trials, as Clay mentioned, we really had just preliminary response rates. And even our pivotal Phase II trials that led to accelerated approval, we had pretty limited duration of follow-up. So at ASH, as you may recall, we presented data on the 3-year follow-up for the Hodgkin lymphoma trial, showing that our median overall survival was greater than 3 years whereas historical would be about 1.3 years. And in the ALCL trial in the relapse refractory setting, we haven't reached median survival after over 3 years of follow-up and that's really unprecedented. The median is closer to 5 to 6 months based on historical data. Then the ECHELON-2 trial for MTCL is based on the ADCETRIS plus CHP data. As you'll recall, we had 100% response rate and we presented data, as Clay mentioned earlier. 71% of patients had not progressed that for a year, and we still hadn't reached the median PFS after almost 2 years of follow-up. So these are also emerging data that we didn't have. And finally, the ADCETRIS plus AVD trial where we had a 96% CR rate among the patients in the Phase I trial. If you look at the Lancet Oncology manuscript in December of last year, you'll see we had very limited follow-up, but extremely few patient progressions. So and 90 -- 95% of the patients in the A plus AVD arm had not progressed at the time that, that manuscript was written. So based on all these data which have come and continue to emerge since those trials have started, we think it's important to look at it and to see if our original assumptions need to be re-examined.

[Jason Kantor:]

Is there an interim analysis built into E-1 or E-2 and if not, is that something that you could consider adding?

[Jonathan Drachman:]

There isn't currently interim analysis, and we have -- we're not prepared to comment on the different things that could be done with the trials. Those are negotiations that we're beginning, and will be ongoing for a while with our partner, Takeda, and with regulatory agencies.

[Operator:]

And our next question comes from the line of Adnan Butt with RBC Capital Markets.

[Adnan S. Butt:]

For the anti-CD19, should we expect NHL alone or is it both ALL and NHL at ASCO and what should we expect -- what should we expect data-wise? Has MTD been reached. And then secondly, Clay, just a high-level question. I think you mentioned 2 INDs per year. Is that ADCs only? Is that something beyond ADC and is that proprietary or partnered, combined? And what gives you confidence the pipeline can be as productive as that?

[Clay B. Siegall:]

Thanks for all the questions. First of all, the presentation at this year's ASCO is just NHL. It's not an ALL presentation on the CD19A. So that's a straightforward question. And there'll be a substantive amount of data in the presentation and I think that -- we'll let the presentation go for itself and not start talking about specifics of data and MTDs and any of these things. We will wait for the presentation. I think that's appropriate. As far as the 2 IND's per year, those don't count the partner -- the partnered technology. Those -- when we say 2 INDs per year, we're referring to internal programs that either are fully owned by Seattle Genetics or at least half-owned by Seattle Genetics, if we did a co-development. We're not counting anything where their out-license technology think that if we were carrying that it would be a much bigger number, year in and year out. But like for instance, last year, we did more than 2. In 2013, we did I think 4 totally. In 2014, what we're doing is we're guiding to -- that we'd do two and we look beyond. I think you'll see some years we will do 2. There may be occasional year, we get 3 in there, but our pipeline is full. I mean the cabinets where our pipeline sits have a lot of different exciting drugs in it. And the last thing that you mentioned was it is only ADCs? No, it's not only ADCs and in fact, we have some very interesting non-ADCs that have come through our development pipeline and through our research that we would consider working on in the future. But having said that, you'll still see that ADCs dominated our landscape going forward.

[Adnan S. Butt:]

So exactly what are these non-ADCs?

[Clay B. Siegall:]

Sorry, what are these non-ADCs...

[Adnan S. Butt:]

What are these non-ADCs? Yes.

[Clay B. Siegall:]

You will find out we're -- for competitive reasons we don't want to state too much of exactly what we're doing. There's quite a few companies that keep a very close eye on what goes on at Seattle Genetics and they want to know what we're doing. You may recall, even with SGN-CD33A, we have been working on that program for 6 years. The first time you heard about it was about 4, 5 months before the IND started or filed. And so, and then we put information at the clinicaltrials.gov. So we tried to really -- we tried to hold our programs as close as we can. You now know that the SGN-CD70A is our next IND, we've outlined that. But we've not even outlined what the second one would be in 2014. You'll hear about that in upcoming days.

[Operator:]

And our next question comes from the line of Thomas Wei with Jefferies.

[Thomas Wei:]

Just on the ECHELON-1 and 2 changes, are you -- should I be thinking of it becoming something like a landmark PFS analysis? Is that what you're thinking of? Like switching the endpoint to a responder analysis of the proportion that get to 1 year -- what the 1 year PFS rate is or the 3-year PFS rate is kind of similar to what you did with the AETHERA trial? And then my second question on AETHERA was just a reminder again of -- there were a lot of concerns that had been raised at the FDA panel on the design of AETHERA, which led them to say that it could not be the confirmatory study for approval. Can you just remind us what those concerns were and how we should think about that as the AETHERA data approaches here?

[Clay B. Siegall:]

Yes. First of all, you asked a question about the ECHELON-1, ECHELON-2 trials and what kind of potential changes. And I used the word potential because this is with discussion with our partner, with regulatory people, so nothing can be written into anything that we are even contemplating now. But your comment could it be a landmark analysis instead of event-driven analysis like such as what we did with AETHERA? That is one of the options. When we look at all the different options that's certainly is not one we're throwing off the table, but I don't want to guide you that, that will be it yet. We're still in discussions and contemplating all of the information before any specifics will be made. But I do appreciate your comment and that is certainly one of the multiple things that could happen. As far as AETHERA, you do remember correctly there were some issues that the FDA brought up to not make a confirmatory trial that it would be something that they wanted in -- they wanted for the safety database for certain. So that's written in there. But as far as confirmatory, it was not. And I think there was a lot of different discussions up and down on AETHERA. It's our assessment that when we complete this trial, if the data are good and that's what we certainly are hoping for and they are good, our intention is to submit this. And we believe that if the data are strong, we submit it, that it would be a review decision by the agency. Jonathan, do you want to comment on any of the specifics that the FDA might have had any questions with?

[Jonathan Drachman:]

Well, I think that the main issue that they wanted to have some more comfort with, with the heterogeneity of the patient population and that's something that we're aware of and we'll look at when we have unblinded data to evaluate.

[Thomas Wei:]

Yes, I think -- just a follow-up on that. So the heterogeneity of the patient population, they were just concerned that a particular subgroup might drive the overall data? So if you just see a good benefit across the entire population in AETHERA, that would address their concern? Is that the way I should think about it?

[Clay B. Siegall:]

I think that's potentially one way to look at that. I mean, there are some patients in the subset that are going to be worse off and have more risk factors than other patients. And so I think that if the data look strong across our different patient types, I think it will speak loudly. So I think you're correct.

[Operator:]

And our next question comes from the line of Navdeep Singh.

[Lisa Zhang:]

This is Lisa in for Navdeep. So with KOLs that you consulted, what absolute improvement in relapse rate does ADCETRIS plus AVD need to show over ABVD to be viewed as clinically meaningful?

[Clay B. Siegall:]

That's something that we've had quite a lot of discussion with KOLs and a lot of internal discussions, but that's not something that we have publicly discussed the specific numbers, so there's a line in the sand. I think that -- whenever you're speaking with KOLs and you're speaking with -- internally, I mean, it's not necessarily the identical thoughts that any regulatory bodies would have. So until you really get an exact feedback, until you get an exact feedback from regulators, you don't know. And the other thing that's really important is also looking at the safety. And the safety is something that by taking out bleomycin, we're looking to get rid of the pulmonary toxicity. So I think that's not just an efficacy line. But I have to say that we believe that it has to not only be just safer, that there has to be an efficacy advantage for doctors to want to use this. So we're -- what we're looking for is a regimen that can redefine frontline Hodgkin lymphoma and decrease the pulmonary toxicity that is debilitating in certain patients, especially because Hodgkin lymphoma is treated in a lot of young people and we want to get rid of that and increasing the efficacy.

[Lisa Zhang:]

So is that more maybe like, say, a 10% improvement or a 30%? Is there anymore greater detail you can give there?

[Clay B. Siegall:]

We're not prepared to give a specific number. That's something that is, I can't -- internal number.

[Lisa Zhang:]

Okay. And then just a follow-up, given the recent increase in scrutiny of drug pricing, including oncology drugs, how much more pricing power do you believe you have with ADCETRIS in the U.S?

[Clay B. Siegall:]

I think there has been a lot of scrutiny on drug pricing and that's certainly not going away and that's going to stay here. And I think that ADCETRIS is a -- had a real value proposition. I mean that's something that it helps patients, it helps a very high proportion of patients. You could -- and so, we've really had incredibly little pushback from insurance companies. And maybe Chris Boerner wants to comment this. But I would say that when you look to the future, drugs that have very incremental benefit, not like ADCETRIS, but ones with incremental benefit, and you can't even tell what patient to use and it works on 20% of people and you have to treat 100% and with incremental benefit. It could be very hard for them to get a premium price. So you need a drug that has the attributes of ADCETRIS that works on a high preponderance of patients and you could tell which patients to go after. And it's outpatient therapy and it really benefits people. And I think those are the drugs that will continue to have a strong ability to price because of their value. Chris?

[Christopher S. Boerner:]

Yes, I think Clay has hit on all the keypoints. We have really seen very little pushback in on label use of ADCETRIS from payers. There's been really no concern about price in the U.S. with respect to this drug on label. And I think Clay is absolutely right, as long as, ADCETRIS continues to have a meaningful impact on patients in whatever setting we believe that the price of ADCETRIS will be appropriate. And that we will continue to have a very strong reimbursement climate for the drug.

[Lisa Zhang:]

Okay. And last question, how many interim safety checks has ECHELON-1 cleared?

[Clay B. Siegall:]

We don't provide that information. We certainly have a DSMB, but we're not providing that information.

[Operator:]

And our next question comes from the line of Gena Wang with Leerink Partners.

[Gena Huidong Wang:]

Actually, I'm dialing for Howard Liang. So I have 2 questions. The first one, when will we see the LIV-1 ADC data? Can you give us an update on the progress? And the second question is for the Roche, the CD22 and the CD79b data will be presented at ASCO. Wondered if there's -- if there will be a milestone if Roche advanced one of them to Phase III?

[Clay B. Siegall:]

So as far as LIV-1 ADC goes, that trial is ongoing and it's occurring and we will present it at the appropriate time when we feel we have an important data set to present. And I don't want to be specific as to timing right now. It's not going to be presented at ASCO this year. I could tell you that. And I could also tell you that it's not going to be presented at ASH because it's not appropriate for ASH. It's in breast cancer, so it's not a hematologic malignancy. So you won't see it at those conferences. Now there are other conferences in 2014, as well as 2015 that will reserve the right to present it at appropriate conferences. And as far as the Roche questions, Eric, would you take that?

[Eric L. Dobmeier:]

Yes, there is a Phase III milestone. I think in all of our ADC deals there are Phase III milestones, So you would expect that when and if they move it to Phase III.

[Operator:]

And our next question comes from the line of Mara Goldstein.

[Mara Goldstein:]

I'm not sure if it's premature to ask the question, but with respect to any modification around ECHELON, how should we think about that in terms of any change in the statistical package for the review of that trial?

[Clay B. Siegall:]

Yes, I appreciate the question, Mara, it is too premature to really comment on any of that.

[Mara Goldstein:]

Okay. And then if I could just ask one unrelated question, and that's on ADCETRIS outside the U.S. I'm wondering if maybe you could provide us with a little bit of color in terms of what treatment character -- or rather, what treatment looks like as it relates to what we see in the U.S. versus territories outside the U.S. now that you're getting royalties in the building and x U.S. territories?

[Clay B. Siegall:]

Yes. I think outside the U.S., treatment paradigms are not that different. I mean doctors are really employing this. I can tell you that I was just outside the U.S. and speaking with doctors with our partner -- Takeda had an event. And I was outside U.S., speaking with doctors that are very interested and very excited about ADCETRIS and have used ADCETRIS to treat patients and -- I mean, everywhere in the -- all different territories. Sometimes it's different territorial ways that people kind of use things here and there that are slightly different. But in general, treating in relapsed refractory patients around the globe, ADCETRIS has been a tremendous drug and helped a huge number of patients and I hear stories in the U.S. But now I'm starting to hear some of these amazing stories from doctors internationally. And it's really why I come to work every day is to make a difference in patients lives. So I think, generally, we're seeing pretty similar use.

[Mara Goldstein:]

And would you say or characterize your duration of treatment is consistent with what the rollout was in the U.S?

[Clay B. Siegall:]

That's a tougher question. That's really a question that Takeda monitors outside the U.S. We monitor in U.S. and Canada. So I don't really have a firm answer for you, yet. But I think it's also hard because as each country comes on board, those numbers may be -- may change and so, I don't know, I don't have answer to that. But I appreciate your question.

[Operator:]

And our next question comes from the line of Steve Byrne.

[Steve Byrne:]

I was wondering if the -- I know you're blinded to E-1 and E-2, but are you looking at overall event rate data? And does that support your concern about a lower-than-expected event rate?

[Clay B. Siegall:]

At this point, we're not looking at any -- we don't have any data on the overall event rate. We're still accruing and that's where it is now. It's really based on the compilation of things that I and Jonathan outlined, all the data that we have on ADCETRIS and combinations, all the Phase I data that were the lead-in trials for our Phase III E-1 and E-2 trials, which we now have the luxury of having a couple of years worth of data in them, so we could really understand what's going on, on those trials and how excited we are with the data of ADCETRIS in combination with chemotherapy. So it's really a compilation of things that we're looking at. And then there's AETHERA, which is really long with the event. So Jonathan, would you like to add anything?

[Jonathan Drachman:]

Yes, I'll just confirm what Clay said. No, this is not based on any data from E-1 or E-2, not blinded, not unblinded, nothing. It's -- and that's in contrast to the AETHERA trial where we did see a decreasing rate of events. And that led to the decision of how we modified it.

[Steve Byrne:]

Okay. I appreciate that. And just with respect to the potential for ADCETRIS in low-expressed CD30 tumors or non-amplified CD30, do you have preclinical data that supports that? And taking it the next step for your more potent cytotoxins on your ADCs, do you think there's greater potential for those to be efficacious in low expression antigen tumors?

[Clay B. Siegall:]

I think that's actually a good question. I mean, we have a lot of data and mounting data on what we call high expression and then, undetectable by histology, you know like standard histology. But then when we start looking at it with other more modern techniques, we can really see CD30 and we reported this at various conferences and on conference calls. So we're learning more and more about what the responses are with higher expression and lower expression. In fact, we have an arm in our DLBCL trial with ADCETRIS, which has an arm, which is below standard histology that we call undetectable by standard histology. So we're treating there and we previously talked about data and presented data in CTCL at the low CD30 amounts. So I think that, that's a gathering -- we're gathering information there. We're excited with the potential to treat a broader swath of people in diseases where there's variable expression profile. Sub-diseases like ALCL, we see in almost every patients, so it's not an issue but at some diseases, you see variable high and low. And we're trying to really figure this out, and I'm excited with the progress we've made there and with how things are looking. And you asked another question on whether if we use more potent cytotoxins. Like that PBD-dimers, could we potentially treat patients that have even lower expression profile. And I think the answer is a potentially yes, we have to prove it. But Jonathan, would you like to comment on either of the two questions?

[Jonathan Drachman:]

Sure. Yes. So based on preclinical data, we do have reasons to expect that ADCETRIS could work where you have low CD30 expression. We presented some data at ACR showing that we can get localization of ADCETRIS to tumors in xenografts that expressed low CD30. And we also showed that in heterogeneous tumors, it can be active. So that's also an issue when you look at a tumor biopsy, whether that reflects all of the tumor or just a small area within it. And then yes, that's a good question about the higher potency payload. They could be active when you have a low antigen number, and that's something that we're excited about and actively looking at.

[Operator:]

And our next question is a follow-up from the line of Jason Kantor with Crédit Suisse.

[Jason Kantor:]

Clay, I was just wondering if we could get, I guess, a little bit more clarification on the ECHELON-1, 2 issue. Would you consider changing the design of the statistical plans before seeing the AETHERA readout? It would seem like you made this change with AETHERA and you're waiting on that data. I mean would it be wise to wait to see how that works out before implementing any kind of change here for E-1 and E-2?

[Clay B. Siegall:]

Jason, thank you very much for the question. It's a logical question you're asking. We're not going to give you a straight answer, whether or not we are going to consider AETHERA's data, which will be in the second half this year, or not, in moving forward. That's not something that I think is appropriate for us to discuss. We are working with a partner, we then work with the regulators. So really giving you that -- giving speculating on it right now is premature. Certainly, we're excited to get the AETHERA data later this year. There's no question about that. But I do appreciate your logical question, but it's one that we can't comment right now.

[Operator:]

And I see no more questions at this time. I'd like -- we'd like to turn the call back over to management for any closing remarks.

[Peggy Pinkston:]

Okay, thanks, operator, and thanks everybody for joining us this afternoon. Have a good evening.