In his first earnings presentation as new CEO at cancer specialist Seagen, David Epstein had lots of good news to share on Wednesday afternoon. And one analyst liked what he heard from the former Novartis oncology chief.
The Seattle biotech’s “growth drivers are firing,” Evercore ISI's Josh Schimmer wrote in a Wednesday note.
Sales of Padcev reached $122 million for the fourth quarter, topping analysts' consensus of $113 million, and sales of Adcetris came in at $238 million, exceeding an expected $212 million, Schimmer noted.
The performance of the antibody-drug conjugates helped Seagen hit $2 billion revenue for the year for a 25% increase on 2021. The company’s projected revenue for this year lands between $2.14 and $2.24 billion, falling short of Evercore's expectation of $2.32 billion.
Seagen’s chief financial officer Todd Simpson noted during a conference call however that the guidance doesn't include Padcev’s likely approval in combination with Merck’s Keytruda in first-line metastatic bladder cancer for patients that are ineligible for cisplatin. The target date for that potential expansion is April 21.
Schimmer sees an approval being worth $500 million annually at peak. The Evercore analyst also noted that phase 3 data on another Padcev-Keytruda combination is due by the end of this year and could expand sales to more than $1.3 billion.
“We have an established presence in this marketplace in the second-line setting. Padcev is now the standard of care,” Chip Romp, Seagen’s U.S. commercial chief, said. “So we have good insight into this space and have the capability of continuing to grow the brand into the frontline setting. The market itself is substantially larger than the current label that we have.”
Evercore also alerted investors to keep an eye on how the FDA receives Roche’s ADC Polivy, which was originally developed by Seagen. The agency will hold an advisory committee meeting next month to consider the Polivy's potentially practice-changing use in frontline diffuse large B-cell lymphoma, an indication for which analysts at Jefferies have once projected $2.4 billion in peak sales.
It's not so much about potential royalties for Seagen, but instead how the experts view Polivy’s strong progression-free survival benefit along with its weak overall survival showing.
“This is a signal we expected to see repeatedly with ADCs and will help divine the outlook for much of Seagen’s emerging portfolio,” Evercore wrote.
Also of note is Tukysa. Sales of the drug—which hit $353 million in 2022—have plateaued. But a potential approval in combo with Roche’s Kadcyla could “double market size," wrote Schimmer, adding that Tukysa could be a “blockbuster too eventually.”
Ana Garcia of CFRA echoed Schimmer's overall outlook on Seagen.
"2023 will be another year of losses but working capital opportunities and prioritization of transformative assets keep our concerns at bay," Garcia wrote. "We continue to see a potential Padcev label expansion accelerating Seagen's path to profitability."