If Seattle Genetics' second-quarter earnings report is any indication, the company's lead product is finally living up to its potential.
The company unveiled that sales of cancer drug Adcetris jumped 30% year-over-year to $159 million in the U.S. and Canada, handily beating the consensus estimate of $148 million. Seattle Genetics also brought in $23.3 million in royalty revenues during the quarter from its partnership with Takeda, which markets Adcetris overseas.
Investors cheered the growth, sending Seattle Genetics' share price soaring more than 15% to $73 Wednesday morning.
The FDA first approved Adcetris, a CD30-directed antibody-drug conjugate, in 2011 to treat Hodgkin lymphoma patients who had already failed on their first line of treatment. But its real growth potential came in March 2018 when it received a green light as front-line treatment with chemotherapy. The company reported Adcetris sales growth during the second quarter in both first-line Hodgkin lymphoma and first-line peripheral T-cell lymphomas (PTCL), the latter of which it launched late last year after a November approval.
Considering sales of Adcetris had been disappointing for three quarters in a row prior to this quarter, investors were understandably relieved.
“This strong quarter should alleviate the concern among some investors who feared Adcetris might miss the company's 2019 guidance, removing a prong of the bear thesis,” SVB Leerink analysts wrote in a note to investors. The firm estimates sales of the drug will peak at $2.7 billion a year in North America.
Seattle Genetics reiterated its projection of $610 million to $640 million in Adcetris sales for the year, which would mark a roughly 30% boost over 2018's showing. But growth-hungry investors are hoping for more, so it’s no surprise that the question-and-answer session of the earnings conference call kicked off with one analyst asking why Seattle Genetics hadn’t upped its sales and earnings estimates for the year.
CEO Clay Siegall admitted that marketing Adcetris has been challenging, despite clinical trial data that provides a strong backing for the drug.
Just after the November approval in PTCL, the company presented data at the American Society of Hematology (ASH) annual meeting showing that adding the drug to a chemo cocktail of cyclophosphamide, doxorubicin and prednisone could be a better treatment option than the standard of care—those three drugs plus vincristine, a combo known in the field as CHOP. The Adcetris combo reduced the risk of death by 34% in that trial and had previously shown it could extend patient lives by 48.2 months vs. 20.8 months for CHOP.
“We more than doubled the median progression-free survival of the standard of care that’s existed for 35 years, and to me, you don’t see that every day,” Siegall told FiercePharma at the time.
Still, persuading oncologists to try something different than CHOP in previously untreated patients is far from simple. That explains the reluctance on the part of Seattle Genetics to translate one good quarter into more optimistic projections for all of 2019. “Now looking out into the future, it's really hard to know exactly what we're going to get. It's hard work out there,” Siegall said on the second-quarter call. “We're continuing to displace decades-old standard of care that are entrenched at the marketplace, and we're working hard at it.”
Seattle Genetics did raise the price of Adcetris in July by nearly 4%, but CFO Todd Simpson noted during the earnings call that only half of that translates to net sales because of discounting.
Adcetris now has six FDA nods in total, one of many factors that prompted the company to hire its first-ever chief commercial officer, oncology veteran Robin Taylor, in May. He will be charged with fine-tuning the Adcetris sales strategy and planning for other expected launches from Seattle Genetics’ advanced pipeline, which includes enfortumab vedotin (EV) to treat metastatic urothelial cancer.
Taylor, whose previous experience included stints at AstraZeneca and Roche's Genentech, said during the conference call that he was “really impressed” with Seattle Genetics’ level of preparedness for oncology product launches. “I would say that we've got a really high-performance group with great depth of oncology experience,” Taylor said.