Seagen Inc (SGEN) 2005 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Seattle Genetics’ Third Quarter Financial and Business Update Conference Call.

At this time, all participants are in a listen-only mode. Following today’s presentation, instructions will be given for the question-and-answer session. If anyone needs assistance at any time during the conference, please press the star followed by the zero. As a reminder, this conference is being recorded Tuesday, October 25, 2005.

I would now like to turn the conference over to Peggy Pinkston, Associate Director of Corporate Communications. Please go ahead ma’am.

Great. Thank you. I’d like to welcome all of you to Seattle Genetics’ Third Quarter Financial Results and Business Update Conference Call. With me on the call are Clay Siegall, our President and Chief Executive Officer, and Todd Simpson, our Chief Financial Officer.

Today we’ll provide an update on our clinical and preclinical programs, review our financial results for the quarter and year-to-date, and discuss our near-term activities. Afterwards, we will open the call for questions.

Before we get started, let me remind you that 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 for information concerning the factors that could affect the Company.

And with that, I’ll turn the call over to Clay.

Thanks, Peggy. Before I begin my remarks, I’d like to further introduce Todd Simpson as our new Chief Financial Officer. Our former CFO, Tim Carroll, retired earlier this month. I’d like to thank Tim for more than five years at Seattle Genetics and wish him well in retirement.

Todd brings to Seattle Genetics a great deal of biotech experience with public companies. I’ve known him for many years and am delighted to have him as part of the team. I look forward to having Todd’s industry experience and insights included as part of our strategic planning as well as his participation in the Company’s external presence.

I’ll start this morning with a discussion of the progress we are making with our three clinical-stage programs, SGN-30, SGN-40, and SGN-33. We are focusing the majority of our resources on advancing these programs, and we expect to report clinical data in the coming year on all three product candidates. I’ll then cover some highlights of our preclinical program, our ADC technology platform, and our business development activities before I turn the call over to Todd to discuss our financial results.

SGN-30 is our lead clinical program. We’ve treated nearly 100 patients to date with SGN-30 and have seen a clean safety profile and objective antitumor activity, including multiple, complete, and partial responses. Currently, SGN-30 is in ongoing phase II clinical trials for systemic anaplastic large cell lymphoma, or ALCL, and for cutaneous ALCL, both of these T-cell lymphomas. These are single-agent studies in relapse or refractory patients.

Our clinical development strategy for SGN-30 is to focus on systemic ALCL as the registrational pathway. We plan to meet with the FDA in the first half of 2006 to discuss pivotal trial design and may seek fast track status for SGN-30 in the future.

Our immediate focus with SGN-30 is on patient accrual. Although ALCL is a relatively rare type of lymphoma, patients with relapse or refractory disease have limited treatment options. We are continuing to add patients and are conducting these studies at over 40 sites across the United States and Europe. We plan to report on our progress with the SGN-30 program at ASH in December.

In addition, while systemic ALCL provides a potential registration path for SGN-30, we believe a much larger market opportunity exists for this product candidate. This includes SGN-30 in combination with chemotherapy for patients with Hodgkin’s disease. We are planning to initiate a combination study in the first half of 2006. We are also amending our cutaneous ALCL protocol to include two new related indications, CD30-positive transformed mycosis fungoides and lymphomatoid papulosis, or LyP.

Because CD30, the target of SGN-30, is expressed from activated T-cells, we also believe that SGN-30 has potential in the treatment of certain immunologic disease. We are evaluating diseases including severe atopic dermatitis and Graft-Versus-Host Disease, which could significantly expand the therapeutic potential of SGN-30. We are targeting the first half of 2006 for expanding SGN-30 into one or more autoimmune trials.

I’ll now turn to SGN-40, a product candidate we’re excited about, both because of its potential to treat many of the most prevalent hematologic malignancies and because of the early signs of activity we’ve observed in the clinic.

We’re currently testing SGN-40 in phase I clinical trials for multiple myeloma and non-Hodgkin’s lymphoma. Both of these trials are single-agent, dose-escalation studies in patients with relapse or refractory disease.

At the ASCO annual meeting in May, we reported preliminary data that showed indications of activity in multiple myeloma patients, including decreasing serum M-proteins, urine proteins, and B-cell levels during the treatment cycle of several patients. Due to indications that we were inducing cytokine release, especially with the first dose, we amended the multiple myeloma protocol as well as the non-Hodgkin’s lymphoma protocol to attenuate this effect following the first infusion. Both SGN-40 trials are [recruiting] patients at escalating doses under the revised protocol, and we look forward to providing an update on these ongoing studies at the ASH meeting in December.

We also expect to initiate SGN-40 trials in chronic lymphocytic leukemia, or CLL, by the end of the year. Looking forward, our goal is to advance SGN-40 into one or more phase II clinical trials by the second half of 2006, based on data from the ongoing phase I studies in multiple myeloma and non-Hodgkin’s lymphoma.

We also recently announced that we’ve been issued another patent on our SGN-40 program. This patent covers the antibody itself and is in addition to two patents we received earlier this year covering composition of matter and methods of using anti-CD40 antibodies for the treatment of cancer. We are continuing to build a strong IP position around this program.

Our third clinical-stage program is SGN-33, a humanized antibody to CD33, that we’ve in-licensed from Protein Design Labs earlier this year. We believe there is untapped potential for this antibody in the treatment of CD33-positive hematologic malignancies, including acute myeloid leukemia, or AML, and myelodysplastic syndrome, or MDS.

In our [framed] clinical trial, we will explore ways to optimize both the dose and administration schedule of SGN-33. While previous studies in this antibody showed activity, there are several reasons why we believe those trials were suboptimal.

First, the antibody was given at relatively low doses. As little as [one-fifth] to [one-tenth] the dose levels typically used in approved antibody-based therapy. We will initiate our clinical investigation in a phase I dose-escalation trial because we believe SGN-33 can potentially demonstrate greater activity at higher doses.

Second, in a completed phase III study with this antibody, patients received treatment immediately after induction chemotherapy when their immune systems were suppressed. Since SGN-33 is an antibody with potent effector function, we believe this sequence of administration did not take advantage of its potential antitumor activity.

And, third, we plan to explore a broad set of indications, including MDS, and less aggressive settings of AML. We look forward to getting this study underway this quarter.

I’d like to move now to our three lead preclinical programs and provide a brief summary of our key initiatives. We expect one preclinical program to advance into clinical trials in each of the next three years. SGN-35 is a primary antibody drug conjugate utilizing our second generation ADC technology. We have worked for many years with ADC technology and have made significant advances. Our second generation technology employs highly stable linkers and potency [better] drugs increasing its therapeutic benefits.

SGN-35 utilizes an anti-CD30 antibody to deliver its cell-killing Auristatin payload to tumor cells. We have generated extensive preclinical data demonstrating that SGN-35 is highly efficacious in regressing CD30-positive hematologic malignancies at low doses. We will discuss some of these data in an oral presentation at the ASH meeting.

We plan to file an IND on SGN-35 by mid-2006 for patients with CD30 expressing malignancies including Hodgkin’s disease. This is a significant initiative for the Company, and we have a number of important activities underway to make this happen.

Behind SGN-35 are two preclinical programs that target CD70. CD70 is an activation antigen expressed in high density on renal cell cancer as well as on a variety of hematologic malignancies that is not readily observed on normal tissue. We are developing a humanized antibody, SGN-70, which has intrinsic cell-killing properties and an ADC, SGN-75.

We have developed anti-- we have demonstrated antitumor activity of both SGN-70 and SGN-75 in preclinical cancer models. Both product candidates may also have application in immunologic and inflammatory diseases due to the expression of CD70 on recently activated T- and B-cells but not on resting cells. We will have a poster at the ASH meeting on SGN-70. Our goal is to file an IND for SGN-70 in 2007, and following with SGN-75 in 2008.

In addition to our proprietary pipeline, we’ve built strong ongoing collaborations with seven companies that have licensed our second generation ADC technology -- Genentech, CuraGen, Bayer, Protein Design Labs, UCB Celltech, and two new collaborations this year with Medimmune and PSMA Development Company.

These companies are developing a variety of product candidates using our ADC technology. In particular, we are working with Genentech on multiple targets including HER-2. CuraGen is advancing an ADC for metastatic melanoma, and PSMA Development Company recently recorded data from their preclinical study of a PSMA targeted ADC.

Licensing our ADC technology provides us with near-term cash flow and revenue. We’ve generated nearly $50 million since 2001 from these collaborations. Our intention is to continue to enter into one to two ADC deals per year with high-quality partners. We also look forward to one or more of our partners advancing ADC utilizing our technology into clinical trial in the 2006/2007 timeframe.

At this point, I’ll turn the call over to Todd.

All right. Thanks, Clay. First, I would like to say just how excited I am to join the team here at Seattle Genetics. I joined the Company a couple of weeks ago and have been both busy and impressed so far. I look forward to seeing many of you in the coming months and look forward to working with the rest of the management team to advance the Company’s programs and technologies.

My comments this morning will be two-fold. First, I’ll highlight our third quarter and nine-month financial results which we announced this afternoon and are available on our website. And, secondly, I’ll provide an update on our financial outlook for the remainder of 2005, as well as take a preliminary look into 2006.

So let me start with revenues, which were $2.6 million in the third quarter of 2005. This represents a 20% increase from the second quarter of this year and a 77% increase from the third quarter of 2004. Revenues for the year-to-date in ’05 were $7.4 million, up 49% from the same period in 2004.

Our revenues are generated primarily from activities under several ADC technology collaborations which, as Clay mentioned earlier, have been a significant source of capital and revenue for the Company over the past several years. These revenues include the earned portion of technology access fees which were recognized over the research period of each collaboration, and that’s typically two to four years. And for context, I would point out that this represents slightly more than half of this year’s revenues to date.

Revenues also include fees for research and development activities and materials supplied to our collaborators, and, lastly, milestone payments as earned and received. We continue to expect that total revenue for 2005 will be in the $8 to $10 million range, up from total revenues in 2004 of $6.7 million. We ended the third quarter with approximately $10.4 million in deferred revenue, of which $6.3 million will be taken into revenue over the next 12 months.

Now on the expense side, total operating expenses in the third quarter of ’05 were $9.5 million compared to $11.4 million in the third quarter a year ago. Year-to-date expenses though were relatively flat at just over $31 million for the first nine months of both years. The quarter-to-quarter decrease reflects lower clinical trial costs that resulted from discontinuing the SGN-15 program earlier this year, as well as a net decrease in antibody manufacturing costs during 2005.

Expenses in ’04 included the costs associated with a large SGN-30 manufacturing campaign. In 2005, we completed an SGN-40 manufacturing campaign but at a substantially reduced cost compared to the work done in 2004. These campaigns provide us with sufficient quantities of both antibodies for our currently planned clinical trials in each program.

Because of lower operating expenses this year, our projected operating cash requirements for the year are now expected to be around $30 million, down from our earlier guidance. So with approximately $87 million in cash and investments, we continue to be very well positioned to fund our programs into 2008 based on our current expectations.

Now as to a preliminary look ahead, we are projecting modest increases in operating expenses in 2006, driven primarily by the costs associated with continued expansion and acceleration of our clinical programs for SGM-30 and SGM-40, initiation of SGM-33 clinical trials later this year, and initiation of SGM-35 clinical trials expected mid next year.

This may be further impacted though by additional manufacturing campaigns now being planned out for next year, and we should be able to provide more information with respect to those plans later in the year as they’re finalized.

Lastly, I would point out that beginning next year, we, along with most other companies will begin to reflect non-cash compensation expense related to employee stock options, which I’m sure many of you are familiar with. We expect this charge to be in the $4 to $5 million range recorded throughout 2006. However, we’d point out that the actual amounts recorded will be based in part on the number of options granted next year, another factor such as stock price, so this is only a preliminary estimate at this time.

So with that, I’m going to turn the call back over to Clay and, again, look forward to working with many of you.

Thanks, Todd. Before we open the call to questions, I’d like to wrap up by highlighting our key activities over the next 6 to 12 months.

We will initiate a phase I study of SGN-33 in 2005, giving us three clinical programs. We will expand SGN-40 into a third indication by initiating a phase I/II study in CLL this year. We anticipate a strong presence at ASH with nine abstract submissions. We plan to file an IND for SGN-35 by mid-2006 in CD30-positive malignancies including Hodgkin’s disease. We expect to advance SGN-40 into phase II studies in multiple myeloma and/or NHL in the second half of 2006. And, we plan to extend our SGN-30 program into a combination chemotherapy clinical trial as well as to autoimmune disease in 2006.

In addition, we plan to provide data updates at relevant meetings through 2006, including the AACR annual meeting in April and at ASCO in June. Seattle Genetics is well-positioned for success with three exciting clinical-stage product candidates, three emerging preclinical programs, leading ADC technology, a strong financial position, and a dedicated team that possesses clinical, regulatory, development, and scientific expertise.

I would like to thank you for your continued support and for your time this afternoon. With that, we’d be happy to take questions.

Ladies and gentlemen, at this time we will begin the question-and-answer session. [OPERATOR INSTRUCTIONS]. One moment, please, for the first question. [Mark] Geller with CIBC World Markets, please go ahead with your question.

Oh, hi. It’s Matt Geller. Can you talk about your plans for going forward in a little more detail on SGN-30 and SGN-40? What are the goals you’re setting in the current trials and what are your basic hurdles you feel you have to step over in terms of going on to the next stage of trials?

Yeah, hi, Matt. For SGN-30-- I’ll have to answer them independently since they are separate questions. For SGN-30, we’re really going to focus on the first thing across the finish line being systemic ALCL. And so, we think that we can get enough patients to meet registrational requirements, and we’re planning to meet with the FDA in first half of ’06 to plot and plan our pivotal trial design. So we feel that we have over 40 sites in the U.S. and Europe on track now. We’re actually adding a few more as we speak, probably another 5 to 7 more sites, so we’re topping off the number of sites to get ready for the pivotal trial type design that we are looking for.

We think that-- maybe the specifics you’re asking for is we think that with patients let’s say close to 100, 125 patients of efficacy data and 250 patients of safety data that we may have what is required to get toward a registrational pathway with this agent, and we’re making good progress on that. But that’s only the beginning, systemic ALCL, because we think we really have opportunities and some great data with cutaneous ALCL, and we’ve expanded that study to include MF, mycosis fungoides, and LyP. We think Hodgkin’s combinations are really important, as well as immunologic disease. So we think that we’re trying to really round out our SGN-30 program with systemic ALCL taking the lead as a registrational-- in the registrational pathway.

Now for SGN-40, we have two ongoing phase I dose-escalation studies, one in MM and one in NHL, and we’re about ready to this year, in the very near future, kick off our third indication in CLL. Now for MM and NHL, these are two-- are both phase I dose-escalation studies, single-agent. We’re in the middle of them, so we’re dose escalating and things are going well in the study so far, and we are looking forward to getting one or both of these into phase II in 2006, and really will depend on the data set that we have.

We will present a progress report at ASH and we’ll present more complete data on the phase I study at ASCO next year, but we will present everything that is validated and checked out at the ASH meeting this year in December.

Go ahead, Matt.

Just quickly following up on SGN-30, do you have a good idea of what the primary endpoint is going to be in the phase III or pivotal trial for that, and to what extent will you have data on the phase II trial which will give you powering assumptions with a lot of-- with good confidence for the phase III?

We think that the response rate is very important with a disease like ALCL, and we have, obviously, looked at response rate and other parameters like progression-free survival. But the response rate with a very well-tolerated drug like SGN-30 is really what we think will be the key here-- a durable response rate I should say. Having durable response rates we think would be the primary endpoint.

Great. Thanks a lot.

Jason Kantor with RBC Capital Markets, please go ahead with your question.

Great. I’ve got a bunch of timing questions. I’ll just ask a couple of them to get started. You had given guidance for starting an SGN-35, or filing the IND in mid ’06, and for SGN-30 starting combination chemotherapy in ’06. I think at your year-end, all those were both ’05 events. Maybe you can give us some color on what’s happened internally that’s changed that view.

Sure. Good question and good note taking. One of the things that has happened is a very good thing, and that is SGN-33. We did not have SGN-33 at the end of last year, and we were very fortunate to have the opportunity to in-license such an exciting program. And when-- as we’ve brought this in, as we have sifted through all of the data, and as we positioned it and set up clinical sites and worked with the agency on starting a trial which should be starting within the next number of weeks, we have been very struck by the opportunity that we have to make this into a success and make it into a rapid success.

And so, one of the things that happened earlier in the year is that we in-licensed this program and it has taken on a pretty high priority level in the mix within the Company, and it has slightly hindered other-- some other activities, but I say slightly hindering them. With SGN-30, the combination study is not on the critical path for registration, so that was one that was-- it made sense to-- if we needed to put SGN-33 in front of something, it made sense to do that.

And the other one was initiating SGN-35 into clinical trial. And I have to say that we have not stepped off the gas pedal on that, and I would say that SGN-35 is the first Auristatin-based drug conjugate that we are putting into clinical trial, and it was an aggressive timeline that we had put out previously. And I think that working with the agency, and we’ve done that every step of the way with this new second generation ADC technology, we’ve had to-- because it is the first molecule, we’ve had to make sure we have a complete data package with complete toxicology, toxicology of the drug alone, toxicology of the drug conjugate, and QCQA stability and everything.

I’m very pleased to say that things are going well, but it took a little longer than we expected. And, also, for every drug conjugate in the future after this first one, it’s going to be a much simpler package to go forward since we’re doing a lot of the pioneering ground-laying work here and now. So it took a little longer than we expected with our timelines there. So we kept the gas pedal on 35 and we included SGN-33 in our pipeline.

Along the lines of future conjugates going faster, why is SGN-75 slated for an IND one year following SGN-70 since you’d be able to go in almost simultaneously because you will have already done most of the work on the conjugate by the time the [naked] antibody gets into the IND path.

It’s an excellent question, and we’ve been discussing that internally. We are giving a timeline now that we feel very confident at. We’re evaluating ways that we can shorten the timeline for SGN-75 in an important way, and we’re working hard to do that.

And I think as far as setting guidance though, we wanted to set guidance in a way where we felt very confident at the present time. And if we were so fortunate as to shorten our timeline through learning and through moving forward with SGN-35 and understanding more quicker with the first of the Auristatin drug conjugates, we certainly will apply those to SGN-70 and try to reduce the timeline. But, for now, we would like to keep it where it is and in future conference calls we’ll update you on where we are going with SGN-75.

Thanks.

Mark Monane with Needham & Company, please go ahead with your questions.

Yes, thank you. Thanks for taking our question. Can you comment on the 33, SGN-33? We know that it’s listed as a preclinical molecule, but we know there has been extensive testing done before this by PDL. Could you comment on the current status and the indications of AML versus MDS?

Sure. Well, with SGN-33 we have filed all our documents with the agency. We have just received our first IRB approval, and we’re just starting to screen patients right now. So, effectively, the study is open, but we usually, historically, we always announced our clinical trials at the time we treat our first cohort of patients and not before that. So, technically, we are screening patients right now, so we are very pleased with that. Everything has gone well.

Now as far as the indications that you spoke about, AML and MDS, with AML the previous studies, as we’ve stated and as you know, were done in relapse refractory late-stage AML. We’re expanding it to include AML that is less aggressive as well. So, clearly, we’ll have the aggressive AML, but we’re going to try to capture a broader market across AML in our trial.

With MDS, what we’re trying to do, there was a very limited amount of information on MDS with this agent previously, so we’re trying to establish a firm data set with MDS, looking to see whether there is an opportunity, which we believe there is based on the expression profile of CD33 in MDS. We think there’s potentially a very large opportunity and not just focused on the early stage MDS, but really the large market of the middle and late stage of MDS that we think is really unserved.

It makes sense. Thanks for that information. One more question, generally, can you speak about what the utility or potential utility of antibody therapy will be in combination with small molecules or potentially antisense or radiation therapy? We know that antibodies like Rituxan work relatively well on their own as monotherapy, but, clearly, almost everything we do in medicine is combination therapy. So maybe you can help us think about the role of antibodies in general and any insights you have for the Seattle Genetics’ program in thinking about combination therapy.

Right. Well, we certainly see that the antibodies that are used now widely are mainly used in combination, such as, for cancer at least, such as Rituxan and Avastin and Herceptin and ones like that, and we feel the same way. And, in fact, if you said what’s our goal for instance with SGN-40, our goal with SGN-40 is not the first study we’re doing in patients with relapsed MM and relapsed NHL.

Our goal is to get into front-line with MM for example, and one of the ways to do it is to look at what the future holds for the front-line of MM. We think it’s likely that Revlamid is going to do, once approved, get in toward the front-line of MM, and we see that the future of MM may be an SGN-40/Revlamid combination for instance.

And we have done preclinical work in MM, fresh patient samples with MM, to show that there is synergy between Revlamid and SGN-40. So when we state that we look to take our vision out and look past our first study to get registration approval, we’re going to want to, once we see some activity there that we’re excited about, expand our studies into combination chemotherapy in front-line as soon as is possible. The same goes for some of our other programs like SGN-30, where we can use it in potentially in Hodgkin’s disease in combination with front-line ABVD chemotherapy, and SGN-33 as well in front-line.

So that’s ultimately where we want to go. We think antibodies due to their potency, their targeted nature, their relative minimum toxicity, that they can be combined excellently with cytotoxic to give a one-two punch to cancer to provide for the best long-term survival with high quality of life in these patients suffering from these diseases.

Thanks, again, and congratulations on your progress.

Quynh Pham with Delafield Hambrecht, please go ahead with your question.

Hi. I have a few questions related to both SGN-30 and SGN-40. First with SGN-30, could you just clarify the expansion for the CD30+ transformed patients? How much will they add to the enrollment do you think and what exactly is the status of enrollment right now and if 2006 is a pretty good timeframe for expectation of completion of phase II? And then I’ll ask my SGN-40 question.

Okay. With SGN-30, the first one was on the MF, mycosis fungoides, and that’s an expansion of the cutaneous T-cell lymphoma type study that we’re doing. And we think that transformed MF has a lot of expression of CD30, and transformed MF can become severe and become-- and go toward a chance of progression. And so we think it will certainly add to the study that we’re doing, but MF is still not a large indication. It’s still a relatively small indication, so we think it should add some to our accrual but not in a dramatic way.

But we have heard some good things from centers that have seen quite a few patients with transformed MF, and so we’re excited to include them. We did not, by the way, include the earliest MF patients that are not transformed, and the reason we did not is because the CD30 expression is definitely trailed off in those early MF patients, but once they’re transformed, there is a lot of CD30 expression. So we really focused on the area where our target is plentiful.

The second question you asked was on--

The status of enrollment.

Oh, the status of enrollment. Thank you. Well, we are going to be presenting data at ASH to show you where we are with enrollment of patients in phase II on our systemic ALCL study, which is the primary one that we’re trying to enroll.

During 2005, we spent a lot of time adding sites, and through the year we kept on adding and adding and adding sites. And, as I said earlier, we’re still at 5 to 7 sites to go to be fully topped off with the number of sites we want. So during the year, our enrollment has really increased nicely.

You could see a nice upward trend in enrollment, and we’ll be presenting data from as many patients that have been through analysis and validated data that we can at the ASH conference. We just have not released the data as of yet until that conference, and our PI’s will be explaining all the data and the patients we’ve treated and the results in those patients.

Do you have some CD40 questions?

Well, actually, one other question. Have you provided any detail on the combination SGN-30 with chemo in Hodgkin’s disease? What type of patients are you planning to look at?

It’s a very good question. We are not-- we have not provided detail because we are debating that internally. There are two different options for us. We may consider doing both or one of them, so we have not provided guidance yet as to exactly what [we’ll] do. We’re sticking with knowledge opinion leaders in the field. We’re sticking with our internal board and our clinicians internally, and we’re trying to make the best judgment possible.

Hodgkin’s disease is a little unique in that there is a number of different therapies used in second-line, and none of them are really approved therapies. And so, we’re trying to get a very good handle on what is the most prevalent type of therapy. How-- and we tested a lot of these in combination.

For instance, Gemzar, which is used a lot in second-line Hodgkin’s disease, in combination with SGN-30 the data looks outstanding, and we’ve done those preclinical studies. So that is one of the potential opportunities we have, but we have not given guidance on these yet because we have not formally made a decision, although that should happen in the very near future.

And when you mean second-line, do you mean first relapse patients?

Patients that have-- that have failed ABVD, and perhaps maybe it’s even really second or third-line. They’ve gone ABVD, perhaps another chemotherapy, perhaps they’ve had transplants. So really when I say second-line, it’s after one to two therapies.

Then, finally, for the SGN-40, does your strategy remain the same given that Chiron’s moving a similar-- well, an anti-CD40 antibody in the clinic both in CLL and other blood indications or cancer indications?

Absolutely, our strategy is set, and we actually started in phase I before Chiron started. We started in MM and NHL. Our-- based on what I hear, they started in CLL as their first indication and then recently added MM, and we had planned on starting MM and NHL and then adding CLL. That’s what we started from the beginning. That was our plan. Perhaps that impacted Chiron to start CLL first. I don’t know, but we are going forward with our plan.

We feel that we have an exciting antibody, we have an excellent IP position, and we have manufactured this antibody at a high amount, well over a gram and a half or over a gram and a half per liter. We have a collaboration with a manufacturer, being Abbott Labs, where we manufactured this in a way where we have a [commercializable] process. So we feel that we are well-positioned to go forward.

In addition, we have the [clear] license from PDL for the humanized antibody that we’re developing. We also have a Cabilly license for manufacturing in [Cho]. We think all of those pieces give us a clear path with all of the IP we need, with our own and other licenses, great manufacturing products-- manufactured products, and the right indications, and we’re moving forward quite rapidly and we’re excited to present at ASH in December.

Thank you, and welcome aboard Todd.

Thanks a lot. I look forward to working with you.

[OPERATOR INSTRUCTIONS]. Jason Kantor, please go ahead with your follow-up question.

Thanks for taking my follow-up. A few things I wanted, one, I wanted to clear up your comments on your partners advancing drugs into clinic. You said that they were likely to advance into clinic in the 2006 and 2007 timeframe, one or more partners. Does that--? Do you mean one or more per year in each of those years or is it possible that we will have no partners moving drugs into the clinic? If you can you clarify that.

Well, what it was in the ‘06/’07 time, during those two years, we feel based on the progress that our partners are making that one or more-- so it could be many of them-- one or more are likely to be advancing products towards clinical trials and initiating clinical trials. We can’t give you an exact number because it’s outside of our control. It’s under our partner’s control, but based on progress, we are very excited to see this go forward.

And is getting SGN-35 into the clinic a gating factor for them just based on the filings that have to be in place with the FDA?

It is certainly not a gating item. The work that we’ve done on SGN-35 that is now really completed is useful for our partners. So we are not a gating item for them and, at this point, we are not slowing down progress on any of their programs at all based on work that we have left undone. So the work that they would need from Seattle Genetics has been done, and we may see one, we may see multiple drugs entering clinical trials in the ‘06/’07 timeframe from our partners. It’s up to them, but we’re excited with the progress that’s being made.

And then just a strategic question, I mean it sounds like from your comments that SGN-33 that there is something, there’s at least some degree of capacity constraint internally in terms of what you can do. Should you be hiring more aggressively or potentially out-licensing one or more of your proprietary products that you could maximize the value of the portfolio rather than letting certain things get prioritized over others where they probably both should be moving forward?

Thanks for the question. If I gave the impression that we were trying to prioritize 33 over important programs, that was not the impression I was trying to leave. Prioritizing 33 over studies that are not [very] limiting and critical to registration are things that are things that we consider doing. Now as far as hiring, we are and have always hired as smartly as we can. We unlikely will go ahead on a large binge hiring. We do have I think 10 to 15 openings right now for some positions at the Company. We’ll continue to hire appropriately to support our product.

And I would say that within the next 12 to 14 months, I could see us doing a partnership on one of our programs with a large company. We have a heck of a lot of interest from large companies in our portfolio, and we’re speaking with a number of companies on some of our products now. So I would say that there is a decent chance that we’ll do a partnership. I won’t guarantee that to you because we are in a good cash position. We’re adding a lot of value to these programs, and we have to make the right strategic decision when these deals come along. And I can tell you that there is a lot of interest in what we’re doing and it is not far from our thoughts to consider partnering one or more programs.

Thank you.

At this time, I’m showing no further questions. Please continue.

Okay. Thanks again for joining us today, and I look forward to speaking with you-- with all of you again in the near future. Good afternoon.

Ladies and gentlemen, this concludes the Seattle Genetics’ Third Quarter Financial and Business Update Conference Call. You may now disconnect, and thank you for using AT&T Teleconferencing.