Seagen Inc (SGEN) 2006 Q1 法說會逐字稿

Good afternoon ladies and gentlemen and thank you for standing by. Welcome to the First Quarter 2006 Financial Results Business Update. [OPERATOR INSTRUCTIONS] As a reminder, this conference is being recorded today, Tuesday, April 25, 2006. I would now like to turn our conference over to Peggy Pinkston, Associate Director of Corporate Communications. Please go ahead, ma’am.

Great. Thank you. I would like to welcome all of you to Seattle Genetics’ quarterly conference call. With me today are Clay Siegall, President and Chief Executive Officer, Todd Simpson, Chief Financial Officer, and Eric Dobmeier, Senior Vice President Corporate Development.

Earlier this afternoon we reported our first quarter 2006 financial results and if you have not seen the press release it is available on our website. During the call today we will provide an update on our pipeline programs and current activities as well as review our first quarter financial results. Then we’ll open up 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 and which are available on our website for information concerning the factors that could affect the Company. And with that I’ll turn the call over to Clay.

Thanks, Peggy. And thank you for joining us this afternoon. We’ve had a strong start to 2006 by continuing to advance our pipeline programs. We’ve expanded our patent portfolio and raised $37.2 million in a common stock offering that closed on April 3rd. Today, I’ll provide a brief update on our clinical and late-stage pre-clinical programs and discuss our progress towards achieving our 2006 goals for each one of these.

Starting with SGN-30, we’re continuing to accrue patients and generate data from our ongoing Phase II clinical trials in systemic anaplastic large cell lymphoma (or ALCL) and cutaneous ALCL; both of these being t-cell lymphomas. We’ve reported clinical data showing that SGN-30 is well tolerated and induces objective response rates as a single agent in both of these indications. We plan to complete the systemic ALCL study during the second half of this year and request an end of Phase II meeting with the FDA. The final Phase II data will enable us to make decisions concerning regulatory strategy. We intend to present Phase II data from this trial at the ASH meeting in December.

In the cutaneous ALCL study we previously reported anti-tumor data including completed partial responses. We recently expanded this study to include transformed mycosis majorities and lymphomatoid papulosis which broadens the patient population that may benefit from SGN-30 therapy.

We’ll reported updated Phase II clinical data at the Society of Investigative Dermatology meeting being held in Philadelphia next week. We’re also collaborating with the NCI on two Phase II studies of SGN-30 combined with chemotherapy. One study will evaluate SGN-30 plus chop in front-line systemic ALCL patients. Chop is the standard of care in front-line ALCLs. This clinical trial will assess the potential synergy of combining SGN-30 with chop while also providing an opportunity for SGN-30 in less-heavily pre-treated patients.

The other NCI study will combine SGN-30 with GVd Q therapy in patients with relapsed or refractory Hodgskin’s Disease. Based on the evidence of anti-tumor activity generated in our previous, single-agent clinical trials of SGN-30 for Hodgkin’s disease, we believe that SGN-30 can play an important role in this indication. We expect both of these NCI sponsored trials to begin during the second half of 2006.

Earlier this month we announced that we received a notice of allowance from the U.S. Patent and Trademark Office for methods of using certain anti-CD30 antibodies to treat Hodgkin’s disease both as a single agent in combination with chemotherapy. This patent encompasses anti-CD30 antibodies possessing direct cytostatic or cytotoxic activity. This patent is a valuable addition to our IP portfolio and provides us with an important competitive advantage for our SGN-30 program.

Moving on to SGN-40, we are enthusiastic about the progress we’re making with our Phase I clinical trials in non-Hodgkin’s lymphoma and multiple myeloma as well as our Phase I/II study in Chronic Lymphocytic Leukemia (or COL). All of these trials are single-agent, dose finding studies in patients with relapsed or refractory disease.

We previously reported data during early dose escalation of SGN-40 demonstrating multiple objective responses in patients with non-Hodgkin’s lymphoma. We’ve also seen stable disease and reductions in M protein during treatments of patients with multiple myeloma. Additional clinical data from our SGN-40 non-Hodgkin’s lymphoma trial will be reported at the ASCO annual meeting in early June. Our goal is to complete the Phase I studies and to initiate Phase II development in the second half of 2006. We expect to report final Phase I data from all three of these trials at this year’s ASH meeting.

We are particularly excited about SGN-40s potential in relapse, aggressive, non-Hodgkin’s lymphoma such as diffuse large B-cell lymphoma and mantle cell lymphoma. Incident rates for non-Hodgkin’s lymphoma are increasing annually and the five-year survival rate is just 60%. Although most patients with aggressive lymphomas respond initially to chemotherapy and Rituxan, the majority of patients will relapse often with more rapidly progressive disease and poor prognosis. There is a considerable, unmet medical need in this relapsed refractory setting that’s not addressed by current therapies. SGN-40 can play an important role in this indication and while rapidly advancing its clinical development.

We also believe that SGN-40 has therapeutic potential in combination with other drugs to increase response rate and improve long-term disease-free survival. We’re planning to initiate several Phase I combination studies with SGN-40 over the next 12 months to explore the potential for synergistic activity in hematologic malignancies. These include studies of SGN-40 combined with Rituxan for non-Hodgkin’s Lymphoma or Waldenstrom’s macroglobulinaemia and combined with Revlimid for multiple myeloma. We are also considering SGN-40 in Hodgkin’s disease and CD40 expressing solid tumors. The opportunities for SGN-40 are substantial and we have a number of initiatives under way to advance and expand this program. We look forward to sharing our future progress with SGN-40 over the course of 2006.

Our third clinical program is SGN-33, a humanized anti-CD33 antibody. SGN-33 is in a Phase I single-agent, dose escalation study in patients with acute myeloid leukemia or myeloid displastic syndromes. During 2006 we plan to rapidly advance this Phase I study and expect to report data at ASH.

There are a number of opportunities for SGN-33 and AML and MDS. Currently the therapeutic options in these diseases for patients not eligible for stem cell transplant are dismal. Two populations in particular that could benefit from SGN-33 are patients with relapsed disease and untreated elderly patients who cannot tolerate chemotherapy. We also believe SGN-33 can be combined with induction chemotherapy to improve cure rates in front-line AMLs.

Furthermore, we’re planning to initiate a study of SGN-33 combined with Revlimid for patients with MDS. This combination may have important clinical benefit because both agents have independent anti-tumor activity and, in addition, Revlimid augments NK cell activity which should enhance one of SGN-33s key methods of cell killing.

We announced this morning that we’ve entered into an agreement with Laureate Pharma for manufacturing of SGN-33. This campaign is important to ensuring clinical grade drug product to support our advancement of this anti-body and on-going clinical trials. We did extensive due diligence before selecting Laureate and believe our manufacturing deal provides us with an optimal combination of experience, time-lines and costs. Laureate has over a decade of operating experience in contract manufacturing and has manufactured monoclonal antibodies for all phases of clinical trials including commercial grade materials.

The Laureate agreement also includes manufacturing for SGN-70, a humanized anti-CD70 antibody that we’re advancing towards clinical trials next year. CD70 is expressed in high-density on a variety of hematologic malignancies as well as renal cell cancer.

We presented data at the AACR meeting earlier this month demonstrating that SGN-70 has potent effective function and significantly prolonged survival in pre-clinical cancer models. CD70 makes an ideal target for cancer therapy because it is not readily observed on normal tissues. In addition to manufacturing activities, we will conduct pre-clinical studies over the course of 2006 and plan to file an ID for SGN-70 in 2007.

Switching gears to our ADC platform, we’re rapidly approaching the plan initiation of clinical trials of SGN-35 later this year. This will be a significant milestone for the Company due to both the therapeutic potential of SNG-35 for patients with Hodgkin’s disease and the pioneering nature of this molecule. SGN-35 will be our first ADC utilizing our proprietary stable linker and our highly potent synthetic drug payloads to enter the clinic. We’ve planned to file an IND for SGN-35 this summer.

We’re also advancing several pre-clinical ADCs including SGN-75 that provide opportunities for future pipeline growth. In addition to our internal ADC programs, we’ve licensed our ADC technology to leading pharmaceutical and biotechnology companies. These deals generate cash flow and revenue as well as supplement our internal R&D activities by creating opportunities for our ADC technology across multiple targets and anti-bodies under development by our partners. Several of our partners are making good progress towards initiating clinical trials of their own ADC programs in the near future.

One of the broadest and most active ADC partnerships is with Genentech with whom we are collaborating on ADCs to multiple antigens. Recently, Genentech notified us that they have decided not to move forward with their Anti-HER2 ADC program using our technology. This ADC employed a different drug linker unit that is used in SGN-35 and in the other ADCs under development by us and our collaborators including Genentech. Genentech has expressed a continued enthusiasm for our ADC technology which they are utilizing with many targets.

We are making significant strides with our ADC technology platform and have demonstrated the depths of our expertise in ADCs and progress towards continued enhancements of our technology. For example, we presented data at the recent AACR meeting on ADC internalization, the chemical structures and rates of release of the synthetic drug payload from internal ADCs and resulting high concentrations of drugs delivered inside of target cells. The data will also present on our enhanced linker system, our work in antibody fragment drug conjugates and in vitro potency of SGN-75 and ADC against renal cell cancer.

We are optimistic about multiple product opportunities within our pipeline and remain focused on advancing our clinical and late-stage pre-clinical programs. Many important milestones are expected in 2006 to include data verification of our ongoing clinical trials advancing SGN-40 into Phase II development and initiating a clinical trial of SGN-35. I’m looking forward to the month ahead.

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

Thanks, Clay. And thanks everyone for joining in on the call this afternoon. As Peggy mentioned, earlier today we reported our first quarter 2006 financial results which are available on our website. We reported a net loss of $8.7 million, or $0.27 per share, in the first quarter of 2006, compared to a net loss of $7.6 million or $0.18 per share in the first quarter of 2005.

Revenues in the first quarter of 2006 were $2.1 million, down from $2.6 million in the first quarter of ’05, but generally in line with our expectations. Our revenues are generated from activities under our ADC technology collaboration so can vary from quarter-to-quarter based on the level of support we provide to our partners and the timing of milestones achieved. With that in mind, we continue to expect 2006 revenues to be in the range of $9 million to $11 million.

Total operating expenses in the first quarter of 2006 were $11.6 million, up from $10.8 million in the first quarter of 2005. As expected, operating expenses were higher quarter-over-quarter mainly due to the impact of non-cash stock compensation expense related to our adoption of FAS 123R as of January 1st of this year. Non-cash stock compensation charges in the first quarter of 2006 totaled approximately $1 million. First quarter expenses also reflect somewhat higher employee costs partially offset by lower costs related to the timing of manufacturing campaigns.

We continue to expect the total operating expenses for the year in 2006 will be in the range of $50 million to $55 million. In addition to the impact of FAS 123R, the significant drivers of operating expense increases in 2006 will include the costs associated with continued expansion and acceleration of our clinical programs for SGN-40 and SGN-33, SGN-35 clinical trial initiation later in the year and planned manufacturing campaigns this year at Laureate Pharma for SGN-33 and SGN-70 which we announced this morning. The cost of these manufacturing campaigns including raw materials and fill finish are expected to total up to $5.7 million through 2007.

And lastly, we ended the quarter with approximately $70.4 million in cash and investments. This excludes $37.2 million in net proceeds from our common stock financing that closed on April 3rd which will be reflected in our second quarter financial results. Through this financing we were able to raise additional capital on favorable terms to enable future execution of our development plans.

In conjunction with the public offering we also agreed to sell approximately $1.1 million shares of common stock at a price of $5.25 per share to funds affiliated with Baker Brothers Investments subject to stockholder approval. The terms of this stock sale are set to match the terms offered to investors in the public offering and, if approved, we would receive additional proceeds of approximately $5.9 million. Our stockholders will vote on the issuance of these shares at our annual meeting on May 19th.

We continue to project that our operating cash requirements in 2006 will be in the $35 million to $40 million range; so with completion of our latest financing we continue to aggressively push our programs forward into 2009.

With that, I’ll turn the call back over to Peggy.

Thank you Todd. Operator, at this point we’d like to open up the phone for questions.

Thank you. [OPERATOR INSTRUCTIONS] Our first question comes from Mark Monane from Needham & Company. Please go ahead.

Thank you. It’s Mark and Richard. Thanks for taking our question. A couple of questions -- can you go over, again, the ADC program. I know it’s not your lead program, but the factors leading to or involved in the Genentech/Seattle Genetics relationship and the decision on thoughts going forward?

Sure. Genentech has said they’re very enthusiastic about our technology. They are evaluating our technology with many targets. Keep in mind that our ADC program under development by our collaborators are not our main focus. By licensing technology to other folks we effectively hand off any development decisions, time-lines, etc., to the collaborators on. And we’re focused on our product candidates and we’re very excited about our product opportunities in our pipeline and especially things like SGN-40 which could play an important role in aggressive NHL forms; and we’re also very excited about initiating SGN-35 later this year in Hodgkin’s disease.

As far as Genentech discontinuing their HER2 ADC program, we cannot speak for Genentech. We continue to have an active ongoing ADC collaboration with them and view them as a strong partner; and I emphasize, again, to keep in mind that our main focus is on our internal pipeline, not the programs under development by our partners.

Absolutely. And turning to the internal programs, can you talk about the possibilities for SGN-40 and 30 especially in terms of using anti-bodies where another anti-body is already being used? Do you see potential synergy there? It’s not something that’s been done so far; what are the opportunities there?

Well, for example with SGN-40 -- using SGN-40 in an aggressive lymphoma state where Rituxan exists, those are the kind of things you’re asking about?

Exactly.

So certainly as antibodies progress and as more antibodies are out there I think you’ll see more antibodies used and combined with each other and after one another if they’re effective. And the key is effectiveness. We’ve already shown that SGN-40 is effective against aggressive lymphomas at very modest doses in Phase I dose escalation. We’ve not shown more data. We will be showing that at ASCO this year. We’re very excited with our progress with SGN-40 and we believe due to the unmet medical need especially in aggressive lymphomas, less so in the more indolent lymphomas, that we think aggressive lymphomas is a really excellent area to pursue.

Terrific. Thanks for the added information, Clay.

Thank you. Our next question comes from Jason Kantor from RBC Capital Markets. Please go ahead.

Thanks. I wasn’t clear exactly -- could you say again what data exactly is going to be at ASCO for SGN-40 because I didn’t see an SGN-40 abstract and I’m not sure if it’s listed under a different name on the ASCO website?

Okay. We’ll investigate and take a look at that. We were notified about this some time ago. We’ll double check that. Thank you for pointing that out.

Is that a poster or talk or what is that?

It’s a poster and an oral discussion on SGN-40 and non-Hodgkin’s Lymphoma.

Okay. Ill take a look at that. It sounds like the bulk of data that’s coming out though is going to be at ASH. Could you give us some sense as to what the totality of that data is going to look like at ASH?

Sure. At ASH we intend to give as complete - if not complete - Phase I information from SGN-40 in three different trials - in NHL, in NM and in COL - and all three of the diseases or trials are progressing very nicely so we’ll have a lot of data to share in all three. We will present a pretty big picture of our data at ASCO on NHL; so that will be much sooner. I think the first week of June.

And then with SGN-30 we’ll present some Phase II data on our studies in systemic anaplastic lymphoma as well as Phase II data in cutaneous anaplastic lymphoma. So there should be substantial data there and should be really complete Phase II data. And with SGN-33 it should be our first data presentation from our Phase I dose escalation trial in patients with AML or MDS and so we’re very excited to start presenting data on our SGN-33 program targeting CD33 we think is very exciting.

And what exactly is this meeting you said next week? How much data are you going to be presenting there?

The meeting next week -- it will be data -- is a dermatology conference and it’s an important dermatology conference and the presentation is focused on cutaneous lymphomas, like cutaneous ALCL, and in that study where you can use either cutaneous lymphoma or you can use transformed mycosis [inaudible] or you can employ patients or treat patients with lymphomatoid pathulosis.

Those are all cutaneous types of diseases and they are treated by docs that are dermatology oncologists; and they have a meeting -- a society for investigative dermatology; that’s one of their key meetings and our PI in the program is making a presentation and it will be on a number of patients and the responses that we’ve seen and we’re very excited to do that in the next week.

So that would be interim Phase II results and we would see the full Phase II results at ASH? Is that how I should understand it?

I think that that is pretty close to what it will be. It will certainly be interim Phase II results and our goal is to complete the Phase II this year and present at ASH; but whether it’s full Phase II data or much more data than we have now remains to be seen. We’re working aggressively on it and our goal would be to get all the Phase II data but whether it’s fully done in view of the cutaneous study, remains to be seen. I think with the systemic ALCL study we’ll probably see complete Phase II data package at ASH.

Thanks.

Thank you. Our next question is from David Witzke from Banc of America Securities. Please go ahead.

Hi there. It’s actually Mark Ingalls filling in for Dave. Just to finish up on ASCO, there was a title that came up for SGN-70. I’m assuming that’s just pre-clinical data at this point?

Yes. It’s pre-clinical data that we have been working on with a collaborator at the Dana Farber Center. And we’re very delighted with all the work that’s been done by our collaborators, they are world experts in Waldenstrom’s macroglobulinaemia and CD70 is expecting very high densities on Waldenstrom’s and it gives us a potential clinical opportunity that they’re pretty jazzed up about in the clinics.

Okay. And then just finally on the notice of allowance in terms of the IP that you mentioned, how did that change your thinking, if at all, with respect to the Mederex compound and your attempt to stake out some intellectual property around CD30?

This is Eric. I think I’ll take that one. I don’t think it changes our thinking because we’ve been prosecuting these claims and been optimistic about receiving them for some time now. What the claims cover is methods of treating Hodgkin’s disease with anti CD30 antibodies that can kill Hodgkin’s without the presence of effector cells; so it’s an important IP for our program and to the extent that other people are developing anti-CD30 antibodies that have that mechanism of action, then we would also have some ability to get broader protection that just around our program. And I don’t think I can comment specifically on Mederex’s antibodies but we think it’s an important step for our program from an IP point of view.

Okay. Thank you.

Thank you. Our next question comes from Bret Holley from CIBC World Markets.

Hi. I had a couple of questions. I guess you said the chop was standard of care in front-line systemic ALCL. Is that correct?

Yes.

Okay. So the Phase II that is planned is in front-line and then you’re going to approach, obviously, the Phase II on the last. Do you still think that in the last setting that the possibility of single long trials going forward is still a viable option given the fact that there were really no treatment options in the last ALCL?

That’s a really good question. We are certainly analyzing the data. It’s going to come out that there’s going to be a lot of criteria that we’re going to be looking at - the single agent. We’re going to be looking at the data, we’re going to be looking at the regulatory pathway, we’ll be looking at the market size, we’ll be looking at how it fits in the overall pipeline of opportunities that we have in the relapse setting.

Clearly where we want to go ultimately with any program is front-line. The bigger markets, it’s treating the better patient populations, it’s really making an impact on the disease. So having the NCI sponsor study and - really, we’re only providing the drug product and not paying for the study - is a great thing for us that they’re really excited about. And their investigators that they’re using and their network are very excited about it. So for us, we’re delighted to be part of that and going forward where our ultimate goal is; but later this year when we finish Phase II and look through all the data and look through everything, we’ll be making some very strong evaluations on the - in the relapse setting. Like you say, we really need to take a very close look at that and see what the whole picture of the program looks like.

And I guess the other question is I guess you said Genentech decided not to move forward with their first candidate the HER3 antibody ADC candidate. Did they give any kind of reason or any kind of explanation on what they thought the next generation technology would really bring to the program or was it a pretty one-sided exchange between the companies?

Well, we’re really not in a position to discuss their data. We’ve not seen much of their data. Keep in mind it’s -- they are a unique company with unique timelines and unique development plans. We can say, however, that they were using a different drug linker unit in their anti HER2 ADC than is used in SGN-35 and is used in our other development programs by other collaborators including Genentech themselves. So we continue to have a very active, ongoing ADC collaboration with them. They are an excellent partner, they are very strong, we work closely with them on many different targets; and we’re excited with our prospects with them. This is a one-off target using a one-off drug linker that’s not going forward.

Okay. Thanks for answering my questions.

Thank you. Our next question comes from David Miller from BioTech Stock Research. Please go ahead.

Hi. Thanks for taking my questions. Do you happen to have a listing of the abstract numbers?

For ASCO?

Yeah.

I don’t; but I can find them.

Okay. That would be great.

It should be just the two, I think.

Okay. Do you have any continued guidance on when and what kind of partnerships you might be looking forward? I know you raised money recently and was kind of curious as to how that affected the “go it alone” or “partner it” concepts that you’ve been thinking of?

This is Eric. I can speak to that. I think that the money we raised through the financing certainly puts us in a stronger position to discuss partnerships. If we’re on strong financial footing we can have more leverage. I don’t think that our philosophy on what type of partnerships we’re looking for has changed significantly. We’ve got the resources to move these products forward into and through the clinic and there’s a value and suction point and we can get to proof of concept in human. So that’s still what we’re focused on.

We’re looking for partners that are strong in biologic and oncology experience that have some of the resources for manufacturing clinical trials and commercial development that we haven’t yet built ourselves. And we’re going to need to make decisions based on cost of capital for a number of the programs to decide whether we keep them longer or partner them sooner; and we’re going to take a portfolio approach to that. So it’s been a consistent strategy and I think that we’re getting closer to that clinical proof of contact we believe. So we have had a number of partnering discussions but, again, we’re not in a hurry to sell things off to soon.

Okay. With the CD30 in the patient group, in the Phase II - the cutaneous one - can you tell me what this patient population sees as typical results for current therapy?

You know there are a lot of different therapies for cutaneous lymphomas. They are different than the systemic which is why it’s a completely different trial. Some people have asked us in the past, “Why is it not just one trial but both ALCL?” They really see different doctors actually. They see the hemoc docs, see the systemic ALCL patients, and the systemic patients have a more life-threatening disease. The cutaneous patients, as well as the transformed mycosis majorities in other patients that we’ve added is a very debilitating disease. But it’s not a classic life-threatening disease like a systemic ALCL or some of the other cancers we’ve talking about on this call.

So they see a lot of different agents including topicals, initially. The people that we see, basically, have gone through topicals. Some of them even get some cytotoxics because the topicals are not working at all. They have very big lesions. It’s incredibly uncomfortable, disfiguring. People can become with many cutaneous lesions, they become shut-ins almost. And it is a very overall debilitating disease as it stops responding to the standard therapies. And that’s what patients are expending a heck of a lot of time and effort with doctors and a lot of money on their therapy. So we think, really, it’s the more severe advanced patient that could be using this type of therapy. But because it’s not “life threatening” like some other cancers such as systemic ALCL, it’s not something that you can get fast-track approval for. So it’s a little bit different.

Right. So what would be the typical response rates, for example, for this particular patient population that you’re enrolling into this Phase II trial?

You mean the response rate for the front-line therapy or our response rates?

Well, response rates -- you’re enrolling - and correct me if I’m wrong, let’s see if my memory serves correct here - that in this Phase II trial you’re enrolling patients who have had more than one systemic therapy. And so what would these patients’ response rate to what they’re getting now, for example, normally be? And I’m looking for historical response rates for these particular patients so I have some frame of reference to compare what we’re going to see in your press release next week.

Are you talking about cutaneous or systemic?

Cutaneous.

Okay. That’s what I thought. It’s quite high, actually. Initially, when they present and they get some of these topicals and other agents they have a varied response rate and I don’t -- I believe it to be above 80% response rate of really getting rid of these lesions; but when lesions come back they are harder to treat. So an initial response rate is very high - absolutely. And it probably is unlikely that someone initially diagnosed with a cutaneous-type of disorder like this would come right to an antibody just because antibodies are more expensive than a topical.

Right.

So most of these types of patients are given topicals that they can self-administer and keep the cost down. A tube of topicals could range but it could be in the hundreds of dollars a year, not in the thousands or tens of thousands and so if that works, certainly that’s where the docs start on to try to keep the costs lower and to make it simpler for administration. But as they stop responding to topicals, patients get in pretty desperate shape and they’re looking for anything.

And so we get patients on our trials who are -- we have pictures of these patients, you know, the skin on the back, legs and arms that are just miserable. And the results - and we’ll show this at the dermatology conference that we’ve talked about previously - some of the pictures we have are dramatic of these patients that have these lesions all over arms, legs, back, everywhere, trunk and they’re just -- lesions have literally resolved. And I mean if this was more of a life-threatening disease it would give us more of an opportunity with fast-track approval since it appears that our response rate is so good with this. But we’ll give more details at this dermatology conference and as we look at this cutaneous lymphoma it is likely not going to be because of the non-life-threatening category not the first place where we would go for approval; but you get approval in systemic ALCL or you get approval in Hodgkin’s or any other area and I have to think that just with all the work that we’re doing with multiple publications where they’ll end up to be showing very strong data that there will be a use for this in this area and it will help people.

Okay. For SGN-40, you’re talking about the Phase I combination studies with Rituxan and Revlimid and can you talk to me about when you might start those studies?

Sure. There are a number of opportunities that we’re looking at. We cannot do all of them all at the same time and so we have to prioritize them just like any organization. And when we look at these we think there are opportunities in combination with Revlimid because Revlimid augments NK activity and can really synergize as an antibody and, in fact, pre-clinically Revlimid and SGN-40 have been shown by one of our investigator - excuse me at Dana Farber - to synergize in multiple myeloma in fresh patient explants. So we’re excited with that.

Now Rituxan combinations are also something that is pretty exciting to us because we’ve done pre-clinical work showing Rituxan synergizes with SGN-40 in NHL and we’ve also had some early evaluations of consideration in Waldenstrom’s. Waldenstrom’s macroglobulinaemia is a disease that is treated with Rituxan now. The response rate is not super great and they do have a response rate but it really needs to go up and one opportunity is to use two antibodies. These patients don’t respond that well to chemotherapy and to use two antibodies that attack the macroglobulinaemia from two different targets could be very valuable. And so when I look at this I think that overall we’re planning to initiate several Phase I combination studies with SGN-40 over the next 12 months and so you’ll see some of these go on.

Okay. So the first one of them is going to start this year? Or the first one is going to start sometime in 2007?

I would say that it’s highly likely that the first one will start in 2006. We’re working on protocols now and we’re working hard to make that happen.

Okay. Great. Thank you very much.

Thanks, David.

Thank you. [OPEARTOR INSTRUCTIONS] Our next question comes from George Farmer from Wachovia Securities. Please go ahead.

Hi, Clay. I just want to follow-up on what Bret was talking about in SGN-30 and in our past discussions we’ve talked about when it may not become worthwhile to develop SGN-30 if, in fact, you’re really only going to be going after a market in refractory ALCL and nothing else. Now I’m hearing you seem to be a bunch more enthusiastic about it. How many patients are we going to see ultimately in this Phase II trial that will probably be reported at ASH? And now, I guess, has your thinking changed given that NCIs interest in running these front-line trials has kind of picked up.

Well, first of your questions is the number of patients at ASH. The Phase II study that we’re working on was designed to include 40 patients in there - 40, a little bit more. You always want to include a little more to make sure that all the patients have treated and everything. So I think that what you’ll likely see at ASH is the full study with a little bit more than 40 patients in the trial and with the full data set. So I think that’s first of all a very valuable thing that we’ll be putting into this as we’re talking about this in terms of some rare disease. So we’ll see a pretty good data set. That was the first question and the other one was about the NCI and their interest here.

Clearly they have interest in SGN-30. They’ve come to us twice now in two different ways; one in Hodgkin’s in combination with GBD, which is a drug-cocktail that they’ve been pioneering for relapsed Hodgkin’s, and the other for front-line ALCL. And we’ve always thought that the way to use SGN-30 best in any CD30 positive t-cell lymphoma where ALCLs one to ones we’re using but any t-cell lymphoma that’s CD30 positive, and the way to ultimately use it would be in combination with front-line therapy and front-line therapy for T or B cell lymphomas for decades have been chopped chemotherapy. And you know the story with Rituxan. You know how Rituxan is just -- it works tremendously well and it changed how B cell lymphomas are treated.

Front-line therapy is our chop in B cell NHL. And we’d love to see SGN-30 -- I mean CD30 positive T cell lymphomas that SGN-30 plus chop becomes front-line. Not all T cell lymphomas have CD30 expression; but anaplastic large-cell lymphoma is 100% CD30. It was a decision we chose to go after which is basically get chopped chemotherapy and after patients - if they respond to chop and response rates are very good - and if they respond to chop, great. But once they relapse, patients go downhill pretty fast with not a lot of good alternatives. Yes, it’s a pretty rare disease but we do have PRs and CRs that were reported - and we’ll report our full data set - so together with the front-line interest it certainly helps our view of this because the sooner you get it to front-line have the possibility, the larger the potential market size. So it just gives us more food for thought and we’re delighted that NCI is involved in this.

All right. But do you file on a refractory indication?

I think that it would be much quicker to file on a refractory indication and get that to an approval state. Because if you could get that approved, you probably can use it for diseases like cutaneous lymphoma and others where you don’t even necessarily have approval but you might have solid publication in those areas. So I think that our decision later this year is to look at the market, look at the data, look at all the regulatory environment, etc., speak to the FDA with an end of Phase II meeting and make critical decisions on going forward or not and we have to make those decisions in the relapse setting, though.

Okay. So you may wait until you get front-line data before you file. Is that possible? So again, just given what the potential market opportunity may be in a refractory setting, is it worthwhile to go forward without any front-line data?

We have not spoken about that question to the FDA, although that is an excellent question and that may be something we consider as we look at this internally and strategize on this that having that data in the front-line setting can really make for a better market; and so these are all pieces of information that we will be looking at. So without having the FDA body or information on what their thoughts are on the front-line data yet, I don’t want to answer it completely except to say that it’s a very important question.

Okay. Thanks.

Thank you. There are no further audio questions at this time. Do you have any concluding comments?

Just to thank everybody for joining us and please give us a call if you have any further questions and we look forward to meeting with all of you again very soon.

Thank you. Ladies and gentlemen that does conclude the conference call today. Thank you for your participation and you may now disconnect.