Seagen Inc (SGEN) 2008 Q4 法說會逐字稿

Welcome to the Seattle Genetics fourth quarter and year-end 2008 financial results conference call.

During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions). This conference call is being recorded today, Thursday, February 5, 2009.

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

Thank you, operator.

I would like to welcome all of you to Seattle Genetics fourth quarter and year 2008 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Business Officer; and Tom Reynolds, chief Medical Officer. This afternoon, Clay will provide an update on our programs including recent highlights and our 2009 goals. Next, Todd will discuss our 2008 financial results and provide 2009 guidance, and then we'll open the call for questions.

Today's conference call will include forward-looking statements based on current expectations. Such statements are only predictions and actual results may differ 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.

I'll now turn the call over to Clay.

Thanks, Peg. And thank you all for joining us today.

Seattle Genetics had a fantastic 2008, and we're off to a strong start in 2009. Highlights of the past year include the following: we reported compelling clinical data with SGN-35, an antibody drug conjugate or ADC, using our proprietary technology. This led to a special protocol assessment from the FDA for a pivotal trial of SGN-35 in Hodgkins lymphoma set to begin this quarter. In collaboration with Genentech, we moved forward five combination trials of dacetuzumab for non-Hodgkins lymphoma and multiple myeloma.

We completed more than 90% of the target enrollment in our lintuzumab Phase IIb trial. We are on track to complete accrual this quarter and report data in the first half of 2010. We initiated a clinical with SGN-70 for autoimmune disease. We entered into an ADCDL with Daiichi-Sankyo on substantially higher financial terms than briefly achieved, reflecting the increasing value of our technology. This new deal and progress by our other ADC collaborators generated more than $9 million during 2008. And this week, we strengthened our financial position by successfully completing a $55 million public offering at a strong price in a very difficult market.

I'll start our program updates with our lead product candidate, SGN-35, and ADC targeting CD-30. Our development activities with SGN-35 are focussed initially on relapsed and refractory Hodgkin lymphoma, and anaplastic large cell lymphoma or ALCL, a type of T-cell lymphoma where there are no clear standards of care and therapeutic options are limited. SGN-35 has the potential to address the high, unmet medical need for patients in these settings. At the American Society of Hematology annual meeting, or ASH, in December, we reported data from our Phase I dose escalation trial showing that at doses of 1.2 milligrams per kilogram and higher administered every three weeks, 54% of patients achieved an objective response including 32% with a complete response. These data are striking and exceeded our expectations, compelling us to advance the program rapidly.

As we announced in January, we have secured a special protocol assessment or SPA from the FDA for a pivotal trial in Hodgkin lymphoma that we plan to initiate this quarter. This is a significant accomplishment for Seattle Genetics and an important step for our SGN-35 program. The pivotal single-arm trial will enroll 100 relapsed or refractory Hodgkin lymphoma patients. The primary end point will be objective response rate assessed by an independent radiologic facility. The pivotal trial of SGN-35 will be an important milestone for Seattle Genetics and it could support the Company's first new drug application. Our goal is to submit NDA for SGN-35 in 2011 under the accelerated approval regulations with potential commercial launch in 2012.

In parallel, we also plan to initiate a single agent Phase II trial of SGN-35 for ALCL by the end of March. In our Phase I trials of SGN-35, five out of six ALCL patients treated to date have achieved a complete response. These data provide strong evidence of the therapeutic potential for SGN-35 in this indication. We belive that ALCL may provide an additional registrational pathway for SGN-35. We are also conducting a Phase I trial of SGN-35 administered weekly. Dose escalation is ongoing and we look forward to reporting data from this trial in 2009. SGN-35 has demonstrated substantial therapeutic promise with a potentially rapid pathway to regulatory approval. We are aligning our clinical, development and financial resources behind it accordingly.

Dacetuzumab, otherwise known as SGN-40, is an antibody targeting CD-40 that we are developing in collaboration with Genentech. At ASH, we reported data from the single agent Phase II trial in diffuse large B cell lymphoma. In a heavily pretreated population of patient with a median of four prior therapies, dacetuzumab achieved objective responses at well tolerated doses. The trial confirmed the single agent anti-tumor activity of dacetuzumab and is supportive of our ongoing development activities focused on combination regiments. We and Genentech are advancing five trials for non-Hodgkin's lymphoma and multiple myeloma in combination with standard treatments for these diseases.

The largest of our dacetuzumab trial is a Phase IIb randomized trial in combination with retuxin chemotherapy for second line DLBCL, named the C-GEN mariner trial. Recently, an independent data monitoring committee completed a pre-specified safety review of data from this trial, and recommended that it continue as planned. We anticipate data from the CGEN mariner trial will be available in 2010. Some of the novel research underway with dacetuzumab was also presented at ASH. Notably, preclinical data were shone on a gene signature designed to identify non-Hodgkin's lymphoma patients more likely to respond to dacetuzumab therapy. This tool is being (inaudible) with clinical findings from our studies of dacetuzumab for lymphoma; and we plan to submit the data for presentation at a medical meeting in 2009. We and Genentech have made meaningful progress in the development of dacetuzumab by advancing the program in a number of therapeutic settings

Our third drug in clinical trials is lintuzumab or SGN-33, an antibody targeting CD-33. The majority of our development efforts on this program are focused on a large Phase IIb study in patients 60 years of age and older with acute myeloid leukemia, or AML. This global trial is advancing rapidly. We have enrolled more than 90% of the planned 210 patients and expect to complete accrual this quarter. This is a randomized double blind placebo controlled trial comparing overall survival of patients receiving low dose cytarabine plus lintuzumab to those receiving low dose cytarabine alone.

An independent data monitoring committee for this trial recently conducted a safety review of the data and concluded the study should continue as planned. Our goal with the Phase IIb clinical trial is to demonstrate that the addition of lintuzumab leads to a meaningful survival advantage for these older patients who have limited therapeutic options. This trial will be unblinded upon reaching 186 events, and our expectation is that the data will be available in the first half of 2010. In addition to the Phase IIb trial, we have completed accrual to a single agent Phase I trial in AML and myelodisplastic syndromes or MDS, and plans to report data in 2009. We will also expect to report data from the Phase I trial of lintuzumab plus revlimid in patients MDS in the second half of this year.

Our fourth clinical stage program is SGN-70, an antibody targeting CD70. In a Phase I trial, we are assessing safety and pharmacokinetics of SGN-70 in healthy subjects. We have completed enrollment to the dose escalation portion of the trial, and plan to ex-planned into patients with autoimmune disease mid-year. We are also developing SGN-75, an ADC targeted to CD-70, which is expressed on both hematologic malignancies and solid tumors. We are on-track to submit an IND in the second half of this year. Given the promising data with our lead ADC, SGN-35, and our compelling preclinical data with SGN-75, we are eager to advance this program into the clinic.

In addition to our internal ADC programs, we are codeveloping AGS5ADC with Agensys, a subsidiary of Astellas for solid tumors. We also have collaborations with six companies and have licensed our ADC technology to empower their own antibodies. Three of these collaborators CuraGen, Progenics, and Genentech have entered the clinic with ADCs utilizing our technology and we expect additional ADCs from our collaborators to follow. To summarize, our key milestones for the 2009 are for SGN-35 initiate the pivotal trial in Hodgkin lymphoma and the Phase II trial in ALCL, report data from the weekly dosing trial, advance our commercial CMC activities and further refine our US and European registration and life cycle management strategies.

For dacetuzumab, advance five ongoing combination clinical trials in collaboration with Genentech and report data. For lintuzumab, complete accrual in the Phase IIb trial in older AML patients and report data from both the Phase I single agent trial, and the Phase I trial in combination with revlimid. For SGN-70, complete the healthy volunteer portion of the Phase I trial, and expand into patients with autoimmune disease; and for SGN-75 submit an IND for a Phase I trial in CD70 positive malignancies.

With proceeds from our recent offering, we are well positioned financially. We are also mindful of the need to be fiscally prudent. Our approach is to strategically invest in our pipeline while using our financial resources wisely, especially given the current economic climate. We are focused on the essential activities and staff neccessary to take our products forward and generate key clinical data. We take a pragmatic approach to funding our business, through a combination of product partnering, technology licensing, and equity financing. Maintaining a strong balance sheet with no debt has allowed us to continue to advance our own pipeline, as well as negotiate potential partnerships from a position of strength.

I would now like to turn the call over to Todd to discuss financial results.

All right. Thanks, Clay, and thanks, everyone, for joining us on the call this afternoon.

As you just heard, 2008 was a year of exceptional progress for the Company, and that progress is reflected in our financial results. This afternoon we reported our financial results for 2008, which included record quarterly and annual revenues for the Company. While accomplishing a lot with our pipeline programs, we also carefully managed our expenses in 2008, which came in at the low end of our guidance. Cash used to fund our operating activities was approximately $63 million, and we ended the year with a cash position of approximately $161 million, which is higher than previously projected.

Today I'll highlight our financial results as well as provide guidance for 2009. For the fourth quarter of 2008, revenues increased 28% over 2007 to $10.1 million; and revenues increased 57% for the year end 2008, to $35.2 million. These revenues were slightly above our guidance, and primarily reflect amounts earned our dacetuzumab collaboration with Genentech, which increased both in the quarter and year-over-year in 2008. Our ADC collaborations also contributed to revenues in 2008, including multiple clinical and preclinical milestones and other payments received under our collaborations with Genentech, Progenics, Bayer and CuraGen, as each of the collaborators advanced products utilizing our ADC technology. ADC collaboration revenue in 2008 also reflects the earned portion of the $4 million upfront payment received from Daiichi-Sankyo in July.

Operating expenses for the fourth quarter of 2008 increased $41.9 million into $127 million for the year-to-date. This compares to $24.4 million for the fourth quarter and $78.1 million for the year end 2007. These planned increases reflect higher R&D expenses, which were $110.9 million for the year end 2008, compared to $64.8 million for the year end 2007. Fourth quarter 2008 R&D expenses increased over both the fourth quarter of 2007, as well as each of the previous quarters in 2008. This reflects manufacturing campaigns for SGN-35, which will complete in the first part of 2009; as well as campaigns for dacetuzumab, which have been completed. Otherwise, the principle drivers of increased expenses in 2008 are consistent with previous discussions, and reflect expanded clinical development activities for lintuzumab, SGN-35, and dacetuzumab and increased employee costs driven by growth in our clinical and developments groups.

I will also note that total operating expenses include non-cash share-based compensation expense of $10.4 million for the year end 2008, compared to $7.9 million for the year end 2007. And as a reminder, dacetuzumab collaboration costs incurred by us, including the manufacturing and clinical trial costs that I described, are included in our operating expenses, but are fully reimbursed by Genentech under the collaboration. We ended 2008 with $160.7 million in cash and investments. This does not include approximately $52.6 million in net proceeds received this week from our common stock financing. Additionally, we have the potential to receive $11.5 million from a planned common stock sale to Baker Brothers Life Sciences, which has committed to purchasing these shares in a private placement at the same price paid by investors in the public offering. As Baker Brothers is represented on our board of directors, this offering is subject to stockholder approval at our annual meeting planned in May.

As to financial guidance for 2009, we expect revenues to be in the range of $35 million to $40 million. These revenues will continue to reflect amounts earned under our our dacetuzumab collaboration with Genentech, as well as our ADC collaborations. Total operating expenses in 2009 are expected to be in the range of $125 million to $140 million, which is the same range as in 2008. Investment in our development programs will be focussed on the following: for SGN-35, we will execute on key development activities, including initiation of our planned trial in Hodgkin lymphoma in the first quarter and continued manufacturing in CMC activities to prepare us for an NDA submission in 2011. We will also initiate a Phase II clinical trial for SGN-35 in ALCL patients.

For dacetuzumab, we will continue the multiple clinical trials with Genentech, evaluating this antibody in combination with other agents. And for lintuzumab, we will continue the Phase IIb clinical trial in combination with low dose cytarabine and complete the ongoing Phase I trials. We expect that research and development expense will comprise approximately 85% to 90% of our total expenses, and because of the timing of manufacturing activities for SGN-35, these expenses should be higher in the first part of the year.

2009 expense guidance includes non-cash amounts projected to be in the $15 million to $17 million range, the majority of which relates to share-based compensation expense. This estimate is based on a number of assumptions, including future stock prices and the number and timing of option grants, and therefore, may change.

Lastly, we expect that net cash used to fund our operating activities in 2009 will be in the range of $80 million to $90 million. We expect to end the year in a strong financial position with more than $120 million in cash and investments. This does not include the $11.5 million in proceeds from the proposed sale of common stock to Baker Brothers in the second quarter. So with that I'll stop and turn the call back over to Clay.

Thanks, Todd.

Operator, at this point, we would like to open the call for questions.

Thank you, sir.

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). And our first question comes from the line of Corey Kasimov with JPMorgan. Please go ahead.

Good afternoon. Actually this is Mona for Corey.

A couple of questions. One relates to SGN-35. And I wonder if you could speak a bit more on how we should think about the hurdles for approval there in terms of response rate. Is that something you could share?

We could share as much information as would be appropriate. What I'll do is I'll turn--this is Clay, and I'll turn it over to Tom Reynolds, Chief Medical Officer, to talk a little about the SPA some guidance we can give.

So as you're aware, the planned pivotal study, which should initiate this quarter, is in a hundred patients with Hodgkin lymphoma following transplant. The primary end point will be objective response rate. We know that the FDA is thinking that there's three things that are important for this study. One is objective response rate. Second is the percentage of complete responses, and then third is durability.

And I think what we've been able to report so far is that at meaningful doses, we've got a 50% objective response rate, 32% CR rate, and a durability that's now going out six months and beyond. We think if we are able to mirror these type of data in the pivotal trial, that this will easily put us over the bar to an accelerated approval. That's our perspective. How low the bar is, or how high the bar is, is a little bit less clear. We do not have actual numbers in our SPA about these, and it's clearly a review issue with the FDA. We're very confident with the data that we've seen, and our evolving data from the weekly dosing study that we should be able to clear the bar and get this drug on the market to help patients quickly.

That's helpful.

And then just the second question, this one, I guess more for Eric; but you had spoken about partnering the ex-US rights for SGN-35 and 33, and I'm just wondering what your current thoughts are there? Any update on when we might see a deal or any thoughts on the timing there?

Hi, Mona.

Yes. There's definitely a lot of interest in both programs, and particularly in SGN-35 as the data continues to evolve and get better and be reported out there through medical conferences. So we're in some active discussions, but I think we've been pretty clear over the last several quarters that we have a strong financial position, and especially with the proceeds from our financing work, we have the resources to take these programs forward ourselves and build additional value. So we are not pressed to to deals unless the terms are attractive and they make strategic sense for Seattle Genetics.

So it's a good position to be in. We feel like with SGN-35 in particular, this is a drug that we can commercialize in the US, and it's something we could probably commercialize outside the US if we chose to go that route, but we're going to evaluate all our options and see what makes the most sense for the program and the Company.

Thanks.

Actually, can you just remind me what you'd said about what size of the fields you would need to commercialize SGN-35 in the US.

We haven't talked much about it. Our internal projections are somewhere around 50 to 75 sales reps in the US to cover the (inaudible) market would be a reasonable size. So it's not a huge sale force.

Great. Thanks so much.

Thank you.

Our next question comes from the line of Mark Monane with Needham & Company. Please go ahead.

Good afternoon from New York City. It's getting dark here, but thank you for sharing the light with us on all your accomplishments in 2008.

A few questions to start off. Off--a couple of questions more off some things that Mona talked about. Dacetuzumab, could we talk about the Phase IIb trial, please?

Dacetuzumab you said, right? Lintuzumab or dacetuzumab?

I called it dacetuzumab, I'm putting all the tuzumab's together. But dacetuzumab sounds good too. Phase IIb trial, can you talk about, please, is that a pivotal trial in your opinion when we get the results, will that be good enough for filing?

Yes, Mark. This is Tom Reynolds.

That's a good question. The trial was initially conceived as a Phase IIb study, really designed to evaluate the difference between adding dacetuzumab to retuxin ice as compared to retuxin ice alone. In our thinking about this, what it is designed to do is enable patients to get to a CR and then go on to transplant. So it's not a classical pivotal trial, but we believe that if the results are strong and we see a significant improvement on the ability to get to CR and get to successful transplant, that it could be part of a registration package, and I think it depends on how strong those results are, as to whether we could move forward immediately to a filing with that, or whether additional trials would be warranted.

That was helpful.

Sticking with the same compound. I noticed that you're developing the drug--or you and Genentech are developing the drug with (inaudible) and multiple myeloma, and there I believe there's another trial with revlimid in multiple myeloma. There's no antibodies in multiple myeloma now to the best of my knowledge. Where do you think this fits best in the treatment regimen, are we talking front line, or second line where the patients may be somewhat impaired and a relatively safe antibody might do some good in terms of combination? How are you thinking about positioning here?

Yes, so Mark, this is Tom again.

Our initial thoughts are that we are taking a pretty classical approach and starting in patients that have failed multiple lines of therapy. We're trying to see if the combinations are tolerable, which we would expect they would be, and we hope to be able to share data with you later this year. And we're also looking for signals for efficacy. Although there are good drugs out there for myeloma right now, patients aren't being cured, and myeloma is becoming more chronic, but better therapies are needed because a significant percentage still die every year. We think we would start toward the back end, but there's no reason not to believe that dacetuzumab couldn't take on a retuxin-like profile and move up the chain to front line. It's something that we believe could be very well tolerated and easy to add to the arm of (inaudible) that keeps evolving.

Very helpful.

When I think of lintuzumab and the low dose, I recall that [Arrisy] low dose is pretty popular in Europe, although in US, it doesn't seem to be all the rage yet. is that a correct assessment; and what do you get, Eric and Tom and Clay, when you think about low dose [Arrisy] in the US?

There clearly are physicians that are using low dose [Arrisy] in the US. I would agree with your take on this, that it's definitely more popular in Europe, and that US physicians use a variety of things. But it is one of the few therapies for older AML that aren't really fit for intensive chemo that has been shown to actually affect survival in a positive way. In fact, it is really the only drug at this point for this population to have solid survival data.

Now, the landscape is going to continue to change. We've seen the data which includes a small percentage of AML patients, but is encouraging. We think [Arrisy] right now is a good standard of care. We think lintuzumab is going to combine well with that. The trial is going quite well, and as clay said, we're almost over the goal line with enrollment and we're looking forward to seeing that survival data in the first half of next year.

And Mark, from our market research, you're right, there's really no good true standard of care for elderly AML. There are not any therapies that are particularly effective there. Patients can't tolerate the more intensive chemotherapy, but [Arrisy] did come across as the most commonly used therapy, And, like Tom said, we think that a number of the other drugs that are in development could also be combined with lintuzumab in the longer run. So we thought this was a good regulatory strategy, and look forward to having those results in 2010.

And last question is for Todd, how many people, please, at the Seattle Genetics? What's the optimal a number of people going forward, and how does Eric's potential partnering strategies affect your thoughts about expenses going forward?

Okay. So we ended the year at about 250, 260 people. We think that the resources needed to push our programs forward, at least in 2009, would involve another 10 to 20 people, primarily in our development groups to support the CMC and manufacturing activities for programs like SGN-35 and also in the clinical teams. So that's about the right size we think for 2009; and I think the last part of your question, I think really depends on the type of partnership, if we in fact do a partnership, and how that would impact the work that we do internally versus a partner might do.

Thanks very much for the added information, and congratulations on 2008. Looking forward to 2009.

Thank you, Mark.

Thank you.

Our next question comes from the line of Bret Holley with Oppenheimer & Co. Please go ahead.

Yes. Thanks for taking my question.

I was actually wondering, I was kind of pondering the pivotal trial for SGN-35, and I was wondering how the data broke down from Phase I in patients that were trans--prior transplants versus patients that didn't receive transplants. I think 72% of the patients got transplants in Phase I, and I'm just trying to get a beat on what the expectation for the Phase II would be, because they're all transplants correct?

Correct. Bret, this is Todd.

You're right about three quarters of the patients were post-transplant, one quarter pre-transplant. The data--the numbers are all small, but there was no real big discrepancy in terms of response rate or durability in the pre and post-transplant setting. On many of the patients who had not gotten a transplant were people who were not eligible for transplant. For example, we had an 87-year-old, who had other co-morbidities, wasn't eligible for a transplant, but did very nicely with SGN-35. So it's not only patients that are earlier lines of therapy, but also patients that are unable to ever get a transplant.

And how might the Phase II pivotal population vary from the Phase I population? Because obviously you're getting a lot of deep salvage patients. Is the patient population that you envision very close in the pivotal trial versus the Phase I?

So I think the way we see the pivotal population is quite similar. We expect there to be a fairly strong representation of patients who had--this is their first failure following transplant, but also a substantive number of patients who have seen other therapies and have not really benefited well from them, and have gone on to relapse. So we think it will be a good mix of both of those populations, as we go forward.

I'm sorry, so just so I understand, so it's not required that they have prior transplant in the pivotal trial?

It is required, but some will be first relapse following transplant, and others may be patients who have relapsed a year ago or so, and have achieved--and have received other therapies prior to 35.

Okay.

And then another question I had is what has your thinking developed along the lines of additional trials for SGN-35? Obviously it would be an accelerated approval based on the Phase II. So it seems like you should have other trials up and running and kind of in your back pocket, or at least projected to report out, if the drug is approved on an accelerated basis.

That is a wonderful question, and this is an area that's taking a lot of our energy right now, in addition to starting up the pivotals. We have quite a number of things. We've got more ideas than we can actually do, and we're trying to winnow them through. But there are some themes I think that are important.

One is we will be doing the pivotal in Hodgkin, and in parallel, we will be running a Phase II in ALCL. The data so far that we've shared the five out of six with complete responses we think is exciting. We're hoping to extend those data in the Phase II. And it may be an additional regulatory pathway we can pursue in parallel or following the Hodgkin approval.

We are also interested in moving this closer to front line. Front line is not a completely unmet need with ABVD, but there are some significant challenges with folk that have refractory or relapse to ABVD, folks that are unable to tolerate all of ABVD, like the elderly population that can't really get full six cycles of ABVD, high-risk patients that, although they respond initially, relapse quickly with ABVD. Those are all areas that we're interested in as trying to move up to front line and really benefit that large segment of the patients.

In addition, there are other CD-30 positive malignant populations either cutaneous lymphoma, there's a subset of diffuse large B cell lymphoma that's CD30 positive; and other lymphomas that we think we can extend laterally into. And we've got--had a lot of interest both from individual investigators, cooperative groups, and NCI itself in terms of what studies we might all do together and have a leverage both our corporate dollars and those of other organizations to move this forward. We would anticipate further discussions with regulatory agencies in Europe and the US this year, and would hope to be able to share with you later this year a bit more about our strategy beyond the accelerated approval here in the US and a potential conditional marketing authorization in Europe.

And I guess the last question is does your 2009 guidance envision any additional trials, or is this more of a 2010 kind of group of trials that are going to start for 35?

Most of those trials will start in 2010, although our assumptions do include some planning activities during 2009.

Okay. Thanks very much, guys.

Thank you.

Our next question comes from he line of Han Li with Stanford Group. Please go ahead.

Yes. Thanks for taking my question.

On SGN-33 or lintuzumab, the Phase IIb in elderly patients with AML, this is like 210 patients study survival end point. Is this study powered for registration, or can you file on this single Phase IIb study if positive?

Yes, this is Tom Reynolds again.

Our plan is, we originally configured this as a Phase IIb screening study that was designed to really evaluate what kind of treatment effect we might see with lintuzumab added to low dose [CRC]. After designing the trial and working that through and discussing this with the FDA, we're running it with the rigger of a pivotal study, and should we see a significant improvement in survival. Right now the largest study done to date with single agent low dose [CRC] shows roughly five and a half month survival. Should we show a survival benefit of eight weeks or greater, we have statistical significance of a T less than 0.01, and our discussions with FDA, which we've documented, really are very clear that that would be enough for this to be considered for approval based on this single study alone.

So yes, it's potentially a registration study, and we're working hard to make sure that it gets done quickly and appropriately to support registration.

Okay. You expect data the first half of 2010?

That's correct.

Okay. so this could be the first antibody drug on the market or to reach the market?

This is Clay.

You mean the first antibody from Seattle Genetics to reach the market?

Yes, yes.

We believe that SGN-35 is the first drug that will reach the market. In addition to clinical trials and all the work that goes associated with trials, there's also a preponderance of CMC activity that goes along with it; and we are positioning the CMC activities of SGN-35 moving forward very rapidly right now. And SGN-33, we are unable to position both at the same time moving forward, and we have chosen to put the SGN-33 CMC activities on a rapid path, but we would be very close behind with SGN-33.

Okay.

Let me get this right, for lintuzumab if you have data in the first half of 2010, if it's a positive, you can file to on a single Phase IIb study

We would be able to file based on the clinical data.

Would that put you on--

We would need the rest of the filing package including full CMC to do the filing.

You mean 2010 or 2011?

We have not provided a guidance on that. We have not provided a specific date on that at this point.

I see. Okay.

And on the SGN-35, I was thinking you mentioned that you projected timeline for NDA filing is 2011. This is an conjugate antibody. Can you comment on why it's NDA not BLA, any additional regulatory requirement for the conjugate antibody for approval?

Yes. We believe--so FDA has two choices for which review division to take this, either the Biologics, or drugs. Because it's an antibody drug conjugate with an active cytotoxic moiety, they have decided that class of drugs going forward will be regulated within drugs. Now because it has an antibody component, they bring in some expertise from the Biologics division to help with the review, but the review division is the drugs division so it will be an NDA..

Got it. Thank you.

Thank you. (Operator Instructions). Our next question comes from the line of David Miller with Biotech Stock Research. Please go ahead.

Great, thanks for taking my question.

Congratulations, everybody, on doing the deal, breaking the six-month drought that we had.

Thanks.

Thanks, David.

Thanks.

The first question I have is can you give me some details on the size of the ALCL trial for SGN-35?

Sure. It will be a--it's going to be a Phase II study. It will be single arm, and it will be 55 patients.

Okay.

Clay, you talked a little about the gene signature that Genentech's R&D folks have found for SGN-40. Can you talk a little bit about how they're--how you together are looking at this gene signature in terms of the mariner trial?

Yes. The gene signature is not part of the mariner trial. It's not a specific part of the trial at this point.

So David just some more color on this. We've done retrospective analyses on our two single arm studies--or single agent studies, the Phase I and the Phase II. And Genentech will be presenting data on that we hope later this year. That's the plan. We do have the provision to be able to use samples from the mariner trial retrospectively to see if that holds up and to do some further validation work, but that's not a prospective analysis. I think that is what Clay is alluding to, and it's not being used to screen or select patients or stratify them at all. It will be completely retrospective.

Right.

Did you--okay. The next question is, a couple of other companies are doing, or at least one other company is doing a conjugate targeted at CD70 and specifically CD30. We've talked before on previous conference calls about your IP position and CD30 for a non-conjugated antibody. Can you talk a little bit about it for SGN-35?

Hi, David, it's Eric.

We're not aware of any other company developing a CD30 conjugate. There are other naked antibody CD30 programs that are in development, but--so that's one point, but on the IP side, we have patents that cover our antibody and the way it behaves in terms of it's signalling activity and the way it kills tumor cells; and then we have a whole separate picket fence of IP that covers our antibody conjugate technologies and methods of using that to treat cancer. So we have strong IP that goes well out into the 2020s that would cover SGN-35 and any other conjugates that use a similar type of ADC technology.

Okay. Great. The rest of my questions were answered. So thank you much.

Thank you.

Our next question comes from the line of Michael Yee with RBC Capital Markets. Please go ahead.

Good afternoon, guys.

Quick question regarding milestones and guidance. How much of the revenue guidance is Genentech based or Genentech type reimbursement? And then in terms of guidance, are there any milestones that are included in there? And any milestones from Genentech that could come in '09?

First of all, we don't give specific guidance on that.

What I can tell you is that in 2008, about 80% of our revenue comes from our dacetuzumab collaboration as well and our ADC collaboration with Genentech. We have two collaborations with Genentech. On a go-forward basis, we do expect that a big chunk of our revenue is going to continue to relate to the dacetuzumab collaboration with Genentech, but haven't really given any specifics beyond that.

With respect to milestones, we do assume modest level of milestone activity from our ADC collaborators. On the dacetuzumab collaboration, the next milestones really would be based on the initiation of subsequent clinical trials that will happen pending the review of the ongoing study. So it's a little hard to predict with a lot of certainty as to when those might happen.

And when they happen, are these kind of AK'd, or is there some sort of announcement to it or some sort of disclosure.

Typically we would issue AKs or press releases on milestones like that.

Okay. Thanks.

Thank you. And there are no further questions.

Ms. Pinkston, I'll turn it back it back over to you for closing comments.

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

Thank you. Ladies and gentlemen, that will conclude today's teleconference. We do thank you again, and at this time, you may disconnect.