Seagen Inc (SGEN) 2009 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Seattle Genetics first quarter 2009 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.

If you have a question, please press the star followed by the one on your touchtone phone. If you would like to withdraw your question please press the star followed by the two. If you're using speaker equipment please lift the handset before making your selection.

This conference is being recorded April 23, 2009. I would now like to turn the conference over to Ms. Peggy Pinkston, Director of Corporate Communications. Please go ahead, ma'am.

Thanks, Lorissa. I'd like to welcome all of you to Seattle Genetics' first quarter 2009 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 upcoming activities. Then Todd will discuss our first quarter financial results and then we'll open the call for your questions.

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.

With that, I'd like to turn the call over to Clay.

Thanks, Peg, and thank you all for joining us today. We've started off 2009 with a lot of momentum, making key progress with our programs, adding a new ADC collaborator, and enhancing our financial position.

Among our accomplishments so far this year, we received a special protocol assessment for SGN-35 in Hodgkin lymphoma, and within weeks initiated a pivotal trial. This is a major milestone for Seattle Genetics and a step towards potential commercial launch in 2012.

We reached our target enrollment goal of 210 patients in our lintuzumab Phase IIB trial. We expect top line data from this randomized, event-driven study will be available in the first half of 2010. We continue to generate value from our ADC technology by entering into a collaboration with Millennium, under which we received a $4 million up-front payment and are entitled to receive additional fees, milestones, and mid-single-digit royalties for any resulting ADC products.

And we raised $53 million in a common stock offering, strengthening our financial position to continue investing in our pipeline. Over the remainder of the year we are continuing to drive towards additional milestones across our key programs.

Let's start with SGN-35, an antibody drug conjugant, or ADC, targeting CD30. We're developing SGN-35 initially for relapsed and refractory Hodgkin lymphoma and systemic anaplastic large cell lymphoma, or ALCL. In February, we initiated a pivotal trial in Hodgkin lymphoma just five weeks after receiving the SPA. The single-agent trial will enroll 100 patients and the primary end point is objective response rate assessed by independent radiology review. Investigator enthusiasm is high and enrollment is off to a great start. Our goal is to report data and submit the new drug application in 2011 with commercial launch in 2012.

In March, we received fast-track designation from the FDA for SGN-35 in Hodgkin lymphoma -- another important component of our regulatory strategy. The fast-track program is designed to expedite the development and review of new drugs that treat serious or life-threatening conditions and address unmet medical needs.

NDAs for drugs with fast-track designation may be submitted on a rolling basis and often qualify for six-month priority review. We also have orphan drug designations for Hodgkin lymphoma and ALCL in both the United States and Europe.

In addition to the ongoing pivotal trial we are conducting a Phase I trial of SGN-35 administered weekly. Data from this trial will be the subject of an oral presentation at ASCO on Monday, June 1st. These data will also be highlighted during best of ASCO conferences in late June and July.

We're also initiating a single-agent Phase II trial of SGN-35 for systemic ALCL. Our clinical data in ALCL have been impressive. We've previously reported that five of the first six patients treated in our Phase I trials achieved a complete response. We believe that ALCL may provide an additional registration pathway for SGN-35.

Another trial that we are preparing to initiate is a re-treatment study with SGN-35. This trial is designed to evaluate the potential to induce additional anti-tumor activity in patients who have relapsed after discontinuing SGN-35 therapy. Re-treatment with SGN-35 could provide a way to keep patient disease in check and potentially extend survival. It could also expand the market potential for SGN-35. We expect this trial to be under way by mid-2009.

Lastly, we are developing our global registration and life cycle management strategies and are ramping up our commercial CMC activities in preparation for launch. We recently hired Dr. Vaughn Himes as Executive Vice President, Technical Operations, and promoted Dr. Morris Rosenberg to Executive Vice President, Process Sciences. These moves will support our aggressive development goals -- in particular, SGN-35 commercial manufacturing and supply chain initiatives.

We believe that SGN-35 has the potential to address a substantial unmet medical need for patients with relapsed or refractory Hodgkin lymphoma and ALCL. We're moving the program forward rapidly toward regulatory approval for these patients who have very few treatment options. There are additional opportunities that we're evaluating for SGN-35 -- front-line lymphoma, other CD30-positive malignancies, as well as in autoimmune diseases.

Dacetuzumab, or SGN-40, is an antibody targeting CD40 that we are developing in collaboration with Genentech, now a wholly owned member of the Roche group. We and Genentech are advancing five trials for non-Hodgkin lymphoma and multiple myeloma in combination with standard treatments for these diseases. We expect that data from these clinical trials will be available later in 2009 and in 2010.

At the American Association for Cancer Research, or AACR annual meeting this week, we showed pre-clinical synergy of dacetuzumab in combination with conventional chemotherapy drugs commonly used in the treatment of lymphoma. In addition, dacetuzumab was shown to sensitize non-Hodgkin lymphoma tumors to Gemzar and improve the efficacy of Rituxan plus Gemzar in models of non-Hodgkin lymphoma. One of our ongoing clinical trials of dacetuzumab is a Phase IB study in combination with Rituxan and Gemzar for patients with relapsed or refractory diffuse large B-cell lymphoma.

In another presentation at AACR, Genentech reported data showing a correlation between a diagnostic gene signature and sensitivity to treatment with dacetuzumab in patients with diffuse large B-cell lymphoma. The gene signature, which was originally identified in non-Hodgkin lymphoma cell lines, was retrospectively analyzed in patient samples from completed single-agent clinical trials of dacetuzumab. The gene signature correlated with sensitivity to treatment with dacetuzumab with an overall accuracy of 80%. In addition, patients who were positive for the gene signature experienced longer progression-free survival compared to patients who were not.

This exciting research may ultimately lead to a diagnostic test that could predict which patients are most likely to benefit from dacetuzumab therapy. We're currently evaluating the gene signature in our ongoing clinical trials of dacetuzumab in combination with standard therapy.

The next program I'll discuss is lintuzumab, or SGN-33, an antibody targeting CD33. We've completed enrollment of 210 patients with acute myeloid leukemia, or AML, age 60 or older. This is a Phase IIB randomized, double blind placebo control trial comparing overall survival of patients receiving a low-dose cytarabine plus lintuzumab to those receiving low-dose cytarabine alone.

This trial will be unblended upon reaching 186 events and our expectation is that data will be available in the first half of 2010. If we successfully achieve our goal of demonstrating that the addition of lintuzumab leads to a meaningful, overall survival advantage in elderly AML patients, it could lead to substantive discussions with the FDA and trigger the manufacturing, commercial and CMC activities necessary to support a regulatory submission.

In addition to the Phase IIB trial we've completed a single-agent Phase IB trial in AML and myelodysplastic syndrome, or MDS, and plan to report data mid-year. We're also working on an investigator-sponsored Phase II trial to evaluate lintuzumab in combination with Vidaza for MDS. This trial should be under way by the end of 2009.

Our next two programs, SGN-70 and SGN-75 both target CD70. CD70 is highly expressed on activated T and B cells but not resting lymphocytes and that's been associated with a variety of autoimmune and inflammatory disorders. By selectively targeting activated immune cells, SGN-70 may provide a new therapeutic option for autoimmune disease that avoids globally suppressing the patient's immune system.

We have completed enrollment of healthy volunteers to a Phase I trial of SGN-70 and plan to expand into patients with autoimmune disease by mid-year.

We are also advancing SGN-75, an ADC targeted to CD70. We reported pre-clinical data at AACR on Tuesday showing the broad expression profile of CD70 on a variety of solid tumors, including pancreatic, ovarian, and colon cancer. We've previously described CD70 expression on multiple hematologic malignancies as well as renal cell cancer and glial blastoma. We're on track to submit an IND in the second half of this year for hematologic malignancies and solid tumors.

Beyond our product pipeline we've also continued to execute well on our business development initiatives. We've licensed our ADC technology to leading biotech and pharma companies and a few weeks ago we added Millennium, the Takeda Oncology Company.

We received an up-front fee of $4 million for access to our ADC technology for a single solid tumor antigen. Millennium also has options for up to two more targets in exchange for additional fees. We are entitled to receive annual maintenance and research support fees, progress depending milestone payments, and mid-single-digit royalties on net sales of any resulting products using our ADC technology.

To date, we have generated more than $75 million through our ADC collaboration. In addition to the up-front payment, these deals have the potential to generate future revenue streams from milestones and royalties as our collaborators advance their ADC programs into and through clinical trials.

The increased value of our recent ADC deals with Daiichi Sankyo and Millennium is a testament to a growing appreciation within the oncology community of the therapeutic potential of our ADC technology to empower antibodies.

Three of our collaborators have entered the clinic with programs utilizing our technology, including CuraGen, Genentech, and Progenix. We expect additional ADCs from our collaborators to follow in the next 12 to 18 months.

Before I turn the call over to Todd, let me summarize our key upcoming activities. They include, for SGN-35, continue the strong enrollment to our pivotal trials, initiate the Phase II trial in ALCL, report data from the weekly dosing trial at ASCO and initiate the re-treatment clinical study. For dacetuzumab, advance five ongoing combination clinical trials with collaboration with Genentech and report data beginning later this year. For lintuzumab, report data from the Phase I single-agent trial and complete treatment and follow-up in the Phase IIB trial. For SGN-70, expand the ongoing Phase I trial to include patients with autoimmune diseases. And for SGN-75, submit an IND for a Phase I trial in CD70 positive malignancies.

We look forward to keeping you updated on our progress. I'd 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.

Our first quarter 2009 financial results were in line with our expectations and continue to reflect revenue growth and expense increases resulting from the expanded activities in our pipeline that Clay just described.

Revenues in the first quarter of 2009 were $9.1 million, up 29% from the first quarter of 2008. These revenues continue to be driven by our dacetuzumab collaboration with Genentech.

Operating expenses for the first quarter of 2009 increased to $37.4 million. This compares to $26.1 million for the first quarter of 2008. This increase is primarily due to higher R&D expenses which were $33.2 million for the first quarter of 2009 compared to $22.2 million for the first quarter of 2008.

There are three main drivers for this planned increase in R&D expense. First, clinical development activities increased, in particular from the initiation of our SGN-35 pivotal trial as well as accruals into the Phase IIB trials for lintuzumab and dacetuzumab. The lintuzumab Phase IIB trial is now fully enrolled and ongoing costs for this trial will reflect patient treatment and follow-up.

Second, manufacturing activities for SGN-35 increased. These activities relate to drug supply campaigns for ongoing and planned clinical trials and commercial CMC activities in preparation for the NDA and launch. The increase in SGN-35 manufacturing activities was partially offset by lower lintuzumab and dacetuzumab costs as drug supply campaigns for those programs concluded in 2008.

And third, employee expenses increased and continue to reflect growth in our clinical and development teams. We've now recruited the majority of our key hires and are well-positioned to execute on our plans. Therefore, we expect our head count growth to moderate over the remainder of 2009.

I will also note that total operating expenses include non-cash share-based compensation expense of $2.7 million for the first quarter of 2009 compared to $2.2 million in 2008.

And lastly, as a reminder, dacetuzumab collaboration costs incurred by us are included in our operating expenses but are fully reimbursed by Genentech under the collaboration.

We ended the first quarter of 2009 in strong financial position with $192.4 million in cash and investments. This reflects $52.5 million in net proceeds received from our common stock financing in February.

We expect to receive an additional $11.5 million from a planned private placement of common stock to Baker Brothers Life Sciences. This stock sale will take place at the same $9.72 price per share paid by investors in the public offering, but because Baker Brothers has representation on our Board of Directors, this sale is subject to stockholder approval at our annual meeting on May 15th.

So we're off to a strong start in 2009 and with that, I'll turn the call back over to Clay.

Thanks, Todd. Operator, at this point we'd like to open the call for questions.

Thank you. We will now begin the question-and-answer session. (Operator instructions) And our first question comes from the line of Mark Monane with Needham & Company. Please go ahead, sir.

Thank you. Good afternoon from New York City -- a nice, clear day after many days of rain.

I was hoping, please, you'd help us clear up some questions we have here on what you mean by re-treatment. Is that maintenance or adjuvant? These terms are used a lot. If you could help define it a little bit better for us?

Sure, Mark, thanks for the question. I'm going to turn the question over to the Chief Medical Officer, Tom Reynolds.

Hey, Mark. It's sunny here in Seattle too and we're feeling very sunny about SGN-35 these days.

The re-treatment study is based on our observation from our Phase I studies where anecdotally we've had a few patients who had initial good responses, stayed on therapy for a while, went off because they were doing well, and then had subsequent progression of their disease and now have re-entered protocol and have had tumor shrinkage a second time around.

So the re-treatment study is really designed to look at patients who have responses in one of our ongoing clinical studies and go off because they're doing well, and then are able to come back and get another course of therapy.

We think this is very similar to the way Rituxan has been shown to work in a number of lymphoma settings, and we'd like to be able to evaluate 35 for this application. We think it would be important both for the patients and for expanding the market.

Could you go over, then, what the treatment protocol will be? How many courses are recommended in the current treatment protocol?

So right now in our currently open studies, patients are remaining on study for up to a year of therapy. Currently, the pivotal study is a Q3 week regimen of a single dose every three weeks for up to 16 cycles.

We also, as you know, have a weekly dosing study that's currently open which doses once a week for three weeks, a week off, and then repeats that cycle again for up to a year.

So the re-treatment protocol will be using the Q3 weekly dosing regimen at this point.

And given that we're going to see some data, I believe you said at ASCO on 35 every week, maybe you can help us understand -- is there potential for incorporating this into the current trial? How will you use that information?

That is a fantastic question. We're excited about our weekly dosing data. We have continued that trial and are currently enrolling patients. We have as yet to define an MTD in the study and we'll be sharing all of those data.

One of the things that's still early days in that study is evaluating durability. I have nice durability on the Q3 week data and it's still kind of premature to really know how our durability is going to play out on the weekly data.

We keep looking at it as it evolves. We're pleased with how it's evolving. We think it's premature to make a switch or to modify our plans at this point but we are keeping our eye on it and as it matures there, we have a number of ways that we could fold that into our program for registration or for label expansion.

That was helpful. We have financial questions.

Yes, congratulations on the trial result in terms of getting the trials forward, but in terms of the R&D, do you see any increase throughout the year with more clinical trials, and any update to your burn guidance of $80 million to $90 million this year?

Yes, this is Todd. So, no updates on our guidance right now. One of the things we did comment on during our year-end call is that we expected to see and we are seeing a little bit of an expense bump that started in Q4 of last year and is extending into the first part of 2009.

That bump relates to a number of manufacturing campaigns including active campaigns that we had for dacetuzumab and lintuzumab that ended last year and then a number of SGN-35 manufacturing initiatives that are under way now. So we do expect a little bit and we are seeing some front-loading of expenses this year, but then things should start to settle out in the back half of the year.

Thanks for the added information. Congratulations on your progress.

Thank you.

Thank you. And our next question comes from the line of John Sonnier with William Blair. Please go ahead.

This is actually [Tim Luzzo] for John. Congratulations on a good quarter. Can you talk a little bit about SGN-35's prospects in earlier lines of therapy and do you see those being combination studies?

Hi, this is Todd. Tom will address that again; I think that's appropriate.

Sure. Yes, this is Tom Reynolds again. We have a lot of aspirations for evaluating 35 in up-front Hodgkin lymphoma in combination with other therapies, not only for Hodgkin but for other forms of non-Hodgkin lymphoma.

We've had a fair bit of interest from clinicians in thinking about how to design those type of studies, first to show that it would be safe to combine these agents.

As you're aware, for Hodgkin's, front-line therapy in this country is what we call ADBD, which is mixed-support chemotherapeutic agents. We have some nice pre-clinical data that shows that 35 combines well and improves efficacy, and we think that we would like to take advantage of those properties and test that out in the clinic.

We have a number of investigators that have proposals in front of us about how to do that, and as the year progresses we expect to enlighten you on how we're going to move forward in the front line. It's very much on our minds. We think it's important not only to expand the market but also to help those patients who are not completely well served with current front-line therapy.

This is Eric Dobmeier. Just to add a little color to that, a lot of low-risk younger patients with these diseases are well-served with up-front chemotherapy, but there are a number of sub-populations, like elderly patients, patients who are PET-positive after a few cycles of chemotherapy, who don't do as well and could definitely use some additional therapy. So those are the kind of opportunities we're evaluating to go into first.

Okay, that sounds interesting. Can you also talk about the gene signature data we saw recently and how you're going to incorporate that in SGN-40?

Well, sure. The gene signature data that was presented at AACR this week actually was on patient samples that were treated with SGN-40 in the trial, and this is a retrospective study.

We had previously reported on data from cell lines -- tumor cell lines -- specifically B-cell lymphoma cell lines. And so we've now gone from the cell line to patient samples in our study, albeit retrospective.

We are using gene signature in some of the studies that we have now, but not prospectively. We're collecting the data and going to look at those data and look at how the gene signature works in the setting of combination with SGN-40 and chemotherapeutic agents.

And so in the future, one can imagine that a gene's signature can be used to select patients that have a high chance to respond to SGN-40 in the specific setting, whether it's combining with one agent or a different agent, and really get a higher chance of success, namely in terms of anti-tumor activity.

Tom, do you want to add anything to that?

Right, just to reiterate some of the points because Clay is right on, we've got some nice data with single-agent which seems to show about 80% predictive values. We're continuing to now expand that into our ongoing studies in combinations.

Again, these would be retrospective, but we ultimately envision this being used as prospective diagnostics that would enable the patient that receives this therapy to have a higher chance of responding than the general population.

And I think as you've all seen with other therapeutics, looking at the KRAS mutations, things like that, that seems to be the direction medicine's going right now -- trying to have a diagnostic that gives you much better value for the patient if they receive a therapy that accompanies the diagnostic.

Sounds good. Thank you very much.

Thank you. And our next question comes from the line of George Farmer with Canaccord Adams. Please go ahead.

Hi, thanks for taking my question. Todd, getting back to expenses, it seems like there still is a lot required to continue on with the ongoing trials, and if I just sort of continue, like, a non-growth ramp, if you will, from Q1 this year it exceeds your expense guidance that you gave in the earlier part of the year.

How should we think about R&D going forward? Is it going to be less than Q1 in subsequent quarters, or will it be growing?

Yes, it's a good question. This really gets back to the point I was making about the manufacturing activities that began in the fourth quarter of last year and we'll now be completing in the first quarter or two of this year.

If you just go back into the fourth quarter of last year our total expenses were about $42 million. They were down to about $37 million in Q1, and we again expect to see a little bit of front-loading of expenses in 2009 and expect to hit our expense guidance range, which was given as $125 million to $140 million.

Okay. Also, can you remind us again how many shares are going to be issued to the Baker Brothers, and that'll all be accounted for in this quarter? Is that what you're expecting?

Right, it'll follow the shareholder vote that'll happen at our annual meeting on May 15th, and the share count's about 1.2 million shares.

Okay. And regarding your other ADC collaborations, I know these have been going on for quite some time. It certainly is encouraging that a new one is on board.

What is the status of some of these other programs? I know one of them has moved into the clinic. Can you give us any guidance on what to expect from these other programs and maybe give us a little bit more detail on what to expect going forward regarding new partnerships?

Sure. This is Eric Dobmeier, I can give you a little more color on that.

So I think as Clay mentioned in the script, there's three collaborator programs that have entered clinical trial, so there's CuraGen has a program in Phase II for melanoma and breast cancer; Progenix has a program for prostate cancer in Phase I, and Genentech has started a Phase I as well.

There are several other collaborators that we think will be starting clinical trials in the near term, and we can't give a lot of specifics. It's really up to our collaborators to be announcing when things are going to happen.

But our collaborations with Bayer and MedImmune, I think both are moving forward well in terms of getting a program into the clinic soon, and then Daiichi Sankyo is a recent deal we did about a year ago, and obviously we added Millennium just recently.

So right now there's three in the clinic. We expect that number to continue to increase over time. Most of the money that we've brought in so far in the $75 million that we've generated total from these collaborations has been through up-front payments and research support fees, and some very early small milestones. We expect those numbers to increase as these programs move further into develop and into later-stage trials.

And the Bayer and Medi programs, are those oncology indications?

Yes.

They are?

They are.

Okay. Thanks very much.

They've both presented pre-clinical data on their programs that you can find at various conferences.

All right, great.

Thank you. And our next question comes from the line of David Miller with Biotech Stock Research. Please go ahead.

Good afternoon and congratulations for getting the first drug into Phase III trials.

First question I have is can you give us some information on the powering of the SGN-35 trial?

Yes, Tom, go ahead.

Yes. So as you're aware, it's a single-arm study really designed to evaluate response rate, complete response rate, and durability. It's not a difference of powering between two arms.

Right, good point.

So 100 patients really is enough to give us a tight confidence in our goal around those numbers and what we're shooting for is something like what we saw in Phase I, where we've got a 54% overall response rate, a 32% CR rate, and durability that's six months plus.

Have you had any feedback on programs -- well, on the 40 program from Roche people yet, or are you still mostly talking to the same people you were talking to before?

Yes, we are still mainly talking to the same people we've talked to before. It's a little too early to really assess the impact of the Roche complete acquisition of Genentech, but we know that Genentech is going to be very active in developing cancer drugs and are very active with the SGN-40 program, so we don't envision any substantive changes. We've not heard of any, but it's early to fully assess that.

Okay. On the gene signature that you're working on and Genentech is working on for 40, can you give us some idea what percentage of the current kind of target patient population has the signature?

Yes, so David, this is about -- it's about half of the patients do -- all right, the numbers that were presented are actually fairly small. They're derived from patients that we could have tissue on from Phase I and Phase II studies. So it's not large enough to really lock on to is there a difference between 40%, 50%, or 60%, but it's roughly in the half of those patients range.

Now, what we don't know yet at all, because the studies are still ongoing, is how that's going to play out into the combination data. And so it would be premature to speculate, but it's unlikely to be only a small slice. It looks like it's a reasonably good slice to look at.

Okay. So if I remember my -- so what's that, about twice what the Herceptin positives are?

Yes, that's correct.

Okay. Now, in talking about the weekly data, can you give us some idea -- if the weekly data on 35 comes back really positive, could you actually amend the SPA trial and finish out the enrollment on weekly? Is that where you're headed, or are you thinking more for a confirmatory trial?

Yes, so we've had quite a bit of discussion about this internally and what the pros and cons are, and I think it's premature to comment on what we're going to do because the data are still evolving.

What I will say is that it is possible to amend an SPA. Lots of companies do it. What I can also say is we're very pleased with enrollment onto the pivotal trial; that there is a huge amount of enthusiasm and it's going very quickly.

So we do have a number of options that do include amending the trial. We're thinking about other ways to bring that dosing regimen forward, much as Glivec has moved to a different dosing regimen as compared to what was originally labeled. So we think we've got options. We'll let you know as our data matures how the program may or may not change.

Okay. So if I understand your thinking on this, you could probably sum it up by saying that it's a balance between how much different the results might be and how far down the path you are to completely enrolling the trial. Are those kind of the two ways you're looking at it?

That's very succinct and correct.

Okay, perfect. Thanks, gentlemen -- I appreciate it.

Thank you. And our next question comes from the line of Jason Kantor with RBC Capital Markets. Please go ahead.

Thanks. Well, obviously a lot of questions have been asked already, but with regard to the SGN-35, is there a specific target response rate or a minimum response rate that you think you need to get to to declare success?

Yes, Jason -- so what our belief is that if we can replicate the Phase I data, we're in extremely good shape. What's the lower limit? If we were to talk to our KOLs, things that get them excited is a 30% overall response rate with a number of CRs there and durability in the four to six-month range.

FDA was very clear that they were not going to give us a hard number or bar that we had to be over or under, and that it would be a review issue in the context of safety and other factors that go into the NDA.

You can see from other compounds that have been filed on recently that things in the 30% range, people feel those are fileable and potentially approvable, and we would believe that if we can be at that range or above, that we should be in pretty good shape.

And then you said you're doing the CMC work now on SGN-35. Is the material that's being tested in the pivotal study the same material that you would be launching with, or is there a need for a bridging study? And I guess along with that, are there any particular challenges with the ADC technology in terms of purity and potency assays and the types of things that normally need to be done?

Jason, you're asking really very smart questions. We have not fully laid out our exact strategy for CMC manufacturing, product launch, et cetera. We absolutely have been discussing this with the FDA and are moving forward, but we have not laid that out yet publicly, so we will choose not to make comment on that now.

And as far as potency and all the other questions you were asking, we absolutely have a very exacting series of assays and analytical tools that we run through with each of our batches of material, and we qualify each of our batches so that they do have the right characteristics. I could say that there is no issue with an ADC going through these types of assays. That doesn't mean that every batch that Seattle Genetics would ever make will qualify, but I can assure you that when we qualify batches they will have the right analytics behind them so that we know that the batches are very equivalent and appropriate for use in humans.

And then one last thing -- in terms of future pipeline growth, anything you can talk about pre-clinically that behind SGN-75 that we can look forward to?

Yes. Well, I could give you an example of it beyond -- behind SGN-75, which is an IND for this year, our next program for an IND is in collaboration with Agensys, which is part of Astellas; it's a subsidiary of Astellas, the large Japanese pharmaceutical company. And the program that we're developing is for solid tumors. We have not been specific out there as to what our clinical plans will be, but suffice it to say it's for some very large markets, solid tumor opportunities, where there's a real need for additional therapies.

And we have an active program, it's undergoing manufacturing, and all sorts of assay development, toxicology, you name it. And we look forward to doing some kind of filing in 2010 -- I mean an IND filing in 2010.

So we'll be -- as the year progresses, we can be a little bit more specific as to when we're going to guide for that, but right now I'd like to just say 2010 and tell you how excited we are with the program and we are very active with our collaboration with Agensys. And it is a 50/50 relationship, just in case you were going to ask that.

So that'd be our next IND filing. We have a variety of other antibodies in pre-clinical development at different stages, but I think right now they probably are a little premature to discuss.

Very good.

Thank you. And our next question comes from the line of Bret Holley with Oppenheimer. Please go ahead.

Hi, it's actually [Matt Lowe] in for Bret today. I just wanted to discuss, if we could, the SGN-35 competitive front. It appears there's an anti-CD30 antibody and an H-stack inhibitor among other things in the clinic. I just wanted to see if you could offer some thoughts on these agents' potential level of activity in Hodgkin lymphoma, if you could just discuss the competitive landscape as you see it.

This is Eric Dobmeier, I can address that. So you mentioned first anti-CD30 antibodies. There's a program -- Medarex had a couple of programs for CD30. One was a regular antibody called MDX060, and then they had an effector function enhanced antibody as well.

We have not seen much data from the effector function enhanced antibody, but from the unenhanced one it does not look particularly active. It looks fairly similar to our naked antibody SGN-30 program, which really didn't have a lot of activity in Hodgkin's. And we believe that an ADC approach, due to some of the biology of Hodgkin's and just the enhanced potency of our agent is the way to go. Hodgkin's tumors are very heterogeneous where the CD30's expressed on the Reed-Sternberg cells but not the rest of the lymphocytes. So we believe with an antibody conjugant that can really penetrate in the tumor and use the cytotoxin to kill the cells, it's going to be more efficacious. So we believe we have a competitive advantage over other CD30-targeted agents.

You also mentioned H-stack inhibitors. There was one that was in development by Pharmeon through MethylGene and then acquired by CelGene that has largely been closed at this point, we understand. It had some activity, but the therapeutic window was not all that great.

So there are some other sort of more small-molecule cytotoxics that are being developed in the same types of lymphoma that we are, but they have a very different therapeutic profile and there are toxicities associated with them. So we're enthusiastic about what we're seeing, which is some really strong activity with less toxicity due to the targeted nature of our agent.

Okay, that's great. Thank you.

Ladies and gentlemen, once again, if there are any additional questions please press the star followed by the one at this time. As a reminder, if you're using speaker equipment you'll need to lift the handset before making your selection.

And our next question comes from the line of Cory Kasimov of JP Morgan. Please go ahead.

Hi, thanks. Good afternoon, guys, thanks for taking the questions.

Most of them have been asked and answered already, but I have two for you. One is I'm just curious as to why you don't intend to take the weekly SGN-35 regimen into the pending re-treatment study.

So at this point, Cory, as we've talked about, we're still in our dose escalation phase. We've not identified an optimum weekly dose. We're going to present our interim data at ASCO in a month or so. And I think you'll see there that why we're excited about it, but the data are still developing.

We need a regimen for re-treatment and for all of our studies that can be well-tolerated by patients, where they can stay on the drug a long time to get their best benefit and be maintained in good responses if they're responders. And it's premature for us to make that decision today.

Okay, fair enough. And then secondly, I'm wondering about your current thinking regarding potential partnerships, especially for SGN-33 and 35. Really, I'm wondering how much of a priority is this for the Company at this point, and is the preferred path forward still to just license the US rights to one or both of those compounds?

Yes, this is Eric -- I can address that one. So we have talked about in past calls that we are evaluating ex-US partnerships for both programs. That continues to be the case. Discussions are going well. There's definitely a lot of interest, particularly in SGN-35 based on the data that we've presented so far.

I think for SGN-33 it's probably less likely that we want to do a deal prior to having our Phase IIB data, which is now roughly a year out from having. So we likely would want to hold on to that and think there's a big value inflection when we report that data, if it's positive.

But for 35, the focus is discussing can we get a strong ex-US partner not only that can provide some additional financial resources, but regulatory commercial experience outside the US. We're not pressed to do a deal -- from a financial point of view, we're well-positioned. But if we can find the right deal with the right partner, we're absolutely moving forward with a number of discussions along those lines.

Okay, great -- thank you.

Thank you. And Ms. Pinkston, I would like to hand it over to you. There are no further questions at this time.

Okay, thank you, Operator, and thanks, everybody, for joining us this afternoon. Have a good evening.

Ladies and gentlemen, this concludes the Seattle Genetics first quarter 2009 financial results conference call. If you would like to listen to a replay of today's conference, please dial 303-590-3000, or 800-405-2236, entering the access code 11130461.

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