Seagen Inc (SGEN) 2010 Q3 法說會逐字稿

Good afternoon ladies and gentleman, thank you for standing by. Welcome to the Seattle Genetics third quarter 2010 financial results conference call. (Operator Instructions) I will now turn the call over to Ms. Peggy Pinkston, Director of Corporate Communications.

Welcome to Seattle Genetics 3Q 2010 conference call. With me today are Clay Siegall, President and Chief Executive Officer, Todd Simpson, Chief Financial Officer, Eric Dobmeier, Chief Business Officer, Tom Reynolds, Chief Medical Officer and Bruce Seeley, Executive VP Commercial. Clay will provide an update on your programs including recent highlights and upcoming activities. Todd will discuss our third quarter and year to date 2010 financial results. After that, we will 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 very materially from those projected. Please refer to the documents that we file to from time to time with the SEC and which are available on our website for information concerning the factors that affect the Company. I will now turn the call over to Clay.

Thanks Peg and thank you all for joining us this afternoon. It has been a fantastic past couple months for Brentuximab vedotin and Seattle Genetics. The remarkable top line data we reported from both our pivotal Hodgkins lymphoma and our Phase II anaplastic large cell lymphoma trials are an important step towards our goal of bringing this promising product candidate to patients in need. We believe the data strongly positions us for a planned BLA submission in the first half of 2011. And we are executing on the initiatives necessary for a potential product launch in the second half of 2011. We have also demonstrated substantial progress with our other programs including encouraging early data from our ongoing SGN-75 Phase I trial and the initiation of a second Phase I trial with ASG-5ME. In addition, our proprietary ADC technology is driving an increasing number of programs in clinical trials by our collaborators and we received more than $40 million under our ADC deals this year alone.

We have strong positive momentum and are poised to achieve substantial milestones before the end of 2010 and throughout 2011. This afternoon I will summarize our recent progress and upcoming activities. Starting with Brentuximab vedotin also known as SGN-35 or B vedotin. This is an ADC targeting CD30, the defining marker for Hodgkin's Lymphoma, and a target also highly expressed on a number of T cell lymphoma's including anaplastic large cell lymphoma or ALCL.

In September we reported top line data from our pivotal trial in relapsed and refractory Hodgkin's Lymphoma that is being conducted under a special protocol assessment. In this trial, 75% of the 102 patients enrolled achieved an objective response based on independent central review. The median duration of response looks greater than six months.

In October we reported top line data from another clinical trial with B vedotin. A Phase II trial in patients with relapsed or refractory ALCL. In the Phase II study 86% or 50 of the 58 patients enrolled achieved an objective response based on independent central review. The median duration of response has not yet been reached at the median follow-up on study of approximately six months. The safety profile of B vedotin in both of these trials was generally consistent with prior clinical trial experience. These data confirmed our high expectations for this program. Few single agents have demonstrated this level of response in a relapsed refractor cancer setting. We are particularly encouraged by these results given we treated a difficult patient population. All patients in both trials had previously failed multiple lines of therapy and most had primary refractory disease, defined as patients who had either failed to response to or who relapsed in three months in receiving front line treatment. And in the Hodgkin's trial all patients had relapsed followed an autologous stem cell transplant. We believe these data under score the importance of targeting CD30 in the treatments of Hodgkin's Lymphoma and ALCL and provide validation for our proprietary ADC technology. We are looking forward to reporting more complete data sets from these trials in two oral sessions during the ASH annual meeting in December. The Hodgkin's Lymphoma data will be presented on Monday morning, December 6th at 7.00 AM and the ALCL data will be Tuesday morning at 7.30 AM. The presentations will include further details on durability of response and the safety profile, as well as secondary end points including complete response rate and progression pre-survival.

Based on the strength of the data from these two trials we are optimistic about our regulatory path forward with B vedotin. We plan to meet with the FDA later this year to discuss BLA submission plan for the first half of 2011 including our goal of getting approval for both relapsed/refractory Hodgkin's Lymphoma and ALCL. In addition, Millenium, our collaborator on the commercialization of Brentuximab vedotin outside of the US and Canada, intends to discuss these data with European regulators towards its goal of submitting a marketing authorization application to the European Medicines Agency in 2011. At the recent international symposium on Hodgkin's Lymphoma in Germany, we presented clinical and preclinical data on B vedotin in multiple poster presentations. We were gratified by the enthusiasm amongst Hodgkin's Lymphoma physicians for the potential of B vedotin to address the unmet needs of patients including exploration of its use in earlier lines of therapy through clinical trials. We believe there is a substantial opportunity for B vedotin in the treatment of relapsed/refractor Hodgkin's Lymphoma and ALCL. B vedotin has the potential to be the first targeted therapy approved in these indications and the first major advancement in many years for these patients. Although front line treatments for Hodgkin's Lymphoma result in a high percentage of durable remissions and cures, approximately 25% to 30% of patients relapsed are refractory and require additional therapies following front line treatment. Based on a combined incidents prevalence model we estimate that there are approximately 8,000 to 9,000 individuals in the US with relapsed or refractory Hodgkin's Lymphoma and ALCL. Another important area of clinical development for B vedotin is in the retreatment setting. We reported data at ASCO and at the recent International Symposium on Hodgkin's Lymphoma demonstrating that B vedotin induced tumor reduction in 10 out of 11 retreatment experiences, seven of which were objective responses. B vedotin is well tolerated in the retreatment setting. We are further evaluating retreatments in our ongoing Phase II clinical trial. Together with Millenium we are exploring B vedotin's potential in earlier lines of treatment. The Phase III ATHERA trials being conducted in post autologous transplant Hodgkin's Lymphoma patients who are at high risk for residual disease. This is a randomized double blind placebo controlled study comparing progression free survival in approximately 325 patients. In this trial patients can receive B vedotin every three weeks up to approximately one year. In addition we are pursuing approaches for B vedotin in front line lymphoma. We are currently conduct ago Phase I clinical trial for the treatment of front line Hodgkin's Lymphoma in combination with ABVD, as standard chemotherapy regimen used in this setting. We are also planning a front line trial in ALCL to begin early next year. We believe that there are development opportunities for B Vedotin and other CD30 positive hematologic malignancies, such as cutaneous lymphomas, peripheral T-cell lymphomas and subsets of B-cell lymphomas. We are planning clinical trials to evaluate these broader opportunities and believe that B Vedotin has the potential to become an important therapy of multiple types of CD30 expressing cancers.

Next in our pipeline is SGN-75, an ADC targeting CD70, Which has a broad expression profile on both solid tumors hematologic malignancies. We are conducting a Phase I dose escalation clinical trial with SGN-75 in non-Hodgkin Lymphoma and renal cell carcinoma. At the European Society For Medical Oncology meeting in October, we reported encouraging interim data. In the first 16 patients treated, SGN-75 was mantle cell lymphoma and a partial response in renal cell cancer. We have not reached an MTD in this study and are continuing to dose escalate to further assess the safety and activity of SGN-75.

Following SGN-75 is ASG-5ME. An ADC we are co-developing with Agensys, an affiliate of Astellas. ASG-5ME is targeted to the SLC4484 antigen, which is highly expressed on many solid tumors.

We initiated the first clinical trial with this program in July. It is a Phase I study on metastatic pancreatic cancer. Last month a second Phase I trial was initiated in advance prostate cancer, the secondly most commonly diagnosed form of cancer. These single agent trials are evaluating the safety, tolerability, pharmacokinetic profile and anti-tumor activity of escalating doses of ASG-5ME. We are excited by the potential for this program based on the favorable expression profile of target, encouraging preclinical data and substantial unmet needs in pancreatic and prostate cancers. Our ADC collaborators have also been making progress with programs using our technology, including the three programs in our pipeline that I've mentioned, There are a total of nine ADCs using our technology in clinical developments. During the third quarter we achieved milestones under our ADC collaborations Genentech, Agensys and Millennium. In addition we expanded our ADC collaboration with Genentech, generating a $12 million up front payment and the potential to receive over $900 million in additional fees and milestones plus mid single digit royalties on ADC product sales. We also recently entered into an ADC research collaboration with Genmap. Under this deal, Genmap has rights to our technology for use with an antibody that targets numberous types of solid tumors. Importantly as part of this collaboration we have the right to exercise a co- development option for any resulting ADC after Phase I. Our recent ADC deals reflect our strategy to enter into ADC collaborations that include either higher financial terms or provide us with opportunities to augment our product pipeline. At this point I would like to turn the call over to Todd to discuss our financials.

Thanks, Clay. Thanks everyone for joining us on the call this afternoon. We continue to be in a strong financial position as we prepare for the planned BLA submission for Brentuximab vedotin in the first half of next year. Assuming a priority review by the FDA, we expect approval in the second half of 2011 and we are building our capabilities to support a successful launch. Today I will highlight our financial results for the quarter and year to date and also provide a brief update on our financial outlook for the remainder of the year.

Third quarter revenues were $16 million in 2010 and $99.3 million for the year to date. These are increases from $11.6 million in the third quarter of 2009 and $30.2 million for the first nine months of 2009. The increase in quarter-over-quarter revenues was driven by amounts earned under our ADC collaborations, most notably the expansion of our collaboration with Genentech. 2010 quarterly revenues also reflect amounts earned under our Millennium collaboration but none (inaudible) collaboration that ended in June. The increase in year to date revenues reflects approximately $70 million recorded in the first half this year under the (inaudible) collaboration with Genentech as we have discussed during our previous calls. Our ongoing revenues are driven by Brentuximab vedotin collaboration with Millennium and with our nine ADC collaborations.

Operating expenses were $51.3 million in the third quarter of 2010 and $132.6 million for year to date. This compares to $32.2 million in the third quarter and $102.4 million for the year to date in 2009. These planned increases were primarily driven by continued investment in Brentuximab vedotin to drive our clinical programs forward, manufacture drug supply and prepare for the BLA submission. These increases were partially off set by lower clinical costs for the Dacetuzumab and Lintuzumab programs. Brentuximab vedotin related activities will continue to be the primary driver of our financial results moving forward. Just as a reminder, 50% of joint Brentuximab vedotin development costs are funded by Millennium under the collaboration. Development activities performed by us are charts R&D expense as incurred. Development funding along with the up front payment and other payments are amortized into revenue over the development period of the collaboration. Lastly non-cash share based compensation expense for the year to date in 2010 was $10.1 million compared to $8.5 million in 2009.

We ended the third quarter in a strong financial position with $315.6 million in cash and investments compared to $287.7 million at the end of 2009. An increase of approximately $28 million for the year to date. This increase reflects the $60 million up front payment received in the first quarter of this year as well as reimbursement payments received under our B vedotin collaboration with Millennium. As Clay mentioned more than $40 million has been received this year in up front payments, milestones and renewal fees under our ADC deals. I will close with a few comments regarding our financial outlook for the end of the financial year which is positively impacted by recent ADC licensing activities. Most notably we expanded our Genentech ADC collaboration which generated a $12 million up front payment, a portion of which was recognized as revenue in the third quarter. As a result we now project that revenues for 2010 will exceed the top end of our previous guidance which was $105 million. Additionally, we now expect to end 2010 with more than $280 million in cash and investments, higher than our previous guidance and strongly positioning us as we enter in 2011. We expect our 2011 operating expenses and cash used to fund operating activities will increase over 2010 as we initiate additional Brentuximab vedotin clinical trials and continue to build our commercial infrastructure in anticipation of product launch in the second half of 2011. We remain well positioned to continue advancing our programs and look forward to providing additional updates on our progress including giving financial guidance for 2011 during our year end call early next year. With that I will turn the call back over to Clay.

Thanks, Todd. Before we open for questions, I will quickly recap our key upcoming activities. For Brentuximab vedotin we will report additional data from our pivotal Hodgkin's Lymphoma and Phase II ALCL trials in two oral sessions at ASH. We expect to meet with the FDA later this year to discuss the regulatory pathway towards our goal of a BLA submission in the first half of 2011 for both relapsed and refractory Hodgkin's Lymphoma and ALCL. We are collaborating with Millennium on its' planned EU submission in 2011 and we will continue our activities to evaluate additional indications for this CD30 targeted program. For SGN-75 we are continuing to dose escalate in the ongoing Phase I trial for CD-70 positive non-Hodgkin's Lymphoma, renal cell carcinoma and for ASG-5ME we are advancing the Phase I clinical trials for pancreatic and prostate cancer. We have an opportunity to make a meaningful impact on patients with cancer. We are focused on our BLA submission for B vedotin, executing on a strong commercial launch and evaluating additional opportunities in earlier lines of therapy and other CD30 positive diseases. We are advancing a strong pipeline of clinical and preclinical ADC's and enhancing the value of our technology through collaborations that generate milestones and future royalties or that provide opportunity to broadening our product pipeline. We look forward to seeing you at coming conferences as well as the ASH annual meeting in December and to keep you posted on our progress. Operator, we would like to open the call for questions.

Our first question comes from the line of Jason Kantor with RBC Capital Markets.

It's [Adnan] on Jason's behalf. Thanks so much for taking my questions. First question about SGN-35, does any further trial need to be completed before you hold discussions with the FDA? In terms of filing a BLA potentially. Can you educate us? Would that be a combined or separate BLA? And then my second question is related to the pipeline, in terms of the Phase I trial that are partnered with Agensys, Astellas, do you think it is reasonable to expect some preliminary data next year some time?

In order for us to submit the BLA we have been discussing, there are no other trials for submitting BLA for what we are discussing. We feel the trials we have basically completed or still following will be used for submission. As far as our submission for both BLA's, it is a Company goal to submit for both. We guided -- we are planning to submit for Hodgkin's Lymphoma and we have not -- in the first half of 2011 and we have not made formal guidance on submission for BLA for ALCL. We are planning to speak to the agency prior to the end of this year and clearly our corporate goal is to submit both. We would love to do that at the same time. We would be able to guide with that in the future after we have been able to meet with the agency.

As far as our joint program, ASG-5ME, that we are working on with the Agensys unit of Astellas. I think 2011 would be a fine year for us to present some information there. We are excited with our trials moving forward there. Certainly there are many different opportunities at important medical conferences in 2011 that would be prime place for us to present some of our data there from of our clinical trials.

One follow-up, in terms of your partner, Takeda Millennium, have they decided yet if it will be a Hodgkin's submission or ALCL or both? And then I'll jump back in the queue.

Thanks for the question. Like Seattle Genetics, Millennium has been excited about the data we presented to date. I think it is also their goal to submit on both. I don't want to speak on their behalf of the exact strategy for how they are going to do their submissions with the European regulators. But clearly just as for Seattle Genetics we are both excited about both the indications for both Hodgkin's Lymphoma and ALCL. We intend to submit for both.

Congrats and I will jump back in queue. Thanks.

Our next question from the line of Mark Monane with Needham & Company.

Good afternoon from New York City it is getting mighty cool over here. Time to bundle up to go outside. Speaking of bundling, let's talk about different kinds of payment strategies that are making their way towards the marketplace and the newspaper. We recently saw the insurance companies paying people, physicians to think about decreasing the use of expensive off label medications. We know there are challenges on pricing pressures that we saw for a number of the big pharma and biotech companies. Can you step back and tell us what you hear from your marketing research, Bruce and the team, concerning the sensitivity for pricing and how one might think of pricing such an agent?

This is Clay. I will start out by discussing this a little bit and turn it over to Bruce to see if he wants to add anything to that. And thanks again for the weather report. We always look forward to that. It's getting colder in Seattle as well, I may point out.

As far as pricing goes, it is a very important topic. It is really fair game for questions and I'm glad you brought it up. We have not made any pricing decisions. It is premature for us to discuss pricing. I know you're not specifically asking that for right now. Our goal as a Company is to make sure that Seattle Genetics does everything possible to bring this potentially important treatment to lymphoma patients. Our goal is to make Brentuximab vedotin accessible to as many patients if not all the patients that really need this product. Pricing is driven by some of the things you discussed. The factors include the data, what the label will be, what is the reimbursement environment, market dynamics. In general, we believe our data support, that we have a very strong value proposition for patients who are in need of better therapeutic options. When you look at pricing into the future, I think that products that really have a profound activity, a very high response rate, are the types of products that are going to be able to command premium pricing because they work in a predominant amount of patients. And that's really what's important here. Based on our data we are excited with the prospects of our product and with the sheer number of patients, the high percentage of patients that we could potentially benefit. Bruce, more thoughts on this?

So Mark, first thing I would say is that we are aware of the ever changing reimbursement environment and that's one of the reasons to echo what Clay said, we have not made a pricing decision at this point. The reimbursement environment continues to change and ultimately we are going to evaluate that environment as time goes on and we approach launch, we will assess what the impact of healthcare reform will be. We will read about and talk with folks about how that is going to impact the adoption of the product in the marketplace and ultimately when we are ready to make that pricing decision, I think we will be very comfortable that we will have all the information in hand to make the appropriate pricing decision.

That was some deep background. I know that is the best you can do right now. I appreciate that information. And then follow-up, when we think about pricing again, but more about therapy for the patient. Right now you have shown great data with B vedotin as a single agent. Maybe you can talk about ADCs in combination with traditional chemotherapy or other targeted therapy. Are there any sequencing issues one might consider or were there any agents that may make better combinations with B vedotin or SGN-75 going forward?

Mark, it's an excellent question. I will turn it over to Tom Reynolds, the Chief Medical Officer to comment on it. We are absolutely are excited about single agent Brentuximab vedotin as a drug conjugate, it is a potent molecule. There are other ways to use it in other settings and we are doing that. Tom, do you want to discuss some of those?

Yes, Mark good to hear your voice. We have quite a lot of interest from physicians and our own researchers in how to combine Brentuximab vedotin effectively in many different diseases and lines of therapy. As you are aware we have a front line study going on in combination with ABVD which is standard front line therapy for Hodgkin's Lymphoma in this country. We have also presented preclinical data both at ASCO and Cologne showing that there is a strategy to combine this with other novel agents, especially mTOR inhibitors. That is something there is a lot of interest about. We have received quite a bit of input, especially in the last few months, from leaders into the area proposing study designs in combination with our types of therapeutics both in the salvage prior to transplant area as well as in front line. A number of issues people are trying to do is improve efficacy in the refractor patients in front line but the second thing is to not overtreat those patients in front line that are getting more therapy currently than they need.

The question that is open for certain populations like the older patients with Hodgkin's Lymphoma or patients with co-morbidities. Whether one could drop some of the pieces of the ABVD regiment and substitute Brentuximab vedotin there. In addition, you are aware there is early stage Hodgkin's Lymphoma when it's diagnosed when there is very little disease. Currently those patients get some chemotherapy and then radiation therapy. It has become clear radiation therapy is many cases a contributor to late toxicity and secondary malignancies. We have clearly had interest from a number of investigators at trying to substitute Brentuximab vedotin for radiation therapy. We see all of those as things we will be exploring in the near term, both as corporate studies as well as investigator initiated trials. We would expect that as well as continuing to broaden out the use Brentuximab vedotin in other indications other types of lymphoma. CTCL, PTCL, B-cell lymphoma as Clay mentioned

Thanks very much for the added information. And congrats on your progress.

Our next question from Marko Kozul with Thinkequity. Please go ahead.

Congrats on the quarter. I have a related question, what do your KOL's and market research suggest will be the impact of a clean and positive Phase I Brentuximab ABVD combination study in terms of advocating front line use and potential reimbursement? I have a quick follow-up after that.

Marko, thanks for the question. We are in a Phase I study as I've said and Tom's said with ABVD. And that's not something -- with the Phase I study on it's own that we would be seeking a label for. Tom, do you want to add anything to that?

Yes, we have designed a fairly careful safety study to see can you combine Brentuximab vedotin with standard front line ABVD. We are still dose escalating and we're looking forward to the data from that. If that shows that the compounds are combinable and that there's a possibility of enhanced efficacy over the long haul, I think we would plan on embarking on a study to demonstrate unequivocally so that physicians could use good information as they decide what patients might best benefit from this.

We do hear things from KOL's about adoption. I think it is premature at this point given that we have not released any data on that study yet and we are looking forward to doing that. The study is going well. We are pleased with the progress of our investigators and the patients on the study and we hope to share that with you over the next little while as the data matures.

Thanks for the answer. The other question I have is can you describe what the front line ALCL study you had planned for 2011 might look like?

Marko, we haven't disclosed a lot about that. And we're in the final refinement about that. Suffice it to say, the current standard of care for ALCL up front and under the NCCN guidelines is either chalk or a multi-agent chemotherapy radiation regiment or a clinical trial. There are very few prospective studies done with ALCL alone to look for the best therapy. What we are attempting to do with the study we plan to conduct is try to build on the chalk background and consider different ways that could be combined or sequenced with SGN-35 to really enhance the ability of those patients to undergo long term and durable remissions and cures and we would expect to share more information with you earlier next year.

Perfect I look forward to it. Thank you.

Our next question from the line of Matt Lowe with JP Morgan.

A couple of questions on Cory's behalf. What CMC work is left to do before you file SGN-35? Secondly, when will we hear the next update for SGN-35? Thanks very much.

Two good questions. Thanks for calling on behalf of Cory. As far as the CMC portion of the Brentuximab vedotin BLA submission we are working on, we think progress we have made is very strong. We have done the work in the conformance area and the stability area. We are trying to make sure we stockpile the correct material we could ultimately use for commercial launch. The CMC area is very busy. I don't want to trivialize it, there are a lot of people working on it. We are planning to meet with the FDA to discuss our entire package as a pre-BLA meeting just like we are on the clinical front where we are working very hard. We don't think we are missing anything. We don't think there is anything that would prevent us from delivering a BLA submission in the earliest possible time frame. Our guidance is the first half of 2011 and obviously we are trying to go as fast as we can to make it happen. We are trying to do that for the patients in need. There are patients who really need this product and we are excited to deliver this product for them.

The second part of your question was possibly when could we see additional data on SGN-75. At the ESMO meeting we were delighted to have our very first presentation -- SGN-75. It detailed only a limited number of dose cohorts. We are still dose escalating. It is in both B cell lymphoma and Renal cell cancer and even though we are still dose escalating we have now reported on 2 objective responses during the process. We are pretty excited with the product. Yes, it is early. It has a long way to go. I remember only a few years ago when we were first presenting interim data of Brentuximab vedotin with our first few responses while we are dose escalating. It gave us a heads up and inkling and we have gone a lot further on Brentuximab vedotin. With SGN-75, we are just starting out. It will be highly likely you will be seeing more data at the major medical conferences in 2011. So expect something in 2011 for sure.

Thank you.

Our next question from Howard Liang with Leerink Swann & Company

This is [John Eckerd] in for Howard. Thank you for taking the questions. My first question was -- you mentioned a collection of other hematological settings that SGN-35 could be used in. Of those settings, are there any that have a higher proportion of CD30 expression or any particular attractiveness?

We have mentioned a lot and I can turn it over to Tom in a moment to talk about some of these. We are very interested in some of the other T cell lymphoma types that do have a substantial CD30 population. There are reports in the literature of the percentage of CD30 on the diseases. We are doing our own work as well with patient samples to really look at these. I don't want to refute anything in literature. Sometimes your own work is better and accurately done. Tetanus Lymphomas and PTCLs will be first off. But Tom can comment on some other diseases as well.

Just to put this in the context, we know that Hodgkin's disease is a largely CD30 positive disease. Over 95% of those patients are positive. By definition ALCL is CD30 positive. That's one of the tests used to make the diagnosis. Other lymphomas have lesser percentages but we are impressed with the number of patients with CD30 positive CTCL as you may be aware we did a trial a number of years ago with the nake antibody SGN-30, a high proportion of responses in cutaneous lymphoma. So we think that that's a disease worth going after where we think we have proof of concept that CD30 can have a meaningful impact. We expect to target that with Brentuximab vedotin. We have seen in the literature a variety of PTCL numbers in terms of fraction of percentages. We believe it is in the double digits and we are trying to refine that a little bit more. We would expect to move into the clinical arena in PTCL and other of the T cell malignancies some time in the near future.

Finally, we are not unaware there's a variety of B-cell lymphomas with CD30 positive. There's (inaudible) and a fraction of diffused large B cell lymphomas. It is relatively large and even if the overall percentage of CD30 positive disease is somewhat small, we think that could be a meaningful market for us. We do plan to attack that as well.

Lastly I'll add one more thing. There are some different types of solid tumors that are emerging that have some CD30 expressed on them. We are trying to understand that, doing a lot of research to determine that and you can look at literature as well. For example, a fair amount of sarcomas have CD30 positives. You find that in literature. We are seeing -- when we look at the Brentuximab vedotin we think of it as a CD30 targeted therapy. This is a type of therapy that can be used -- our vision for this is doctors will consider it and think about CD30. In the past we have talked to doctors and they knew about CD30 as a target but it wasn't something they thought about when they considered a patient they may have. Doctors who have been around for a while, they said it used to be that way with CD20. Along comes with Rituxan, and doctors look for CD20 in patients they look for opportunities to use Rituxan on patients that have CD20 related disease or an area where you can knockout CD20's expressing cells and have an impact on the disease. And we think that is where our vision is for this product, It is not known as a Hodgkin's Lymphoma product or an ALCL product. It is known as product that could be effective for CD30 in many different disease types and stages, and one that can be used in front line, for late stage patients. One that can be used for treatment, potentially maintenance. We are looking to make a difference in patients' lives with this drug. We think we are on to something. Our first data sets are extremely strong and we are looking forward to making this something that could really help patients.

That's very helpful. Thank you. Another follow-up question on a completely different topic. Regarding commercial supply, what would you -- what are the internal plans on building commercial supply and approximately how much in time, in months would you be expecting that, the time of the launch?

Some of that I feel good about responding to about how much we will have at the time of launch is internal. It is not something I will exactly define. I think we are in great shape of how we manufacturer this product. We do it with a series of contractors. We are well positioned with contractors to make all the different parts of the product. Like for example, we discussed the antibody is manufactured by Abbott which has a long history of manufacturing antibodies. We do that at their facility in Worcester, Massachusetts.

The drug [Linker] is manufactured by SAFC. They have a very strong manufacturing company. Because we have a synthetic product we are able to make a drug linker unit all at once. That gives us the competitive advantage in the ADC space as well. We are able to make a single unit and attach it to any antibody. When you look at each part, and I'm not going to go through all of the parts of our supply chain, but when you look at each part we have great partnerships with contractors. It is being done on a very robust scale. We will have plenty of material to supply the market. We've evaluated the market opportunity. We think there is a lot of upside in the market opportunity. And we're going to make sure that when we manufacture and we have material on hand at product launch and past there, that we have enough material to hit what potentially could be a very important launch and a high-end launch. We are not going try to sell ourselves short and not have enough material on hand at all to cover what we need. We will make sure we manufactured enough to meet a high-end demand that may occur here because of how remarkable their data is with this product.

Very helpful. Thank you for taking the questions.

Our next question with John Sonnier from William Blair. Please go ahead.

Thanks for taking the question. Clay, congrats on a very formative quarter for the Company. I appreciated your commentary on your vision the use of B vedotin and the number of CD30 positive malignancies over time or at least the potential for that. I think the emerging debate is for the near term market potential for the drug. You provided some nice granularity of what the patient population looks like for the first likely indication. Can you give us a little more help? What are in your opinion realistic duration of use expectations, both in the first indications and in the retrievement populations. How do you see the patient populations for the ongoing studies?

Let me address one at a time, first there is duration of use in the patient population. Let me touch on duration of use and then I will turn Tom over to patient population question. Duration of use, I think we will be in a much better position to discuss that after ASH. We have not put out a lot of information right now on that. We are excited to go to ASH and excited to share with the doctors in the medical community at ASH. Sorry to say that we're not going to ASH to present just to investors but we are going to share this with the medical community. That's what that meeting is all about. I know a lot of the investment community and analysts come to ASH but its' actually -- we've had a phenomenal time at going to these medical conferences. The enthusiasm we get from the medical community is amazing. They say we haven't seen responses like this with almost any therapy in the relapse/refractor setting, heck with any disease in cancer. We have something exciting here and we are looking forward to presenting our ASH data. I just don't have a full answer for you now on duration of use. But suffice it to say that we're not only just looking at what we would use it initially. We have also reported on retreatment. Duration of use is a little bit of a trick question. It could be used multiple times. Such as -- like Rituxan, which is not just a one duration but often patients can get it many times. Tom, you want to touch on this or go forward?

We are looking forward to presenting the duration on treatment and the durability in responses, PFS, things like that at ASH and hoping you'll be there to share that with us and make some assessments on your own. In terms of patient population for the Hodgkin pivotal study it was a clean population, 100% post-ASCT. We will be providing a lot of information about prior therapies and how tough of a patient population this was to treat and show activity in. What is interesting is we have been running a drug interaction study and a cardiac safety study. Both of those studies have been a little bit more expansive. They have included not only post transplant patients but patients who are refractory, unable to receive a transplant, patients who had progressed further than that and gotten to (inaudible) transplant and failed that so we have a continuum of patients in the Hodgkin's in ALCL that range from the refractory population all the way down to patients that are very down on the therapeutic chain. And we're collecting data about those to help us best understand how to use the drug.

In addition, we opened the trials up to the patients with any CD30 positive malignancies. I think one of the pieces that will come out of our analysis is some really preliminary but interesting hints as how this drug may work in other CD30 positive malignancies outside of the two core indications. Look for that coming to you in 2011 at some point as we do the analysis and are able to share that with you . I'm not sure that exactly answered your full question about the population, John, do you want to expand on

No, that is quite helpful. When you think about moving up the treatment paradigm given Hodgkin's Lymphoma, how do you see the patient populations there in terms of patient numbers?

That is a Bruce question.

When you look at the front line population of patients, it is a straight incident population. It is about 8,500 patients for HL.

In the US per year?

Yes. If you look at ALCL, that is somewhere in the tune of 1,500 to 2,000 incident patients.

Thank you.

Our next question from George Farmer with Canaccord Genuity. Please go ahead.

Clay, could you comment on your ALCL filing strategy? I know that wasn't a part of SPA and what sort of argument do you think you can make to the FDA that this should be a registration trial, the Phase II you just completed. Also, can you comment on some of the retreatment data you collected, I understand it has come from a larger extension, according to Clinicaltrials.gov. It looks like you were targeting 125 patients yet you only reported on a handful since that trial began on summer of ' 09. Perhaps you can talk about the pace of retreatment and what is holding that up?

I'll comment on ALCL and then I will turn it over to Tom to talk about the retreatment strategy. As far as ALCL goes, the trial that we have completed enrollment in and now reported top line data with an 86% objective response rate is the largest ALCL only trial that we are aware of. That's a really good point, it is not a small trial. Out of the 58 patients we have enrolled in this trial, we have 50 objective response rates. That's a very high percentage. I would put that up there with almost any cancer drug I can remember with that level of response rate. When you take those into account, I think this becomes something that we are proud to go and speak with the FDA about. And look for ways we can move forward. Almost laughable, here, George, is when you have 50 out of 58 responses in the trial, if you were to say to me, Clay, what if you need 100 patients? Let's just say the next 42 patients didn't respond, we would still have a 50% response rate and it would be somewhat unprecedented in this disease in the relapsed/refractory setting. We are at such a high response rate with all be it such a small number of patient, 58 patients, but it is the largest single ALCL trial ever put together. We think we are in good shape and look forward to speaking with the FDA.

I'll just follow up with that on the retreatment question. One other thing to remember on the ALCL study, the design is identical to the Hodgkin's study under the SPAs, same degree of rigor and same degree of screening, same independent review. All the things to do to make them potentially submittable, we did those things. Really the only two differences are, one, the disease, two, the patient numbers are a little lower. As Clay said, with a response rate this high, adding more patients may give us a little bit more precision but really is not going to change the basic evaluation of activity of this compound.

Moving onto retreatment. You were right, clinicaltrials.gov does show it is 128 patients. That study has two pieces to it. One is an extension arm that allows patients to go for longer than a year and also to rollover all the patients from our drug/drug interaction study onto that to receive up to a full year of therapy of their choosing. So a large number out of that 125 are actually coming from those two things and we are targeting roughly 50 treatments for a retreatment experience. The pace of that has been reasonably good. One has to remember that all of these patients need to come from trials that have already been completed. They have to have to be patients that received a CR or PR and then they have to be patients that relapsed. And since there are somewhere south of 400 patients that have ever received this drug in the world, it is not a big pool to draw on yet. We are seeing steady enrollment and we expect that to accelerate over time. And we're looking to having a large data set there similar to what Rituxan had to have retreatment added into their label. We are looking forward to that data to help the physicians learn best how to use the drugs.

Great and one more question if I may. In both of the Phase II trials were patients dosed through progression or were they all stopped after finite number cycles?

Patients could receive the drug up to a total of 16 cycles. If they had progression they went off treatment but we continued to follow them on study. They could discontinue therapy for aversion events or if they chose to do something different. Those were all potential outcomes to go off of study treatment.

Okay, thanks Tom.

Our next question from Bret Holley with Oppenheimer & Company. Please go ahead.

Thanks for taking the question. I'm just wondering if you can give us some historical perspective on why the FDA was hesitant to have the ALCL trial be a pivotal trial. Way back when, obviously data can change a lot. What were some of the fundamental hesitations they had that you might need to overcome with the ALCL filing?

I will turn it over to Tom to address but please keep in mind that we had reported all that -- it wasn't reported publicly until these data were a grand total of seven patients that we treated with ALCL. Seven. We had six CR's we reported but it was a grand total of seven.

There were a couple issues of ALCL and feedback from FDA about special protocol assessment. One thing they were concerned about is if we had marginal activity like a 20% plus response rate that 55 patients might not be enough. They were clear about that and that was a risk and they were a little worried about that. They were thinking potentially a larger study might be something that would be necessary. With the response rate they observed, it would only give us more precision. It wouldn't help us.

At the time of the dialogues, they were aware that they had a submission coming for (inaudible) had shown activity in PTCL and data component to that are ALCL patients, I think FDA has to be a little bit careful when they have more mature data set coming about what they are going to set as a bar for special protocol assessment for another compound. Because they don't know if that drug will become the new standard of care if they give us a special protocol assessment and say we can get approval but the other drug gains a full approval then we haven't run against a compare and it is a challenge for them. That was in the mix as well. I think acknowledging that (inaudible) had 17 patients with ALCL and are now approved to sell drugs to ALCL patients based on a response rate in the 20s with very few CR's that may bode well for the FDA to think about this drug with the activity we've seen so far. We are looking forward to discussions with them later this year with them.

Thanks a lot.

Our next question with Keay Nakae with Chardan Capital. Please go ahead.

Thank you, question about Millennium. You're less precise about the timeline for their filing. Just wondering -- and I realize you are not calling the shots there -- wondering is there is any clinical data that EMEA might be looking for?

I appreciate the questions on Millennium. Bruce, you may want to add to this. We have discussed with Millennium their interest in submission in 2011 and anything past there is not appropriate to talk about. Bruce or Tom you want to add anything more than we discussed with Millennium their interest or expectations of submitting in Europe?

This is Tom. We have worked really closely with Millennium to try to dovetail our submission package so that as much as possible what we are preparing for the United States can be used in Europe. And to do that seamlessly without a lot of duplicative work. We are working hard on that. Since our package will be going in the first half of the year, we expect that to be available to them. Europe has some different things that they like. We are aware of what we think most of those are and are trying to address those as quickly as we can. And what we've heard from our colleagues at Millennium, they are very interested in getting this in front of the European agencies as quickly as they can.

Can't be more specific about guidance and timing about that. As one of the members of the committee that oversees this joint alliance, they are very motivated to do this as much as they can.

The only thing I would add from a commercial prospective and we have an excellent working relationship with Millennium and I can tell you they are extremely eager to get the drug on the market and available to patients in their territory. We don't have a partnership in our territory -- our two territories are separate. We have very good meetings with them and their energy and enthusiasm for bringing a product to market in their territory is palpable.

Okay, and just one last question for you. Last week another company, Compugen announced they have had signed an agreement with you. You were going to take one of their MAB targets. Just wondering if you can add anything to that since you didn't press release and a fundamental strategy question -- if you have a new target that you are going to evaluate, does it still make sense to try to do so first with an optimized naked antibody or is it a necessary step to go forward with an ADC compound?

This is Eric. There was an announcement that Compugen made about an option agreement we did with them recently -- it involves a novel target we identified that we're really interested in for solid tumors. We haven't disclosed any specifics. It is something that they wanted to announce in terms of validating their platform. It is not something we would have announced on our own. We do have a number of these types of efforts ongoing to look for novel targets that we can utilize with our ADC technology. So it's not something we talk a lot about but there's a lot of effort going on in our research group to do these types of things.

The second part of your question -- we have a number of targets. We have some internal targets that we are not discussing yet. We have some that we have discussed and presented on that are novel targets ? We are working on different antibody based therapies. Historically if you look at Seattle Genetics, we have taken every target we were excited about it. We made an antibody out of it. We assessed it as a naked antibody and antibody conjugate. I think moving forward, what's happening is our antibody drug conjugate technology and our systems for testing it and actually manufacturing even small scale and the rapid high throughput screening techniques that we've developed with our ADC technology, have really led to some exciting early stage programs. It is becoming harder and harder for a naked antibody to beat our antibody drug conjugates in preclinical models. I don't want to rule it out that we are not going have any other empowered naked antibody that have strong effect of function or things like that. I certainly don't want to rule it out. But we always look the ADC of every antibody -- ADC configuration of every antibody that comes into our shop. The data is often very strong and compelling for moving forward. I think as you look at our pipeline moving forward, you will see a predominant amount of programs. Maybe all, maybe not all but a predominant amount being ADCs. For the reason that the preclinical data package looked incredibly strong. Our first ADC out of the gate with our [orastatin] synthetic drug linker units is

That's great to hear. Thanks.

Our next question with David Miller of Biotech Stock Research.

On the BLA if we assume the FDA is okay for you submitting for both HL and ALCL, from that point forward, what is the rate limiting step about how fast you could get this done?

David, there are a lot of unknowns that we have. Let's say we meet with the FDA and they are okay with us submitting a dual BLA for both Hodgkin's Lymphoma and ALCL. We don't know if they will do an ODAC panel for this. We have to go under the assumption that they will. That is not something they have to do. Our assumption would be that once we submit and like I said we are planning to submit in the first half of 2011. Obviously we are trying to do it as early as possible because we feel compelled to and we are excited to do that. We're working hard at doing that. Normally we want to look at a six-month time period from submission to really having some sort of word on that.

I'm talking more about from your side, what is the rate limiting step on -- after your initial FDA meeting you will have this year, your pre-BLA meeting. Between that and filing the BLA, what are the rate limiting steps from your side? Is it -- still correlating some manufacturing data, getting some inspections done? What's -- the components of the BLA what's still left to be done?

There are a lot of different things that still have to be put together. There are some CMC activities that are still being completed. We are still watching patients and collecting durability data. The more the better. The longer the better. Those are all the good things. Standard normal things that we are trying to put together to make this a great package as soon as possible to submit to the agency. We are really excited about to meet with them lay they are this year.

There has been quite a lots in the news lately from CMS and FDA working together from an application forward. Can you talk about any changes, advantages or disadvantages that you can see that this may hold for you in the Brentuximab vedotin application in launch?

It is an interesting question. I really don't have any insight into that right now. We are constantly talking with the agency and meeting with them and keeping our ears open. Right now I don't have any specific insider guidance on that.

You mentioned in your press release you had a milestone triggered for a new drug that Genentech had in the clinic. Can you talk about what the target for that drug is?

I can't. It is Genentech specific event. We are thrilled that Genentech is embracing our technology and using it and going toward clinical development with our technology. We, of course, like getting milestone payments. What is even more important is getting forward in development with any products that could potentially help our patients using our technology, using other companies proprietary antibodies. We have our own set of antibodies but we can help patients on a much more broad scale by allowing other companies to utilize our technology with their own antibodies that they have a lot of IP on. We would have never worked on. They have certain IP on certain antibodies and certain targets. Why not get our technology involved with the other ones that other companies hold and try to make a difference and save patients lives. We are thrilled to support Genentech but the best way to get any information on any product from any of our partners in this technology is really to ask them.

Our next question comes from the line of Chris Schaefer with UBS. Please go ahead.

Thanks for taking my question. Going back to the EU question but in a little different way. When your designed of the pivotal HL and the Phase II ALCL, did you also discuss the trial design and approvability of these studies with the EMEA or did you strictly get feedback with the FDA?

When we were designing these studies we did go and meet with European authorities and outlined our plan for Hodgkin's Lymphoma for the pivotal study and especially to get consensus on a confirmatory study -- the AETHERA study that is running right now which is a randomized placebo controlled study of Brentuximab vedotin following autologus stem cell transplant. So we had some stand-up dialogue with the EU authorities. Millennium is following up with that in preparation for their submission as well. So they are well aware of what we were planning and what our approach was.

Does -- that sort of sounds like they were okay with the way the Phase II was but they wanted to see the AETHERA study be performed and get the data from that prior to approving. I was trying to figure out whether or not they agreed that would be an approvable trial, the Phase II trial?

The focus of the discussion was whether the end points were appropriate, the design of the study, the patient population as a relatively large randomized study to confirm benefits. Much as the FDA was interested in knowing what the response data were before saying whether our Phase II studies or our pivotal studies would be approvable, EU took the same approach and said with compelling data these are things we could consider for approval. But without seeing any data it was really difficult for them to make a firm judgment. And as you're aware they have somewhat of a different pathway in Europe. We have accelerated approval and full approval here. They have exceptional circumstances for fairly rare populations, conditional approval which is kind of accelerated approval here again with relatively orphaned populations, and then a full approval process. It is a little apples and oranges. But suffice to say we had a very good stand-up discussion with them and they are well aware of what we're doing. And we're not aware that they have made any comments to the affect that one would need to wait for the AETHERA study prior to seeking approval.

Our next question comes from the line of Ling Wang of Brean Murray. Please go ahead.

Thank you for taking my questions. I was wondering if you can provide more details on the Phase I combination trial in front line patients? How many dose cohorts have you done so far and when we might see data from this trial? And then with regard to that (inaudible) in front line study, wondering if you can share with us your thoughts on trial design including the patient population or the key end points here?

We haven't disclosed the information about our current Phase I. When the data are more mature we'll put that out there as soon as we can. As we said we are still dose escalating and enrollment is proceeding well. We are exciting about that. We also have not disclosed exactly what our study would be for a large Phase III in front line Hodgkin's Lymphoma. We've had quite a lot of dialogue with key opinion leaders and with our partner. We're actively working on that. When the appropriate time comes, we will share that information with you all and get it out there.

Thank you. Just a follow-up, in the Phase I combination truly, I want to make sure you are actually holding the ABVD (inaudible) and then just dose escalating of SGN-35 ; is that right?

That's correct.

Thank you. And management I have no further questions in the queue. Please continue with any further remarks.

Thanks everyone for joining us this afternoon. Have a good evening.