Seagen Inc (SGEN) 2010 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Seattle Genetics fourth quarter 2010 financial results conference call. During today's presentation all parties will be in a listen-only mode. Following the presentation the conference will be opened for questions. (Operator Instructions)This conference is being recorded today, Tuesday, February 8 of 2011. And I would now like to turn the conference over to Peggy Pinkston, Director of Corporate Communications. Please go ahead, ma'am.

Thank you, operator. I'd like to welcome all of you to Seattle Genetics fourth quarter and year 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 Vice President, Commercial. This afternoon, Clay will provide an update on our programs, including recent highlights and upcoming activities. Eric will give an overview of our progress with ADC collaborations and Todd will discuss our fourth quarter and year 2010 financial results, as well as provide our 2011 financial outlook. After that 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. I'll now turn the call over to Clay.

Thanks, Peg. And thank you all for joining us this afternoon.

Our progress during 2010 has positioned Seattle Genetics for a transformative year in 2011. We are executing well on the regulatory, operational and pre-commercial activities necessary to bring brentuximab vedotin to patients in need. In addition, our earlier stage pipeline programs including SGN-75 and ASG-5ME are advancing in Phase One trials and there are now eight ADCs using our technology and clinical development by our collaborators. With our recent $178 million financing we are well positioned to invest in the launch of b-vedotin, expand its clinical development and take advantage of the opportunities represented by our strong pipeline of ADCs for cancer.

Our lead program is brentuximab vedotin also known as SGN-35 or b-vedotin. This is an antibody-drug conjugate or ADC targeting CD30, the defining marker for Hodgkin lymphoma and a target also highly expressed on a number of T-cell lymphomas, including anaplastic large cell lymphoma or ALCL. At the American Society of Hematology annual meeting in December we reported data from a pivotal trial in relapsed or refractory Hodgkin lymphoma that was conducted under a special protocol assessment as well as a Phase Two trial in relapsed refractory systemic ALCL.

In both trials, more than 90% of patients experienced tumor reductions. More than one third of Hodgkin lymphoma patients and more than half of ALCL patients achieved complete remissions. Notably, the median duration of CRs had not been reached in either study. This level of response from a single agent in a relapsed refractory cancer setting is remarkable. All patients in both trials had previously failed multiple lines of therapy and most were either refractory to or had not achieved a durable remission following front-line treatment. B-vedotin was associated with manageable side effect profile in these difficult-to-treat patients. With the most common adverse events being peripheral sensory neuropathy, fatigue, nausea, upper respiratory tract infection, diarrhea, and fever. These data provide the clinical basis for our b-vedotin BLA submission that is planned for the first quarter of 2011. Based on our discussions with the FDA in late 2010, we will seek approval for both relapsed refractory Hodgkin lymphoma and relapsed refractory systemic ALCL.

Meanwhile, Millennium-Takeda, our collaborator on the commercialization of brentuximab vedotin outside of the US and Canada, is discussing with European regulators their planned first half 2011 MAA submissions. Our teams are hard at work on the important efforts necessary to get b-vedotin approved and make it broadly available to relapsed refractory Hodgkin and systemic ALCL patients as soon as possible. B-vedotin has the potential to be the first targeted therapy approved in these diseases and the first major advancement for relapsed or refractory patients in many years. Prior to the commercial launch of b-vedotin we are making b-vedotin available in the United States to a recently opened expanded access program. Outside of our territory, Millennium is conducting a Named Patient Program. Both programs are designed to give limited access to b-vedotin for patients with relapsed refractory post-transplant Hodgkin lymphoma and relapsed refractory systemic ALCL. In addition to the BLA submission, we are preparing for the planned launch and commercialization of b-vedotin.

These activities are being conducted under leadership of Bruce Seeley, our Executive Vice President of Commercial. During the fourth quarter of 2010, Bruce completed the hiring of our commercial management team which now includes VPs of Marketing, Managed Markets and Reimbursement, and Sales. The team has extensive experience in commercial activities for many highly successful brands including Rituxan, Herceptin, Soliris, and Avastin. Our primary focus is on ensuring that we are launch-ready by approval. Some of the key initiatives currently under way include product positioning of branding, pricing analysis, sales force recruiting, and reimbursement strategy. These activities are designed to introduce b-vedotin into what we believe to be a substantial opportunity in the treatment of relapsed refractory Hodgkin lymphoma and ALCL.

Although front-line treatments for Hodgkin lymphoma result in a high percentage of durable remissions and cures, up to 30% of patients relapse or are refractory and require additional therapies following front-line treatment. In ALCL, less than half the patients are cured by front-line chemotherapy. Based on a combined incidence prevalence model, we estimate that there are approximately 8,000 to 9,000 individuals in the United States with relapsed or refractory Hodgkin lymphoma or ALCL in need of treatment. Another high priority for our b-vedotin program is additional clinical development activities to evaluate it in earlier lines of Hodgkin lymphoma and ALCL treatment as well as in other CD30+ malignancies.

The Phase Three AETHERA trial, our largest clinical trial to date with b-vedotin, is being conducted in post-autologous transplant Hodgkin 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 for up to approximately one year. This study is designed to be a confirmatory study in both the United States and Europe. In addition, this trial will provide us with data on the use of b-vedotin in a maintenance setting.

The strength of the data we present at ASH in patients with relapsed refractory Hodgkin lymphoma, or ALCL, has generated substantial investigator interest in new approaches to evaluating b-vedotin in the front-line setting. Standard front-line chemotherapy regimen and radiation therapy are associated with significant side effects including cardiac and pulmonary toxicities, infertility, and increased risk of secondary malignancies. There is a need for approaches to reduce these toxicities while maintaining or increasing the overall response rate in newly diagnosed patients.

In front-line Hodgkin lymphoma, we are conducting a Phase One clinical trial of b-vedotin in combination with ABVD. This trial, which was initiated in February 2010, is designed to evaluate the safety of b-vedotin when combined with this standard chemotherapy regimen. We also plan to initiate this month a trial in front-line ALCL to evaluate b-vedotin in combination with chemotherapy. There have been no significant advances for front-line ALCL patients since CHOP was introduced decades ago. This trial will evaluate the safety and activity of b-vedotin when administered sequentially, as well as in combination with multi-agent chemotherapy. In addition, the activity and safety profile of single agent b-vedotin allows us to consider new front-line approaches with the intent of improving the activity and reducing the toxicity associated with standard front-line chemotherapy regimens. These approaches include strategies to redefine front-line regimens by removing toxic and less active agents and adding brentuximab vedotin.

We have also received numerous investigator sponsor trials proposals for the use of b-vedotin in earlier lines of therapy, including second line salvage prior to autologous transplant and in older Hodgkin lymphoma patients. We expect that multiple ISTs will be initiated during 2011. We are also interested in evaluating b-vedotin in other CD30+ hematologic malignancies. In our Phase Two systemic ALCL trial, 14 out of 15 patients with cutaneous involvement experienced complete regression of their cutaneous lesions. We believe this illustrates that Cutaneous T-Cell lymphoma or CTCL could be an interesting development opportunity for the evaluation of b-vedotin. There are several planned investigator sponsored trials, or ISTs, for Cutaneous lymphoma patients that we expect to start this year. Under our collaboration with Millennium, we also expect to initiate a corporate sponsor trial in CTCL.

Another high priority area of clinical development for b-vedotin is CD30+ non-Hodgkin lymphoma including diseases such as peripheral T-cell lymphoma and diffuse large B-cell lymphoma. CD30 is expressed in a substantial fraction of these other non-Hodgkin lymphomas. We plan to initiate a trial in these indications later this year. Through both corporate-sponsored and investigator-sponsored clinical trials, we are committed to exploring the potential of b-vedotin in new therapeutic settings. We believe that b-vedotin has the potential to become an important option for patients with many types of CD30 expressing cancers. The clinical data we've reported with brentuximab vedotin reflects the significant potential of our ADC technology.

The next ADC in our pipeline is SGN-75 which targets CD70. CD70 is expressed on both solid tumors and hematologic malignancies. We are conducting a Phase One dose-escalation clinical trial with SGN-75 in renal cell carcinoma and non-Hodgkin lymphoma. In 2010, we reported that, in the first 16 patients treated, SGN-75 was generally well-tolerated and demonstrated antitumor activity, including two objective responses, a complete remission in mantle cell lymphoma, and a partial response in renal cell carcinoma. We have not reached an MTD in the study and are continuing to dose escalate to further assess the safety and activity of SGN-75. Also in Phase One, is ASG-5ME, an ADC that we are co-developing with Agensys, an affiliate of Astellas. ASG-5ME is targeted to the SLC44A4 antigen, which is highly expressed on many solid tumors.

There are two clinical trials underway with ASG-5ME -- a Phase One study in metastatic pancreatic cancer and a Phase One trial in advanced prostate cancer. These single-agent trials are evaluating safety, tolerability, pharmacokinetic profile, and antitumor activity of escalating doses of ASG-5ME. Over the course of 2011, we plan to report clinical data from both our SGN-75 and ASG-5ME programs. In addition to our own pipeline, our ADC technology is becoming increasingly valuable through licensing and co-development deals. There is a growing number of collaborator ADCs utilizing our technology that have advanced into clinical development for the treatment of many types of cancer. I'd now like to turn the call over to Eric Dobmeier to talk about our ADC collaboration activities.

Thanks, Clay. Last year was an active year for business development at Seattle Genetics. During 2010, we received a total of more than $148 million from our corporate partnering activities through a combination of upfront payments, milestones, reimbursements, and other fees. In particular, we have continued to make strong progress with our ADC collaborations, including new and expanded deals, clinical trial initiations, and development milestones. Highlighted by the data from our b-vedotin program, our ADC technology has garnered increasing interest in the biotechnology and pharmaceutical industry, which we believe drives substantial value for the Company. Our strategy for ADC deals is focused on transactions that reflect either higher financial terms or product rights for Seattle Genetics through opt-in or co-development structures that can expand our pipeline with ADCs to promising new targets. Consistent with this strategy, highlights of our collaboration activities in 2010 include the following.

Under our ADC deal with Genentech, we received a total of $21.5 million to extend and expand the collaboration. Genentech is working on multiple targets with our ADC technology and has made strong progress recently. During the past year Genentech initiated a Phase One clinical trial of anti--CD22 ADC for the treatment of B-cell malignancies, and submitted INDs for three other ADCs, all of which utilize our technology. We also completed a new ADC collaboration with Genmab, under which Genmab has rights to utilize our technology to develop ADCs to a single target expressed on numerous types of solid tumors. Genmab made an undisclosed upfront payment and has agreed to pay milestones and royalties any resulting products. Importantly, as part of this collaboration, we have the right to exercise a co-development option for any resulting ADCs after the completion of Phase One.

Most recently, in December, we completed a new ADC deal with Pfizer, containing the highest financial terms we've ever received for a single target collaboration to date. Pfizer paid an upfront fee of $8 million and has agreed to pay more than $200 million in potential milestones, as well as royalties on product sales. Given Pfizer's understanding and involvement in the field of ADCs, we are pleased with their decision to utilize our technology for one of their product candidates.

In total, we have 10 ongoing ADC collaborations that have generated more than $145 million so far, including more than $40 million received in 2010 alone. Under all of our ADC deals we have the potential to receive total fees and milestones of approximately $3 billion plus substantial royalties, and there are now eight ADCs in clinical development using our technology, including four from Genentech, and one each from Celldex, Progenics, Bayer, and Agensys. These clinical stage ADCs are in development for range of solid tumors and hematological malignancies, including non-Hodgkin lymphoma, leukemia, prostate cancer, and breast cancer. Over the next 12 to 18 months, we expect many of our collaborators will report clinical data from their ADC programs and several more collaborator ADCs will enter the clinic. We also intend to continue to do one to two new ADC deals per year, consistent with our corporate strategy. At this point, I'd like to turn the call over to Todd to discuss our financials.

All right. Thanks, Eric. And thanks, everyone, for joining us on the call this afternoon. 2010 was a year of great progress for the Company, especially with our ADC programs and most notably brentuximab vedotin. Based on our substantial progress during the year, we were able to fully fund our operations through cash generated from our corporate development efforts. As Eric mentioned, during 2010, we received cash payments totaling more than $148 million from our collaborations. With the proceeds from our financing announced last week, we are well-positioned to pursue our aggressive plans for 2011. These include our planned BLA submission and launch of b-vedotin, expanded clinical development activity of b-vedotin, and advancement of our other pipeline programs.

Today I'll highlight our 2010 financial results and then provide our financial outlook for 2011. Revenues were $8.1 million in the fourth quarter of 2010 and $107.5 million for the year. This compares to $21.8 million in the fourth quarter and $52 million for the year in 2009. Fourth quarter revenues were down from 2009 reflecting revenue recognized under the dacetuzumab collaboration with Genentech. This collaboration ended in June of 2010 and contributed approximately $70 million in revenue during the first half of 2010. 2010 revenues also reflect amounts earned under the Millennium collaboration, as well as the earned portion of milestones and reimbursements received under our ADC collaborations of which there are now 10.

Operating expenses were $43 million in the fourth quarter of 2010 and $175.7 million for the year. This compares to $34.5 million in the fourth quarter and $136.8 million for the year in 2009. These planned increases were in line with our guidance and driven by continued investment in brentuximab vedotin clinical trial, manufacturing and pre-commercialization activities. As a reminder, 50% of joint brentuximab vedotin development costs are funded by Millennium under the collaboration. Development activities performed by us are charged to R&D expenses incurred. Development funding, along with the upfront 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 in 2010 was $14.3 million compared to $11.8 million in 2009. We ended 2010 with $294.8 million in cash and investments. This is an increase of approximately $7 million for the year and reflects the $60 million upfront payment and reimbursement payments received under our b-vedotin collaboration with Millennium.

Additionally, we received more than $40 million in cash payments under our ADC deals. Earlier this week, we received approximately $168 million in net proceeds from our common stock offering announced last week. Combined with the nearly $295 million in cash and investments at the end of 2010, we are well positioned to make the investment needed to bring b-vedotin to the market as planned in the second half of this year, explore additional opportunities for the drug through expanded clinical activities, and to advance the other ADC programs in our pipeline. Towards these goals we expect that net cash used to fund our operating activities in 2011 will be in the range of $160 million to $180 million and that we will end 2011 with more than $280 million in cash and investments.

We anticipate that revenues from collaboration and license agreements will be in the range of $40 million to $45 million in 2011. This is lower than 2010, but recall that in the first half of 2010 approximately $70 million in revenue was recorded under the dacetuzumab collaboration, as it came to its completion. Revenue from collaboration and license agreements in 2011 will be driven by amounts earned under the Millennium collaboration, as well as our ADC collaborations, including the recent deal with Pfizer.

Total operating expenses in 2011 are expected to be in the range of $230 million to $260 million. Brentuximab vedotin related activities will continue to be the primary driver of our expenses, including clinical trials, manufacturing, and commercialization activities. However, in 2011 R&D expenses will also include clinical trials of SGN-75 and ASG-5ME as well as costs associated with advancing our pre-clinical ADC programs. Currently b-vedotin manufacturing activities are included in R&D expense. However, under GAAP, the costs of these activities will be capitalized as inventory following regulatory approval.

In 2011, we expect SG&A expenses to represent approximately 25% of total operating expenses. This is an increase from approximately 17% of total expenses in 2010 and reflects the expansion of our commercial team as we prepare for our anticipated product launch. Commercial expenses will likely be higher in the second half of the year as we bring our sales force on board later in the year. 2011 expense guidance includes non-cash amounts projected to be in the range of $23 million to $26 million, the majority of which relates to share-based compensation expense. This estimate is based on a number of assumptions including future stock prices and the number and timing of option grants and therefore may change. So in closing, we're looking forward to a very active and productive year and believe that we have the financial and operating resources needed to aggressively advance our programs. So with that I will turn the call back over to Clay.

Thanks, Todd. Before we open for questions, quickly recap our key upcoming activities. For brentuximab vedotin, we are on track for a BLA submission this quarter for both relapsed and refractory Hodgkin lymphoma and systemic ALCL. We're collaborating with Millennium on their planned MAA submission during the first half of 2011, and we will continue our ongoing and planned clinical development activities to evaluate additional settings and indications for this CD30 targeted program. For SGN-75, we are continuing to dose-escalate in the ongoing Phase One trial for renal cell carcinoma and non-Hodgkin lymphoma and expect to report additional clinical data this year. And for ASG-5ME, we and Agensys are advancing Phase One clinical trials for pancreatic and prostate cancer and we expect to report data from at least one of these trials during 2011.

We believe there are tremendous opportunities in front of us. Our three main corporate priorities are -- number one, to obtain approval and successfully launch b-vedotin to bring an important new treatment option to the many relapsed refractory Hodgkin lymphoma and systemic ALCL patients in need; number two, to expand the potential of b-vedotin through evaluating it in earlier lines of therapy and other CD30 positive malignancies; and number three, to aggressively advance our pipeline of earlier stage ADCs. We look forward to keeping you posted on our progress in the exciting year ahead for Seattle Genetics. Operator, we'd like to open the call for questions.

Thank you, sir. We'll now begin the Question and Answer Session.

Our first question comes from the line of Bret Holley with Oppenheimer & Co.

Yes, thanks for taking the questions. I guess my first question is, is what variables would push your operating expense guidance towards the top end of the range? I'm just trying to think about the -- the $30 million difference in -- in the range there.

Yes I think, Todd, you should take that question.

Yes, so thanks for the question, Brett. You know, what really is going to be driving the expenses this year are threefold. First, obviously, the planned acceleration of our commercial activities in preparation for the launch, and as I mentioned those we expect will come more rapidly, in -- in the back half of the year but we're obviously building that infrastructure right now. And then on the R&D side, we're expecting a significant investment this year in clinical activities intended to expand the opportunities for brentuximab vedotin, as well as continuing to push the asset -- the other ADC programs in our pipeline, I should say -- forward. So these include SGN-75, ASG-5ME, as well as a number of pre-clinical assets that we're excited about as well. So our goal this year is to really hit the ground running with product launch expected in the second half of the year and then continue to invest in expanding the opportunity for b-vedotin, as well as continuing to push the other ADCs in the pipeline forward.

And, Todd, can I follow-up on the guidance on the revenue guidance? I guess, I -- I'm just want to wrap my mind around this. I guess you said you had about $40 million in ADC revenues in 2010 and your guidance is for $40 million to $45 million. Does the $40 million to $45 million include an EU filing milestone for Millennium or am I thinking about that incorrectly?

Our -- our -- there will be some milestones expected under the Millennium collaboration. Those typically come through regulatory submissions and approvals in Millennium's markets as well and -- and so in Europe -- Europe and other markets, so our guidance does include some expectations for milestones across not only the Millennium collaboration but through our ADC collaborations as well.

Okay. And then I was curious, Clay, about your comment -- I think it was your comment -- about redefining front-line combinations in Hodgkin lymphoma, and I'm wondering, does that signal any kind of -- I guess, kind of, move away from the combo of b-vedotin with ABVD or is -- how should I -- how should I read that?

Yes, I don't think it signals anything moving away from that. I think that we're trying to explore what is the best -- what is the best we can do at Seattle Genetics for patients going forward, and there is a myriad of different ways that you can look at this. We talked to many doctors, gotten their opinions, and I'd like to turn it over to Tom Reynolds to -- to tell you a little about our thoughts about how we're trying to do what's best for patients.

Hello, Brett. So, one of the things that's been really interesting story is once -- as our data has come out during the fall and at ASH, I think it really beat investigator and opinion leader expectations, and we're very pleased by that. What -- what we've seen is a real upsurgence in the last few months of folks thinking out of the box, and saying this is such a highly active agent that has a manageable safety profile -- how can we really leverage this to make therapy better for patients especially in front-line? And so they're -- they're rethinking now what are the components of front-line therapy, which ones may have modest activity but contributes substantively to toxicity and we've started to hearing a number of proposals about, well, if you've got this really active agent, maybe we could take the more problematic agents out of the mix.

Things we've talked about have been bleomycin. We know that that's a contributor to long-term pulmonary toxicity in a -- in a substantive fraction of patients receiving ABVD alone. We know that Adriamycin can contribute to cardiac toxicity so there is discussions around that agent, and we've also had dialogue about whether we really need two anti-tubulin agents. So I'm not proposing that we're going to monotherapy for front-line but I think people are thinking out of the box here on what might be the best way to transform front-line therapy for patients.

We're having similar discussions on ALCL. As you're aware CHOP is kind of a -- a therapy developed for B-cell malignancies that's gotten courted over to the T-cell disease space without a lot of rationale and without people being tremendously excited about it, so there's thinking there as well as how can we modify front-line therapy by the use of brentuximab vedotin as a highly active -- an -- an agent with a very manageable safety profile and take out other agents that may be more problematic. So I -- I think there's a lot of exciting thoughts going on. We're going to try to capitalize on that and really improve the outcomes for patients with Hodgkin lymphoma and anaplastic large cell lymphoma.

So -- so Brett, it's Clay again. So when we think of front-line therapy, yes, brentuximab vedotin is potentially an add on to front-line therapy, but the other way that we like to think about it, is we could potentially redefine front-line therapy as something that's best for the patient.

I guess the last follow-up to that -- then what data from the Phase One combination ABVD trial, what data are particularly interesting as far as the side effects to kind of signal which combo, be it novel ABVD with the B being brentuximab vedotin, honestly, how -- how is that data going to guide the -- the path forward?

Thanks for the question, Brett. We've really not reported those data yet, and we've not outlined the specific trials that we're doing so it's a little premature for us to answer your question, albeit a good question.

Fair enough. Thank you.

Thank you. Our next question comes from the line of Cory Kasimov with JP Morgan. Please go ahead.

Hello, good afternoon, guys. Thanks for taking the question. First, I wanted to ask you about expectations for building your commercial organization. How many reps do you expect to have at launch and -- and when do you plan to start hiring them, aside from just your managers and stuff that you're working on now?

Yes, Cory, that's a great question. I'm going to turn it over to Bruce Seeley to address commercial questions.

Hi, Cory. So the -- we're well underway with executing on our hiring plan to bring the entire field organization to Seattle Genetics. As you mentioned, we're right now in the midst of bringing the managers on. Our goal is to -- to be fully launch-ready for the -- at -- at the period of time when we're ready to go with product launch, and that means that we will probably be bringing on somewhere between 50 and 75 field sales representatives. We want them all fully trained. We want them ready to go at the time that the product is available for commercial sale.

Okay. Great. Thanks. And then a follow-up on R&D. If we look at the kind of the midpoint of your guidance, it looks like it's in the mid-$180 million range this year -- for 2011. Broadly speaking, can you comment how much of this is manufacturing and inventory build relative to ongoing or new clinical work?

Well, first of all, none of it's inventory build because that -- that would be capitalized upon approval. What I can say is b-vedotin will continue to dominate our operating activities. I think if you look over the last few years -- last year it -- or in 2010, it represented about 70% of all of our external R&D spend. We're expecting, obviously, that to continue this year although probably not quite at the rate that we saw last year given the heavy push on all the -- the pivotal trial activities, but going into 2011, it's going to continue to represent probably north of 60% of the total R&D spend. That's largely going to include the expansion of the clinical trials that I mentioned and it will include manufacturing activities up until the -- the point of approval.

Okay. And then lastly, Clay, you've commented many times on the combined incidence prevalence market here of 8,000 to 9,000 patients. Can you split that up for us and tell us what you this is incidence and what's prevalence?

Sure. Bruce, would you like to comment on that?

Sure. We look at a -- at a total number of HL and ALCL in a -- in a prevalence pool and incident population combined. So when we look at relapse HL and ALCL markets, we look at them as a newly incident patients, those -- those patients being are diagnosed for the first time as relapsed, and then relapsed prevalent patients, those patients that have been diagnosed as relapsed for some time and may have been even receiving other treatments in the relapse setting. And those patients cycle through -- so these are patients that, for example, at time of launch may be receiving other therapies like Gemzar, Gemzar combination, they may be on clinical trials, and these patients eventually, over time, reenter the pool. So when we look at the -- the accessible patient population for brentuximab vedotin at launch, it's important to look at not just the incident population, but also the -- those patients that are -- are coming in. The -- the prevalent population represents the larger of the two opportunities for us, and we're anticipating that penetration is going to be very robust in both of them and the way to -- to think about it is about one-third, two-thirds -- so one-third incident population and about two-thirds prevalence roughly.

All right, great. Thanks for taking the questions.

Thank you. Our next question comes from the line of Matt Rodden with UBS.

Thanks a lot for taking the questions. So first on the use of b-vedotin and the pre-transplant Hodgkin's setting -- so we're getting mixed feedback on the extent of spontaneous adoption one should we expect in that population and where it would be added to induction regimen, so what feedback can you share with us from your experts, your investigators, and -- and how would you frame expectations for that population out of the gate here?

So, Matt, great questions. We've got a lot of enthusiasm from our investigators in exploring brentuximab vedotin in the pre-transplant setting. We expect to start a number of ISTs in that space this year to really ask whether this would be an appropriate addition or substitution for salvage regimens to get patients to transplant. A lot of interest in that. We also have a number of patients up from our Phase One data that were pre-transplant. We saw good activity and a -- and a very similar safety profile in those patients, which lays the groundwork to say that this is something that can be given to patients prior to their transplant. It's a little early to forecast what spontaneous adoption would be, but we are fairly confident that physicians will explore this and we're facilitating that through investigator-sponsored studies as appropriate.

Okay. Thanks. And then just on, Todd, your comments around capitalizing material ahead of the launch. Should we -- first of all, how much inventory would you expect to have at launch? Do you have a target in terms of inventory levels? And secondly, would that count against the COGS line or would you have to run through that inventory before we would see expense show up on the -- on the COGS line?

Yes, so good question, so our goal is to, at the time of launch, have sufficient quantities of inventory to successfully launch the drug. So our efforts this year will be directed at making sure that we've got that in place. We haven't given any guidance with respect to how much that will be, but we would envision it would be at least a -- a year if not more of the initial product sales would be covered by the inventory that we're building this year, and you're -- you're right that will have an impact on COGS because those -- those quantities of supplies would have been fully expensed. So, you know, you get a little bit of a COGS break in the initial year or two of launch.

Okay. Thanks a lot for taking the questions.

Thank you. Our next question is from the line of Marco Kozul with Thinkequity. Please go ahead.

Hello, good afternoon and congratulations on your progress.

Thanks.

My first question is, how is the compassionate use program progressing?

Well, you know, I could start that and Tom could add anything. We have switched to a expanded access program, and we had done some very limited compassionate use for really the worst of the worst patients, where they really needed the opportunity to see this product to stay alive potentially, so -- but now we have our expanded access program open and that really replaces our compassionate use. Tom, do you want to add anything to that?

Yes, just a few points. So we had a lot of requests and have really ramped up over the fall and into the beginning part of this year for compassionate use access. We have fulfilled those in most need as Clay pointed out under single patient treatment INDs with experienced investigators, and that's -- that's gone very well. We have now formally opened an expanded access program in the United States. It's running at about -- will be running at around 25 sites. Initial sites are up and running and more sites are adding every week, and we believe that that's being well-received and will allow patients in the most need within a -- a patient population very similar to our Phase Two and pivotal studies to receive the drug if they are in great need prior to approval. And so we're -- we're very pleased to be able to offer that to patients and physicians. So far it's going very well.

Perfect. And if -- if you had around 1,000 patients that were in high demand, how would you schedule or prioritize them in terms of access?

You know, Marco, appreciate your question on the numbers. We're not releasing the size of our EAP. It -- it's just not -- it's not important for us to do that. We're opening the EAP because we believe that it's important to take care of the patients in the -- with the biggest need and so if they limited EAP. It's not an unlimited one, and we're prioritizing patients by working with their doctors and making sure we're treating the patients in need.

Great. Thanks for taking my questions.

Thank you. Our next question comes from the line of Ted Tenthoff with Piper Jaffray. Please go ahead.

Great. Thank you very much. Can you hear me okay?

We can.

Great. So congratulations on all the progress. I thought maybe switching a little bit from b-vedotin, when it comes to some of the data that you'll be reporting on the pipeline this year, in particular with the pancreatic study, how quickly do you think you could go into combination studies there and how would you envision ADCs being used either with current standard care chemo or how do you think about that a little bit longer term?

Yes. Ted, thanks for the question. We -- we have enormously exciting discussions internally when we think about how we can use ADCs, especially treating these really hard diseases like pancreatic cancer and others where we -- we're absolutely looking to -- to see single agent ADC activity but we realize that in diseases like pancreatic cancer it may also benefit patients looking at combinations, and so we have detailed discussions and we brought in KOLs. We are positioning ourselves very strongly to do that in the soonest possible time frame. Tom, do you want to add anything to that?

Yes. I can just add a little more color. When you think about brentuximab vedotin, kind of this game changing paradigm here, what we see is that that agent as mono therapy is as good, if not better, than multi-agent chemotherapy, even though I'll have to couch that though we haven't actually done comparative studies directly, but against historical controls, it looks really good. Now, our other ADCs may be -- meet that same model of very substantive single agent activity that could be used in monotherapy, especially in the relapse refractory or multi-line therapy, later stage patients.

We are cognizant, however, that we should be thinking now about how to move these -- these ADCs up in earlier lines of therapy for pancreatic cancer, for renal cancer, for non-Hodgkin lymphoma. And so our teams have been working very diligently about thinking what combinations make sense. We've done a fair bit of pre-clinical work to identify which partners might play best that would have non-overlapping toxicity profiles and perhaps synergistic efficacy, and I think you'll see in the coming years that we are able to engage in those type of trials while we move forward with monotherapy as well. So I think we're going to take a combined approach and do whatever makes the most sense to fully develop these as quickly as we can and get them out to the patients that need them in their respective disease states.

Great, excellent. That's helpful, Tom. Thanks.

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

Great. Thanks for taking my question. I have a couple of them here. You mentioned that there were three INDs for -- from Genentech. I was only aware of one that's in the clinic. So are those three things that are going into the clinic this year and did you already receive milestones for those or do you receive them when -- when they go into the clinic or when the IND is filed?

Hi, Jason, it's -- it's Eric. Yes, there is one ADC that is already in clinical trials where they're actively treating patients. That's the CD22 conjugate. And then the other three we have received milestones for -- for IND submissions. We don't -- we -- we can't comment on whether they've actually treated patients or not. That's for Genentech to do but Genentech has disclosed publicly that they're treating patients with the CD22 conjugate, but -- but all four have had INDs submitted.

Okay, can you say whether that was this year or last year?

It was a combination of last year and this year.

Yes. Okay. And then the -- on the revenue guidance is there anything built into that for new collaborations and then also what percentage of that is just straight reimbursement versus some of the milestones you might receive?

Good -- good question. Let's see. I'm sorry. Ask your question again.

I was asking if the revenue guidance includes any new collaborations and then also what portion of it is -- is reimbursement for your expenses versus additional milestones from -- from collaborators?

Great. So as far as new collaborations, we typically don't include new collaborations in our guidance. As new deals happen, to the extent they will impact guidance, we'll -- we'll talk about that at the time. And then with respect to reimbursements, bear in mind that a lot of the revenues for Seattle Genetics come from payments that have already been received and have been deferred and are amortized then into revenue in the future, so if you look at our statements, a significant part of this year's guidance -- the $40 million to $45 million relates to payments that have already been received, but you are right, there will be some additional revenues this year, obviously, as it relates to the reimbursement payments that come in namely at -- primarily under the Millennium deal.

Okay and then finally on -- on the clinical side you mentioned starting trials in BCL and PTCL. Are these company-sponsored trials and do you think there is still a -- an accelerated approval path in either of those indications?

Yes, great question, Jason. So the studies in CD30 positive non-Hodgkin lymphomas which will include both PTCL, diffuse large B-cell lymphoma, and other CD30 positive non-Hodgkin lymphomas would be a corporate study. It will start later this year. We think depending on the strength of the data that accelerated approval could be possible. We're not ruling that out especially depending on the line if there are a few that we choose to pursue. I think that may be more likely in PTCL given the paucity of really good drugs there at this point in time. DLBCL clearly has unmet needs but that -- I think it's premature to speculate whether we could craft an accelerated approval approach there. But we will clearly look to data as it develops and the magnitude of benefit and again follow our paradigm, try to get drugs to help patients out to them as quickly as we can.

Thank you.

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

Hello and good afternoon. Thanks for taking my questions. Can you give us a preview of whether we might see data in 2011 across or for the SGN-35 retreatment program trial that you have?

We -- we may. We -- we usually don't confirm the specific nature of what we will be presenting. That study is open and active, and we've already presented preliminary data there. We may choose at an appropriate political conference to present additional data there, but I'm not -- at this point we're not ready to commit to it.

Okay. How soon after you receive b-vedotin approval would you be ready to start commercial sales?

The goal is to do it ASAP. I'm not going to come out and say it is within one week or one hour or one minute or whatever it is that you want me to say here, but we're going to do it -- we're going to do it as fast as we can because we want to make sure that every patient that needs this drug will get the ability to use this drug, and that's what's important to us, and that's why what Bruce said before and Bruce can certainly expand on this if you like, Bruce, but we're -- we're going to do -- we're not going to do a soft launch of this drug. We -- we believe in the drug. We're investing fully in the drug -- it's one of the use of proceeds from our -- our recent financing. We're -- we're not going to do a soft launch. We're going to do a hard launch or whatever you want to call that where we bring all of our reps in, we train them, they're out, they're ready to go, by the time we gain approval. Bruce, would you like to add anything?

I -- I think you -- you said it very well. I think the only thing I could add is that -- that our [KOLs] are salivating right now to be able to get their hands on this and be able to start talking to their customers and we are ready to go as soon as the FDA tells us.

What is -- what are your plans in terms of revenue guidance? How soon after approval would you be giving revenue guidance for b-vedotin?

I think we're going to have to take it as it comes. Obviously, our first focus is get the BLA submitted, so we'll -- I think we'll have more to share on that later. That's about as good an answer as I can give you right now.

And we are -- we are on track for submitting the BLA this quarter, so we are working really hard to try to do it as soon as possible as we can in this quarter. We're not providing any more guidance than this quarter but we're working on it day and night.

All right. And then should we expect anything new from the pipeline in the clinic in 2011 and could you talk about what -- what's exciting for you in the pre-clinical pipeline?

We don't want to provide any expectations for our clinical pipeline in 2011. We certainly don't want to rule out that there will be something new, but we don't want to provide any guidance at this point. We're -- we view that we have this rare opportunity right now, and also one of the use of proceeds from our -- our recent financing was to robustly develop our -- our pipeline and really fully investigate and -- and work on everything we have from the two products, the two ADCs that in clinic, to a -- a number of very exciting ADCs that we have pre-clinically right now that we're working very hard on.

We -- we have this unique opportunity where our first ADC that's utilizing our core statin platform and keep in mind that historically Seattle Genetics has developed an ADC a number of years ago called SGN-15, an older technology that was not something that we thought was commercially viable and we closed that program. So this is really the ADC 2.0, if you will, and utilizing ADC 2.0, our first product brentuximab vedotin has really provided some very strong data, as you know. So we're -- we're really excited to robustly go forward and utilize and -- and invest with our capital -- invest into multiple ADCs and clinical trials within Seattle Genetics' walls. And this is not just our partners. Yes, we have eight partners, or eight ADCs from our partners, that are in clinical trials. We expect more from our partners over the next 12 to 18 months but we also expect that Seattle Genetics will continue to put more and more drug conjugates into clinical trials that are exciting, that have good packages of data and -- we -- our research is really a strong engine.

All right. Great. Congratulations on a great year. Looking forward to 2011.

Thanks.

Thank you. Our next question is from the line of John Sonnier with William Blair & Company. Please go ahead.

Thanks for taking the questions. I guess, first, for Tom -- as you move up the treatment paradigm and Hodgkins lymphoma -- are you looking at any of the poor prognostic indicators like CD68+ approximate macrophages?

Yes, John, that's an interesting question. There is a number of things that have come to bear right now. CD68 is great. It's a marker that in exploratory studies looked exciting as to be able for prognostic -- for patients with poor prognosis. We're also very interested in early PET. That's turned out to be a pretty good prognostic marker, as well as the kind of -- the gold -- old gold standard IPI scores, so we think there's a number of prognostic factors that might help us really look at the patients in most need in front-line.

We also know that one of the biggest predictors is age. Older patients don't do as well. They tend to have aggressive disease and they can't tolerate as much. So that's another segment of the front-line population we're interested in. We expect to have more activity in this. We've had a lot of investigator enthusiasm, and we'll be exploring how best to use these markers going forward.

Okay. And have you -- have you given an estimate on what percentage of the diffuse large B-cell population you estimate to be CD30 positive?

We're doing more work on that to understand that better. We have seen literature estimates that range from [50%] to 20%, and we are doing both in-house work as well as work with other large lymphoma centers to get more precision around that number.

Okay. I guess just one final question for either Clay or Bruce. How many clinical liaisons do you have on the ground and I know it is early days, but can you offer any kind of early insights into what they're hearing from docs as they get out in the field?

Yes, you know -- John, this is Clay. As far as our MSLs go, they actually report under our clinical group.

Oh, so that would be Bruce -- I mean, no, that would be Tom, right? Under Tom, yes, and so, Tom, do you want to comment on our medical science liaisons?

Yes, we -- we started building our team in the fall. It's now fully staffed, and we have eight -- eight MSLs out in the field right now. They're meeting with our KOLs. We had initial -- a big blast of information exchanges at ASH with the KOLs and have continued to follow up into the new year. Things that we hear from -- from our KOLs are, first of all a lot, of enthusiasm in finding ways to get a hold of the drug, a lot of interest in exploration of using this either in earlier lines of therapy, in combinations with other agents both established and novel, and also there has been increasing interest in taking this into other CD30 positive malignancies, whether that be cutaneous T-cell lymphoma, whether that be PTCL, DLBCL, or some of the rare tumor types like and embryonal carcinoma, which is known to express CD30. There's a lot of interest there. So I think we're going to see that leverage into investigator-sponsored studies that we will help manage, and -- and those will come along soon. We -- we have heard really good things and -- from our investigators and our KOLs in the field, and not a lot of things that I am worried about at this point.

Okay. And is -- is eight the appropriate number? Are you going to grow that into the launch?

So that's our -- that's our starting point for right now. We're evaluating how our reach is with that, and thinking hard about whether we can meet all the demand for information requests and KOL meetings that are -- that are coming at us. If we need to upscale that a little bit, we -- that's a possibility, but we haven't committed to that at this point. Right now our team is doing very well.

Okay. Well thanks a lot and congrats on all the progress last year.

Thank you.

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

Thanks for the review and greetings from the east where the temperature -- the temperature has been warmer this morning, in the high 30s led to significant snow melt, thank you very much. A couple -- speaking of melt, I have a couple questions related to I think your second priority which has to do with believe the brand of CD30. We saw at the ASH presentations that basically the HL and ALCL patients had melting of their tumor and greater than 90% of patients had some sort of tumor reduction. That's great. But as you move into other CD30 positive tumors, how much positivity is needed in these tumors? For lack of a better word, how much is enough, to make a difference in these patients?

Yes, it's -- that's a very good question. It is probably different for each tumor type. We don't know a lot yet, Mark, and we're trying really hard to learn as much as we can. I'll -- I'll give you a little bit of my thoughts, Tom can jump in with more. When you look at Hodgkin lymphoma, the expression of CD30 is really only on the Reed-Sternberg cells. So you have most of the cells in the Hodgkin lymphoma being infiltrating lymphocytes that are CD30 negative, yet we have a profound impact on Hodgkin lymphoma, and then you look at ALCL and you have a very high rate of expression. So we really don't know yet without getting into a lot of tumor types how broadly we can use this. We think that those data indicate that this might be very useful in a broad fashion, but we do have to get the data first and really know that. Tom, you want to add more?

Yes -- yes, a couple things to -- to follow up on -- on Clay's comments there. As we said, we are planning to start a study in CD30 positive non-Hodgkin lymphoma later this year. That study is going to design to look at many different types of lymphomas that are CD30 positive and capture expression data so we can hope to make some correlation about how much CD30 is enough, is it different for different tumor types, is there minimum level. We do have some anecdotal information from our clinical trials that have earlier stage studies, the Phase One studies and allowed CD30 positive key malignancies in, and there are a few patients there that were not HL or ALCL that appear to have had tumor shrinkage and/or responses, so we're bullish that this is not a tumor type effect but rather it's a CD30 directed effect.And we intend to fully explore that in the upcoming study. We're also very interested to start the CTCL studies quickly. As you're aware 14 out of the 15 patients with cutaneous manifestations in the ALCL trial showed complete remission of their cutaneous lesions, so we're very interested in -- in whether that will hold true in -- in all types of CTCL and again we're going to be doing expression response type correlations to try to better understand that.

That -- that was helpful. And -- and then in -- in follow-up on the priority that you mentioned first on successful launch in HL, what are your early thoughts -- you and Bruce and the team -- on how you're going to evaluate your launch early? There's been challenges in biotech and launching their own drugs. How will you judge yourself in doing a good job -- and -- and evaluate yourself on the launch early in the launch?

It is a really good question. We really haven't set guidance yet on -- on that. Internally, obviously, we work with our Board of Directors and you'll just have to trust me that the Board of Directors has a lot of expectations for us to really get this product out to a lot of patients and do well by the patients but also have a lot of expectations we're going to be able to do the right thing by the Company, and -- and make this into an important brand and important product for the Company, so both helping patients and the Company and not -- I don't want to give you any specific numbers or specific thoughts here, but we -- we've told you about what we think is the incidence prevalence pool. We -- we have some internal thoughts as to what kind of market penetration we think is possible over what time period, and so we do have a lot of internal information that we're going based onto say here is what we think is possible for this launch, but it's certainly not something that we're public now. Bruce, do you want to add to that?

Yes, I mean, we -- it is a great question. We have in the process of thinking about the commercial opportunity, have developed some metrics that can help us identify how we're tracking at launch. I think a couple things are important. One is that we already fielded and have completed some baseline research, and we look at baseline research, we look at overall awareness of the product, for example. We look at relative rates of enthusiasm about the product and the data, let people know about the Company, CD 30 positivity as the target, and so we have a good baseline from which to go and we've set metrics from there to at certain points of time post-launch that we want to have awareness up to X level.

As Clay mentioned, we also have a sales goal that we will be tracking. And that is going to depend on us achieving our metrics as it relates to things like what market share we're able to achieve, what duration we're able to drive. Those are going to be directly the focus of the field sales organization. I think also we are going to pay very close attention to the market research that we get back immediately in the post-launch period to listen to what our customers are telling us about how the sales representatives are -- are messaging, how they're feeling about the products, so we'll be able to -- to have very good data from a market research perspective. And I think the last thing I would say is that from a data perspective, we are making substantial investments and making sure that we have access to the data sources to be able to track the metrics for launch and that'll be not just through the -- the market research and the tracking studies that we've already got cooked and ready to go but also in terms of the information we get back via distribution and other ways, so we are building the -- the infrastructure to be able to take all of those data inputs, be able to feed them in so we're able to track the success for the launch very closely.

Thanks very much for the added information.

You bet.

Thank you. Our next question comes from the line of Thomas Wei with Jefferies & Company. Please go ahead.

Thanks for squeezing me in. I just wanted to get your read on today's FDA panel meeting and any thoughts on how to incorporate the feedback from the panel today into the regulatory strategy for b-vedotin?

Thanks. Tom?

Yes, so we've been listening in, at least up until the point when we began the call, so I may have missed a few late-breaking items, but our take on this is we're positioned well. We talked to the FDA well in advance about our study design, our HL study done under an SPA. The FDA has been quite clear that we're operating for both diseases in the setting of unmet medical need, and they have encouraged us to submit both indications for the BLA. We are aware that these are single-arm studies and there was dialogue about that. We also are aware that, if my recollection serves me correctly, that Dr. Pazdur said -- indicated that perhaps people coming in with response rates at the low end of the range in the 15% range or others might choose to do randomized studies but that when you're north of 60% that might be something that a single-arm study would be appropriate for, and we think we fit into that end of the range given the data that we have developed.

The second piece that's come up today is what about confirmatory studies, and we're very pleased we've gotten in front of both the FDA and EMA early, come up with a negotiated potentially confirmatory study design and are executing well on that. That study started about a year ago. It is accruing well, and it will be substantively accrued at the time of potential launch, so we've -- we've really played ball here. In addition, we are teeing up a front-line study in ALCL to begin to lay the groundwork should a confirmatory study be needed in ALCL. So based on what we heard today, we don't see a real down side for our submission or consideration for approval by FDA.

I -- I think we all would agree that -- that you're very likely to fulfill what the panel wanted in -- in terms of using a single arm study for accelerated approval. I guess I -- I more wanted to understand what you thought about the discussion around the need for two randomized trials for full approval. Do you -- do you think that would apply to b-vedotin in each of respective indications that you're seeking approval for and since that's come up now and your about to submit a filing, what are you going to propose for the two randomized studies in -- in each setting?

So I think the -- our take on the discussion is that in large indications that doing potentially two confirmatory studies would be a good back stop so they can back stop each other and then if you saw the magnitude of benefits (inaudible) less than what you hoped for but still significant in both of the studies, they could add together. It's pretty clear -- or at least our understanding from the panel discussion was that for rare indications it might not be feasible to actually run two simultaneously -- simultaneous confirmatory studies. We -- we think the AETHERA trial is -- is probably the largest study and the furthest along in the post-transplant setting that's ever been done at Hodgkin. I am not -- it's not clear to me we could mount another such trial simultaneously nor would we be asked to.

We are laying the ground work for a front-line trial should it be needed, and I think we have other opportunities should the FDA request a second confirmatory trial to fulfill that easily potentially in the salvage space. With ALCL, and given the incidence of that disease, it's very unclear whether one could run two simultaneous front-line trials. We will work with the regulatory agencies both in the US and with Millennium and our partner and the EMA to meet whatever the confirmatory requirements are, but we expect, given the -- the -- that these diseases are not super common, that we may have some advantage with just doing a single confirmatory study. But that's our take so far.

And then, just lastly on -- on the label, in terms of what -- what you're going to be proposing here, should our expectation be that the labeled indication might just read generally as relapsed refractory disease or -- or do you think that there might be some language that -- that may also throw in the word post-transplant or third line?

So we think -- so both of those are possible scenarios. Our belief is that this is a drug that can help patients with relapsed and refractory Hodgkin and relapsed and refractory ALCL. In the Hodgkin space, our pivotal study was conducted exclusively in the post-transplant setting. However, we've amassed a data set from our Phase One data that include a number of patients that were pre-transplant. Those patients were able to respond to the drug and they also had a manageable side effect profile. So we believe we can make a case for relapsed refractory label. We believe that that will be the subject of dialogue with FDA. I don't think I am in a position to handicap that yet. They have not seen our full data set, and they have urged us to bring our best case forward for both of these indications, and to -- they are looking forward to our submission and we expect to prosecute it as well as we can with them and to get the broadest label possible.

Thanks very much. That's very helpful.

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

Hello. Thanks for taking my questions. Just a couple. What -- what's the royalty rate that we should think about when modeling out COGS that you have to pay out to third parties?

Yes, so this is Todd. Good question. So, I think you can think about the royalty stack on this product being in the mid-single digit range.

Okay. And FDA has notified physicians and ASCO about generic drug shortages. A number of different drugs are not readily available for treating patients and one oncology company has indicated in the securities filing that this may impede clinical trial progress. Two of those drugs including docoxrubicin and bleomycin are on that list and I was wondering if you guys had experienced any shortages or delays towards advancing b-vedotin clinical trials?

George, that's a great question. We've been monitoring the situation. At the clinical centers where which we're operating these studies, this has not been an issue for us so far. We have been able to accrue patients from this incident population as soon as cohorts open up, and it hasn't been an issue, but we're -- we're aware of it and it could put a crimp in things going forward to larger studies, so we are monitoring it. If those shortages persist it may also provide some opportunities for physicians to consider how to accelerate brentuximab vedotin exploration in the front-line setting.

Great. Thanks very much.

Thank you. We have time for one last question. And our last question comes from the line of Ling Wang with Brean Murray. Please go ahead.

Thank you for taking my questions. Just a couple of questions on the prevalence and incidence number you cited -- between 8,000 to 9,000. Can you give us the breakdown in terms of the refractory -- relapse refractory Hodgkin lymphoma versus ALCL?

You know, it's basically when we look at the incidence and prevalence, we think of the incidence as about a one-third and the prevalence being about two-thirds. Now clearly there is more Hodgkin than ALCL. That's a -- there's higher incident there. But the specific breakdown within there we -- we really haven't been exact with that, but clearly more Hodgkin and more prevalence than in incidence.

Okay. Thank you. And then secondly, can you explain why it takes quite long for you to report the Phase One front-line data? If I remembered it correctly, when you initiated the trial early last year, the expectation was that it's a relatively short trial because you pretty much know the dosing of SGN-35. So can you give us some color here?

Yes. So, Ling, it's a very carefully designed study that has a number of dose -- dose escalation cohorts. It is using an every other week dosing schedule. We picked a starting dose that we thought would be very (inaudible) and we are observing patients in each cohort for a relatively long period of time before making decisions about cohort escalation. So even though the cohorts are filling very quickly, we observe patients for quite some time. We're combining brentuximab vedotin with four other drugs and we're wanting to make sure that long-term toxicities don't emerge as we put substantive number of patients on, so we're just being careful. We're being good corporate citizens. We're protecting the safety of our patients, and we're developing a good data set and when it is mature we will release it.

Thank you. Just have a follow-up on the prevalence incidence question. So I assume your member is relapse refractory patients in a post-transplant setting, am I right?

No. The number that Clay mentions looks at the -- the overall population of patients with ALCL and HL.

Relapse refractory --

So it doesn't need to be?

It's the relapsed refractory patients, not just the post-transplant.

Correct.

I see. Okay. And also, how many years do you -- is in your assumption for the prevalence? How many years worth of patients?

Yes, approximately five.

Okay. Thank you very much. Thanks.

Thank you. Ladies and gentlemen, this concludes our Question and Answer Session for today's conference. I would now like to turn the conference back to Ms. Pinkston for any closing remarks.

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

Thank you. Ladies and gentlemen, this concludes the Seattle Genetics fourth quarter 2010 financial results conference call. This conference will be available for replay after 4.30pm Pacific Standard Time today through February 10, 2011, at midnight Pacific Standard Time. You may access the replay system at any time by dialing 303-590-3030 or 1800-406-7325 and entering the access code of 440-4372 followed by the pound sign. Thank you for your participation. You may now disconnect.