Seagen Inc (SGEN) 2013 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Seattle Genetics first quarter 2013 financial results conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation the conference will be open for questions. (Operator Instructions). This conference is being recorded today, May 7, 2013. I would now like to turn the conference over to Peggy Pinkston, Senior Director of Corporate Communications. Please go ahead.

Thanks operator. I'd like to welcome everybody to Seattle Genetics' first quarter 2013 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Operating Officer; and Chris Boerner, Senior Vice President, Commercial.

Following our prepared remarks today, we will open the line for questions. If we are unable to get to all of your questions, we will be available after the conclusion of the call.

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 factors that could affect the Company.

I'll now turn the call over to Clay.

Thanks, Peg, and good afternoon everyone. I'm pleased to update you today on Seattle Genetics' strong progress so far in 2013. Our three key areas of focus are, first, continuing to deliver on our commercial goal of bringing ADCETRIS to relapsed Hodgkin's lymphoma and systemic anaplastic large the lymphoma, or ALCL, patients in need. Second, building on the ADCETRIS brand through multiple clinical trials designed to generate data and expand its label. And third, advancing our industry-leading ADC technology through both internal and collaborator pipeline programs.

Some of the recent accomplishments towards these goals include -- we received ADCETRIS approval in Canada and Takeda Millennium received approval in Switzerland. ADCETRIS is now approved in more than 30 countries. We submitted to the FDA a supplemental BLA for retreatment with ADCETRIS and for dosing beyond 16 cycles in relapsed Hodgkin's lymphoma and ALCL. We obtained fast track designation from the FDA for front line CD30 positive for the mature T-cell lymphomas, or MTCL; and we initiated the Phase III ECHELON-2 trial for these patients.

We initiated two Phase I trials of SGN-CD19A, and we submitted an IND for SGN-CD33A. ADCETRIS net sales in the first quarter were $33.9 million, which is in line with our guidance of $130 million to $140 million for the year in 2013. We ended the first quarter in a solid cash position with more than $344 million in cash and investments. The cash flow we are generating from ADCETRIS sales, royalty revenues and collaborations is enabling us to continue executing on our vision of improving the lives of people with cancer through innovative and empowered antibody-based therapies.

Today I'll highlight the progress we and our collaborator, Takeda Millennium, are making on our broad ADCETRIS clinical development program. Next, Chris will update you on our ADCETRIS commercial entities. And Todd will discuss our first quarter financial results. Then I'll provide a brief review of our ADC pipeline and collaborator progress before we open for questions.

On the global expansion front, we received approval for ADCETRIS in Canada during the first quarter. The Canadian label is broad, consistent with our label in the US and includes both relapsed, post-transplant and transplant-ineligible Hodgkin's lymphoma, as well as relapsed systemic ALCL patients. We are working to secure both national and provincial Canadian reimbursement coverage which we anticipate beginning in the second half of 2013.

In parallel, Takeda Millennium is executing on the ADCETRIS launch in a number of European countries. They continue to actively pursue pricing and reimbursement applications in European Union member state, having achieved coverage in nine countries to date. In addition, ADCETRIS was recently approved in Switzerland and Takeda Millennium continues to pursue regulatory approvals in other countries, including Japan where they recently submitted a new drug application.

Prior to each individual country launch and in regions where ADCETRIS is not yet approved, Takeda Millennium continues to make ADCETRIS available based on unsolicited physician requests through an international paid named patient program, or NPP.

From an ADCETRIS clinical development perspective, we are making substantial progress. Our initiatives are intended to generate clinical data and support label expansion opportunities over the course of the next several years. In the near term, we anticipate data will be generated by several corporate and investigator-sponsored trials. One key corporate study with additional data planned during 2013 is our Phase II non-Hodgkin's lymphoma trial, which includes diffuse large B-cell lymphoma, or DLBCL. This is an ADCETRIS monotherapy trial in relapsed patients. At ASH, we reported an interim response rate of 44% with a manageable safety profile in relapsed DLBCL.

We are continuing to treat patients on this study and assessing the durability of responses. We also recently added an arm to the trial that will enroll approximately 15 patients to assess the combination of ADCETRIS and Rituxan.

In addition, we plan to initiate a Phase II trial in front-line DLBCL evaluating ADCETRIS plus R-CHOP later this year. This trial is being designed to assess objective response rate, complete response rate and PFS as well as the safety of adding ADCETRIS to the standard of care in newly diagnosed patients. We are enthusiastic about the potential of ADCETRIS in DLBCL and look forward to additional data and clinical trial progress in this disease.

We also expect clinical trial results in 2013 from our ongoing corporate trial of single agent ADCETRIS in front line Hodgkin's lymphoma patients age 60 or older who are unable to tolerate combination chemotherapy and from several ISPs. These include data from an M.D. Anderson trial for CTCL that is part of a plenary session at the upcoming Society of Investigative Dermatology meeting in Edinburgh, Scotland this weekend, and data from a Memorial Sloan-Kettering trial in salvage Hodgkin's lymphoma at the International Conference on Malignant Lymphoma in Lugano, Switzerland in June.

We also plan to submit IST data from the evaluation of ADCETRIS in CTCL to compendia review committees in 2013. We believe the data are compelling and worthy of consideration although we cannot control the outcome or timing of these reviews.

Moving now beyond 2013, I'd like to update you on our Phase III AETHERA clinical trial. This trial is evaluating ADCETRIS compared to placebo in 329 Hodgkin's lymphoma patients at high risk of disease progression after autologous transplant. We are evaluating whether ADCETRIS can extend progression-free survival, or PFS, in a consolidation or maintenance-type setting for these patients. AETHERA finished enrollment in September 2012 and all patients are scheduled to complete treatment in the third quarter of this year. Previously, we estimated that we would reach the pre-specified number of PFS events during the first half of 2014. A recent review of pool blinded data indicates that a slower than expected rate of progression in the trial now suggests that reaching the targeted number of events is likely to extend into 2015.

Given this new time line, we are working with Takeda Millennium to evaluate options that could enable unwinding of the data before the end of 2014. This is an important decision, so we are working closely with our collaborator and plan to seek regulatory feedback from both the FDA and European regulators. Our ultimate goal is to maintain the integrity of the safety and efficacy evaluations from this trial.

In the 2014 to 2015 time frame, we anticipate data from our ongoing ALCANZA Phase III trial intended to support registration in relapsed CTCL patients. This is a global randomized Phase III study in relapsed CD30-expressing CTCL patients to evaluate single-agent ADCETRIS versus physician's choice of methotrexate or bexarotene. The primary endpoint is objective response rate with duration of at least four months. This trial is being conducted under an SPA agreement with the FDA and received scientific advice from the EMA.

We also continue to execute on our strategy to bring ADCETRIS to the front line setting for both Hodgkin's lymphoma and MTCL. We and Takeda Millennium are conducting two global randomized Phase III trials intended to support registration. The goal of these trials is to redefine the standard front-line regimen for these patients.

ECHELON-1 is a front-line trial in Hodgkin's lymphoma patients comparing ABVD to ADCETRIS plus AVD, intended to increase antitumor activity and decrease pulmonary toxicity associated with bleomycin. The planned enrollment is 1040 patients and the primary endpoint of this trial is PFS. Encouraging data from an ADCETRIS Phase I combination study in front-line Hodgkin's lymphoma was recently reported as ASH have bolstered our enthusiasm for this trial.

And in the first quarter we initiated ECHELON-2, a front-line trial in MTCL comparing CHOP to ADCETRIS plus CHP. The planned enrollment is 300 patients and the primary endpoint is PFS. We recently received fast track designation from the FDA for ADCETRIS in front-line MTCL, an orphan drug designation for peripheral T-cell lymphoma, a type of MTCL. Data from an ADCETRIS Phase I combination trial in MTCL that will report at ASH provided a strong rationale for the evaluation of ADCETRIS plus CHP in this setting.

The ECHELON-1 and ECHELON-2 trials are being conducted under SPA's with the FDA and with scientific advice provided by the EMA. In addition, the FDA has agreed that, if successful, either of these trials would be confirmatory for regular approval in both of our current indications. We expect our front-line trials to reach their primary endpoints within the next 4 to 5 years.

At this point, I'll turn the call over to Chris to provide an update on our ADCETRIS commercial activities.

Thanks, Clay, and good afternoon, everyone. During the first quarter we continued to make good progress in driving breadth of ADCETRIS use with approximately 1400 accounts ordering drugs since approval. In Q1 approximately 130 new accounts ordered ADCETRIS, and another 130 accounts that had previously ordered reinitiated use as we continue to work closely with customers to identify new appropriate on-label patients for the product.

In the US, net sales for the quarter increased modestly over our fourth quarter 2012.

Strategically, our goal is to entrench ADCETRIS use in our labeled indications. With high on-label penetration rates and high product awareness, our focus is on assisting physicians and identifying appropriate patients, ensuring adequate CD30 testing and driving duration of therapy consistent with our label. Reimbursement for ADCETRIS continues to be favorable.

One question that has come up related to reimbursement is the recent implementation of sequestration, specifically the mandated reduction in Medicare drug payments to providers. Sequestration will likely impact the oncology market in different ways depending upon the drug and patient population. We have not seen any impact on ADCETRIS utilization thus far. Moreover, our analysis indicates that practice economics for ADCETRIS continue to be favorable in spite of these cuts. We continue to monitor the situation and are appropriately engaging customers as needed. We also continue to highlight all of the significant reimbursement support services available to customers through our SeaGen Secure program.

As Clay mentioned, we received Canadian regulatory authorization on February 1. We shipped our first commercial vials in Canada within three weeks of approval. We continue to make progress on the national and provincial reimbursement approval processes and are encouraged by the coverage and reimbursement discussions that we've had thus far. As previously stated, we anticipate obtaining those reimbursement milestones beginning in the second half of 2013.

Overall, I'm pleased with the progress made by the commercial team and by the execution against our plans for bringing ADCETRIS to patients in need. In the US we are continuing to solidify ADCETRIS's position as standard of care in our approved indications and ensure that patients are treated consistent with our label. The Canadian approval in the first quarter, along with the efforts of our partner Takeda Millennium in the rest of the world places us another step closer to our goal of making ADCETRIS a global brand.

With that I now turn the call over to Todd to review our financial results for the quarter.

Thanks, Chris, and thanks everyone for joining us on the call this afternoon.

Our financial performance in the first quarter was strong and in-line with guidance and we ended the quarter with more than $344 million of cash and investments. Total revenues for the first quarter of 2013 were $57.3 million which included ADCETRIS net sales of $33.9 million. We don't intend to break out US and Canadian sales going forward, but recall that fourth quarter 2012 sales included a one-time amount of $2.6 million related to patients treated in Canada between October 2011 and December 2012 under a paid special access program. Factoring this one-time amount out, net sales of ADCETRIS increased from $32.8 million to $33.9 million quarter to quarter. First-quarter 2013 revenues also reflect collaboration revenues of $21 million related to our ADCETRIS collaboration with Millennium and our ADC collaborations.

We also reported $2.4 million in royalties on Millennium sales of ADCETRIS. As a reminder, we report royalties one quarter in arrears, so this amount relates to sales by Millennium in the fourth quarter of last year which was a combination of NPP sales as well as an initial commercial sales.

ADCETRIS gross to net adjustments increased to 13.5% in the first quarter. This is consistent with our expectation of modest increases in gross to net discounts for this year. These adjustments will continue to be driven by government discounts, primarily the PHS and Medicaid programs as well as price increases. Approximately 40% of ADCETRIS sales in the US are covered by these government discount programs with discounts now approaching 30%.

Cost of sales continued to be less than 10% of net sales primarily reflecting royalty costs at this time as we continue to benefit from the sale of ADCETRIS product that was manufactured prior to FDA approval. This benefit is diminishing as that product is utilized. As previously guided, we expect that ADCETRIS cost of sales as a percentage of net sales in 2013 will increase into the 10% to 12% range and eventually into the low to mid teens.

R&D expenses were $47.7 million in the first quarter of 2013. This reflects spending for ADCETRIS development activities as well as increased investment in our other ADC programs. One of the components of the collaboration agreement with Millennium is for us to provide them with adequate drug supply for clinical and commercial use. For accounting purposes, the cost of this material is reflected as an R&D expense as we deliver product to Millennium. This is expected to create variability in R&D expenses over the remainder of the year and indicates acceleration by Millennium of its clinical and commercial activities with ADCETRIS. We are reimbursed for this material at cost plus markup reimbursement payments for products that are amortized in the collaboration revenue, along with other development payments received from Millennium under the collaboration. SG&A expenses were relatively flat year-over-year.

Non-cash share-based compensation expense for the first quarter of 2013 was $6.6 million compared to $6.1 million for the first quarter of 2012. Cash generated through ADCETRIS commercial activities as well as through our collaborations continues to be substantial and supports our investment in clinical trials designed to enable expanded uses of ADCETRIS as well as driving our ADC technology and product pipeline forward.

With that I'll now turn the call back over to Clay.

Thanks, Todd. Next I'd like to provide a brief review of our earlier stage product pipeline and our ADC collaborations, as well as advances with our ADC technologies.

Our clinical programs include SGN-75, which is in a Phase Ib trial in combination with everolimus and mTOR inhibitors for renal cell cancer; ASG-5ME, which is in Phase I trials for prostate, pancreatic and gastric cancers. We've completed enrollment in all three indications. We plan to review all of the Phase I data from these three disease areas with our partner, Agensys Astellas, and then make decisions on next steps for the program, ASG-22ME, which is in a Phase I trial for solid tumors under our collaboration with Agensys Astellas; and SGN-CD19A, our fifth clinical stage ADC. We recently initiated two Phase I trials with this CD19-targeted ADC, one for acute lymphoblastic leukemia and one for B-cell non-Hodgkin's lymphoma.

The next ADC that we plan to advance in the clinic is SGN-CD33A which is targeted to CD33, a well-characterized antigen for acute myeloid leukemia. This molecule employs our newest proprietary ADC technology. The payload is a highly potent cytotoxic agent called a PBD dimer that works by a different mechanism than orastatins. The payload is stably linked an antibody with our site-specific engineered cysteines resulting in uniform drug loading of two PBD dimers per antibody. We call this engineered antibody and EC-mAb. These technologies resulted in compelling preclinical activity of SGN-CD33A which was described at ASH in December and at ACR last month.

We recently submitted an IND for SGN-CD33A and are on track to begin a Phase I trial in the second half of the year.

We also plan to submit an IND this year for SGN-LIV1A, an orastatin-based ADC using the same drug linker as it ADCETRIS. SGN-LIV1A is targeted to an antigen called LIV1A which is expressed on several types of solid tumors, including more than 90% of breast cancers. Pre-clinical data for this IND candidate were presented at the ACR annual meeting demonstrating significant antitumor activity in multiple cancer models. A Phase I trial in breast cancer is planned to start by the end of the year.

Our ADC collaborators are also making progress with programs using our technology. Recent highlights include -- Genentech reported data at AACR, including multiple objective responses from a Phase I clinical trial of an anti-MUC16 ADC for advanced recurrent platinum-resistant ovarian cancer utilizing Seattle Genetics technology. We generated fees under our ongoing ADC collaboration with Genentech for extension of the research terms and renewal of exclusive licenses to specific targets.

We received milestone payments under our collaborations with Daiichi-Sankyo and GlaxoSmithKline triggered by preclinical progress with ADCs utilizing Seattle Genetics technology. And we generated fees from Agensys, an affiliate of Astellas, triggered by its option exercise for an additional exclusive antigen license under our ongoing ADC collaboration.

I'm very excited by the progress we are making across the Company and by the path ahead for ADCETRIS, our product pipeline and our ADC technology. We are executing on many ambitious goals, generating value in the Company and bringing important new drugs to cancer patients in need.

At this point we will open the line for Q&A. We ask that you limit yourself to one to two questions and then re-queue with any additional questions. Operator, please open the call for questions.

(Operator Instructions). Matt Roden, UBS.

Good afternoon everyone, and thank you for taking the question. It's [Leah] in for Matt. I have two quick questions. The first is if you'd comment on off-label use now and in the future, and sort of what is included in guidance since on the last conference call you mentioned that guidance for this year assumes duration would largely be flat, just so we can get a sense of the current market dynamics. And then I have one follow-up question.

Thanks, Leah. Our guidance that we have given is largely flat and doesn't really include anything of substance with off-label use (technical difficulty) de minimis. Chris, would you like to comment?

Yes, the only noticeable off-label use but we are seeing right now is in the pre-transplant patients who are eligible. We have seen some use there, but really aside from that, as Clay said, it's been minimal and that's why it's minimal in the guidance.

Okay, thank you. And my follow-up question is with regards to your planning to file for compendia for CTCL. Do you have a sense of physician awareness of ADCETRIS in this patient population, and is there any potential impact to guidance for this year as well? Thank you.

Yes, we do have awareness for physicians and we do hear about it, and there is a small amount of off-label use that we hear about in CTCL. Certainly our data is very strong. We are excited about our data. It's almost twofold more activity than the competitive drugs in relapsed CTCL space. We are confident with the package that we are going to be submitting to the compendia, but there is nothing in our guidance for that for this year. We really don't have control over when compendia would rule on this. We know that there is a meeting this year, but when they would make any guidance change and if they will make guidance change is not something that we have in our guidance. It's just something we are striving toward; it's a goal of ours, trying to get in guidance because, quite frankly, we think it's in the patient's best interest.

Any thoughts on patient awareness of the data, or physician awareness of the data?

Chris, any thoughts on that?

Sure. I think position awareness of the CTCL data is quite good. It's a relatively concentrated group of prescribers for CTCL, certainly in the population of patients we are looking at. And so I think we've had very good awareness of the data that we've presented at previous conferences.

Thanks.

Corey Kasimov, JPMorgan.

It's actually Matt Lowe in for Corey today. I just wanted to ask you about the rate of new patient adds you've seen in 1Q as well as any trends in duration of use that you've noticed and whether the current penetration for on label indication is still around the 60% mark. Thank you.

Chris, would you like to talk about your thoughts on new patient adds and duration? I can make one comment. First of all, on duration of use, that's something that we are not planning to make specific comments on. We are certainly working with our doctors out there that use ADCETRIS to try to use the appropriate amount of duration that could benefit the patients the most. But commenting on specific changes in that are not something we want to do. I will say we think it's going in the right direction to get the best use by patients.

I think the continued use of the product has been very strong in the first quarter. We've seen -- we certainly hear about a number of new accounts coming online. I mentioned 130 new accounts came online. We also had a fairly large number of accounts that have used the product previously we initiate use suggesting that they have new patients available.

I will say we did not update the penetration rates for this quarter. The penetration rates in duration data that we've reported on previously come from relatively large-scale physician chart reviews, and given the size of the relapsed refractory Hodgkin's and ALCL markets it's not feasible to perform those audits every quarter. However, we will be updating those specific data points in subsequent calls. But we feel pretty good about the rate at which new patients are coming on. And then as Clay mentioned, we continue to focus on duration and we are also happy with what we've seen there.

Okay, thank you.

Jason Kantor, Credit Suisse.

Thank you for taking the question. I have a couple I guess. The DLBCL trial that you're going to start, is that going to be a randomized study with ADCETRIS plus standard of care? And then when you talk about 130 counts reinitiating orders, does that mean those are accounts that did not order last quarter, or are those just repeat order accounts? I'm a little confused.

Chris, can you take the second question, then I'll address the first question.

Yes, so Jason, those are accounts that had ordered previously, discontinued in the last quarter and reinitiated use. And when we probe into those accounts, the re-initiation is really a result of new patients that those accounts have identified.

Great, thanks.

On DLBCL, with the study we talked about is not randomized. It's a study looking primarily at the safety and efficacy, a combination of ADCETRIS plus R-CHOP. It's a Phase II trial, and we are excited to get those data.

And then with AETHERA, are you contemplating putting in like a high stringency interim analysis or just simply unblinding the trial early?

First and foremost with AETHERA, our goal is to maintain the integrity of the safety and efficacy evaluations from the trial. And please note that it's very important that we work with regulatory agencies to make sure that whatever we approach we take is acceptable. We also are working with Takeda Millennium to evaluate our options, and there are a number of possibilities.

One such option, Jason, and I'm not suggesting at this point that we are guaranteed to do this, but one concept is to amend the study, to perform primary analysis at an earlier time point, such as after all patients have completed their one-year post-treatment assessments which is the last pre-specified PET scan part of the protocol. And that's estimated to occur in the third quarter of 2014. But that's just a possibility to try to use prespecified scans in the protocol and say, once patients are all done with that, could that be a time where we achieve the integrity of the safety and efficacy evaluations? But that remains to be seen after working with our partners and working with agencies, both in US and in Europe.

Thank you.

Rachel McMinn, Bank of America Merrill Lynch.

Just following up on that question, I'm curious given the fact that the PFS is taking longer how -- why that wouldn't influence the PFS assumptions in the front-line studies. I know you had said 4 to 5 years for us to get the primary endpoint. Why couldn't that be more like 6 to 7 years?

When we started the AETHERA trial, please remember that we only had Phase I data and we powered that trial to the best of our ability with very limited information. And that's why that accrual for AETHERA is done now. We powered Phase I trials based on more information and a deeper understanding. So we think that the guidance that we are giving on our Phase III trials, front-line trials, front-line Phase III trials in HL and [NPCL], we feel confident with those, that those are the right guidance to give.

Certainly we'll have to continue watching those, but those were based on a lot more information that we knew than when we first set out on the AETHERA trial. And it was Phase I, we knew we had a drug that was active, and it was an exciting drug. It could help patients. What we didn't know until we got our Phase II data, the pivotal data that we used to get approval in both indications, was how efficacious it was, and it was very efficacious, as you know, from the data, and with very high response rates. But we did not have those information when we first designed AETHERA.

Okay. And so to go back than to AETHERA, just so I can get a sense of this, do you feel like this is more of kind of a judgment call from after sitting down with Millennium and figuring out what you guys want to do, or do you think the FDA -- while you have to go to the FDA and obviously get approval, is there any reason why they would come back and it's like say no? Because companies change statistical plans before unblinding, you know. Maybe not all the time, but certainly it's relatively common. So when you think about sort of like how things could play out, is it more from the discussion on partner, or more rely on FDA feedback?

I think both are important. I think that we have a very great, strong partnership with Takeda Millennium and we intend to keep that strong. And so it's really a discussion between the two companies as to what's best for the drug, what's best for patients, what's best for the doctors. So we are going to make sure that we tried to come up with the best plan to go forward.

And it's also important to meet with the regulatory agencies to make sure that we maintain the integrity and efficacy of the study. And we have two different regulatory agencies that we are very focused on working with, and that is US FDA and the EMA. So we want to make sure that all parties are satisfied with any plan we have. And that's why when Jason asked me the question of what are you thinking here, one possibility, and there are other possibilities, for sure. But one possibility is to say what is the last time that we would have a prespecified PET scan that was built into the study? And that's basically one-year post-treatments for all patients. And that's estimated to be the third quarter of '14.

So that's an example of something that I feel that one can go to regulators with as a real tangible data set to say okay, we'll have all these data plus we'll have PFS on as many patients as we can at that point. And maybe we haven't hit a prespecified number, but we'll have a substantive substantial amount of data on every single patient. And those are the kinds of things you want to bring forward so you can have really strong data ultimately, provided that the data come out in favor of ADCETRIS here and helping patients. We want to make sure we have great data here. And so those are the kinds of things we're trying to just ensure.

That's really helpful, thanks very much.

Adnan Butt, RBC Capital Markets.

Thanks for taking the question. The first question is on ADCETRIS usage. The Company in the past had talked about switching over to the incident model. So the first question, is that -- are those sales we're seeing pretty much incident sales at this point? And secondly, the second question is on the DLBCL studies. Is the front line study C30 positive only? And then for the prior DLBCL data that was presented at ASH, when can we expect an update on durability if there will be an update? Thanks.

Thanks, that was a bunch of things. As far as sales, yes. We had previously guided that we are largely in incident sales now, and that's not changed, I think that's where we are now, and that's a good thing. We really have a good handle on this. But I would focus on being incident.

As far as DLBCL you asked a few things; I want to make sure I captured all of them. In our front-line study, you asked about whether these were C30 positive patients, and the specifics of any trial that we do we don't discuss because protocols, until the trial starts, protocols can be moved around and we work with regulators, etc. So as soon as we get this protocol listed on clintrial.gov, I'll be happy to answer those type of questions, but right now it would be premature to answer questions about the protocol.

As far as durability goes, that's something that our intention is to present durability of responses in many different disease types. We have done that in the past and we'll continue to do that, whether it be in presentations at conferences like ASCO, at Lugano, the lymphoma contract conference, at ASH. We usually have a pretty big presence at ASH; that's a big conference for us. ASCO is usually a little lighter for us. And then about a week or two after ASCO, there's Lugano, and that's usually a good conference for us as well. So we had multiple opportunities to present on efficacy and durability of trials, and we intend to do so.

Thanks, Clay, I'll get back in line.

Howard Liang, Leerink Swann.

Thanks very much. Just a follow-up on AETHERA, the change or potential change of the primary analysis, I guess my question is, so if this has changed to some sort of a landmark-based (inaudible) something like one year after the collection of PET scans, how do you control the risk that there may not be enough events to have sufficient power for positive study?

And then sort of you talk about the events at the current rate could go into 2015. Are we talking about just going into 2015 or well beyond the beginning of 2015?

Good questions, Howard, well thought out. We don't know. The answer is we don't know. If we do a landmark analysis rather than a PFS endpoint analysis, that there would be enough power. It is uncertain. That's the risk that you take when you consider those type of things. And that's why we want to work very closely with our partner and the regulators, to make sure that we have as small of a risk while maintaining the integrity and safety of the trial -- evaluations of the trial. So that is something that is a little risky, but it's also, as you know, with trials, as they get longer and longer, past when you had guided for, there's also risk to just let them go as well. So there is risk to be balanced and risk to decide of what's best for the Company, what's best for our partner, what's best for patients. And we're very proud of the study that we have done. We're not -- we are not trying to make comments that the trial looks good or looks not good. We're giving you data on what we see and when we do analysis of the data and we see the endpoints going into 2015, certainly will present that on a quarterly call like we have.

We are not giving specific time points in '15 whether it's early, mid or late right now; I know you asked that. We just said going into '15. And we'll continue going into the future to update you on thoughts with AETHERA, and any interaction with the agency that changed this trial from a different -- from a PFS endpoint to a landmark endpoint we will be sure to keep you update it.

Could I just follow up to make sure I understand correctly -- there's no prespecified interim look so far?

That is correct, there's no prespecified interim look for efficacy. There certainly were quite a few prespecified interim looks for safety, and that happened many different times, and we have an IDMC. And they had looked at our safety throughout the whole trial and they have not recommended any changes to the study protocol, or safety evaluations. And they've always recommended over and over and over for the study to continue, and we have reported that.

Thanks very much.

Bret Holley, Guggenheim.

Thanks, thanks for taking the question. I hate to harp on AETHERA, but I guess I'd love for you to just expand a little bit on what I guess your key motivation for quicker results from the trial would be. I understand the commercial considerations, but I guess at the end of the day, how much time could you theoretically save if in fact the delay of events is due to essentially the trial heading towards positive results in 2015; why not just wait?

I guess part of that I'll try to answer, and part of it is kind of hard to answer. Clearly, we have over time at different time points reported the delay in AETHERA, so this is the first time we're reporting a delay in what we initially guided, and you probably know that, and you all probably know that. And as we look at something like this that has continued delays, it's hard to know what we will see in the future. Having a trial that has had many delays, and delays is something that is real here, but it's something we need to address and not leave the study lingering. We think that there is risk both ways. It's not just that there's no risk in letting it go, and it's important from a patient standpoint and a corporate standpoint to make sure that we provide data and evaluate our data in a reasonable timely fashion.

Right now, we're providing, we are saying extend into '15. If the date was a different date and continued to get longer, would you still ask the same question? And if I said no -- what if -- what if it went longer than that? And I can't predict the future and we don't know what will happen, but we wanted to vary be very clear on this call that this has extended substantively longer than we thought. We've announced that a couple of times, and we are considering other alternatives. We haven't said that we will definitively make a move in a certain regard. We want to work with our partner, Takeda Millennium and regulators on this before we do anything.

Okay, thanks a lot, Clay.

Allen Carr, Needham & Company.

Thanks for taking my questions. I wonder if you can comment on your efforts to -- you commented on this earlier -- efforts to encourage CD30 testing. How's that going? How does that fit into your marketing ADCETRIS? And I guess another element to that is -- what sort of impact does that have on awareness outside of HL and ALCL?

First of all, I want to note that in our current approvals in relapsed refractory HL and ALCL, there is no requirements for CD30 testing. So I want to first put that out there. So when you say we are encouraging people to test, that's not for our current label.

And now having said that, we certainly know that a lot of people screen for CD30, and certainly we can encourage CD30 screening as we go forward. There are a lot of other diseases that we can consider and encourage it for as doctors evaluate what treatment options there are, and CD30 we think could play an important role in the future, especially as we get more data in different disease settings. Chris, would you like to comment?

Yes, so the one area where we have put some focus is, as Clay mentioned, for HL it's certainly not a requirement for HL or ALCL, but we do know that about 20% of ALCL is misdiagnosed as PTCL-NOS. And so that is one area where we feel that we want to make sure that physicians are aware of CD30 testing, as that is one of the primary ways by which you can correctly diagnose ALCL. And so that's the main focus area that we have today.

And then beyond that, awareness of CD30 is potentially helpful in the future as we get additional data and potentially additional labels.

Great, thanks very much.

Navdeep Singh, Goldman Sachs.

Thanks for taking my question. I just want to clarify, if you were to modify the AETHERA trial, are you still looking at PFS at the one-year -- one-year post-treatment time point?

Yes, of course we would still be absolutely looking at PFS and reporting those data. It's just that if -- we have a prespecified number of PFS events, and if we are short of that and we think it's going to be a substantive amount of time to get to this PFS event, it may not make sense to continue waiting and waiting and waiting, and so we will have a -- most certainly, we'll have a substantive amount of PFS data. But it just might be short of the prespecified amount. And that's why we are looking for other opportunities so that it makes -- it can make sense of such as after the last PET scan that is prespecified in the trial.

So at this earlier time point, how confident are you that the PFS curves would be I guess differentiated enough at that point?

Because it's blinded, I have no knowledge of the specifics of this.

And I think you had mentioned you're also looking at other scenarios. Can you just walk us through the other scenarios you're thinking about?

Not at this point. I wanted to -- I hesitated to actually walk you through one, but I didn't want to leave everyone hanging and thought that it would not be good to say we have scenarios and not tell you anything. But I think this is an important discussion between Takeda Millennium and Seattle Genetics, and this is important work this out with regulators. So I just -- we put one in there just so that you know that we actually have thought about this and there is a tangible one at least to discuss. There are other tangible ones, but I don't think it's appropriate to discuss it at this point.

Okay, thanks.

Mara Goldstein, Cantor Fitzgerald.

Thanks very much for taking the question. I actually had a question on the supplemental for retreatment use and your I guess knowledge about or understanding of how much -- understanding of that data is already in the marketplace for retreatment, and if you're seeing any of that.

It's a fair question, so thank you for it. Certainly, our label allows for use up to 16 cycles. And so if a patient gets -- let's just say they get half that, eight cycles, and they go off drug and they want -- then the patient decides to go back on drug, it could still be thought of as within label to get more drug there, because it's within the 16 cycles. So if that's what you're referring to, yes that's out there. And Chris could comment in a moment on what his thoughts are there.

It is still very important to us to work with the agency to try to get our label changed to formalize that we can get retreatment. And in that regard, it can do a few things. One of them is then our reps can discuss it with doctors and talk about the data we have and present those information as (multiple speakers) label where the reps can't talk about now some of the data we have. It will allow patients that go on drug and then go off for a substantive period of time to come back on, which it is a little confusing, sometimes, to think about what is within label and how long -- like what if you were on eight cycles and offer a year? (multiple speakers) label. And so to have this as a formal label would clarify any questions that we think docs could have and enable us to talk about it, and be there for patients to support patients' needs. Our data is good. We have 70% retreatment re-response rate. This is very substantive, and so that we think it's important to get out there.

Do you think today there exists a unified thought in terms of what constitutes a continuation of treatment versus a retreatment?

There's probably not a fully unified thought, and I think getting a label could help out a lot. Chris, would you like to comment?

Yes, so just to address the awareness these, I think Clay has correctly characterized it. The data had been presented previously at conferences, scientific conferences, and I would say that the awareness of the retreatment data is fairly high among academic physicians. In the community setting, I would say the opposite is true. It's relatively low. That's one of the reasons it's important to get this on label so that we can promote to it and drive awareness of that.

I think retreatment becomes an important option, particularly for physicians who for reasons of patient preference or other reasons have decided to give a patient a drug holiday, knowing with confidence that he can bring the drug back at a later time. It's also important as Clay mentioned in order to take out any concerns about reimbursement on the retreatment side after you've gone beyond 16 cycles. So for those reasons we're looking forward to getting that in the label now or in the future.

And does your market research, if you don't mind me asking, does market research you're doing give you any sense of -- from those institutions that you're getting data from, how many are actually retreating versus just discontinuing treatment?

We do see some amount of retreatment. The numbers are relatively small, so I would be loath to provide any specific data. Obviously, we will be tracking that going forward as awareness of the data percolates. But we do see some physicians retreating, and that's particularly true of physicians who have decided to take a patient off to give them a drug holiday and coming back. And certainly, we know of anecdotes of patients who have been retreated multiple times. But the numbers are still relatively small.

That's another reason why we want to get this added to our label and get out there and really talk about it and raise the awareness that this can really benefit patients. It could be a big thing for us.

Okay, thank you.

At this time there are no further questions in queue. I'd like to turn the call back over to Peggy Pinkston for closing remarks.

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

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