Seagen Inc (SGEN) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Seattle Genetics first-quarter 2014 financial results call. (Operator Instructions). I would now like to turn the conference over to Peggy Pinkston, Senior Director of Corporate Communications. Please go ahead.

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seattle Genetics' first-quarter 2014 conference call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Eric Dobmeier, Chief Operating Officer; Jonathan Drachman, Chief Medical Officer and Executive Vice President, Research and Development; Chris Boerner, Executive 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 the factors that could affect the Company.

With that, I will turn the call over to Clay.

Thanks, Peg, and good afternoon, everyone. Thank you for joining us. I'm pleased to update you today on our progress thus far in 2014. We continue to deliver upon each of our top three priorities: building ADCETRIS into a major global brand; advancing our ADC product pipeline; and enhancing our leadership position in the field of ADCs. I would like to highlight some of our recent accomplishments.

First, we and our partner, Takeda, have made tremendous progress with global activities for ADCETRIS. In the US and Canada, we reported ADCETRIS net sales of $38.7 million for the first quarter of 2014 and are on track to achieve our guidance for the year. ADCETRIS is now commercially available in 40 countries worldwide and this year we have already achieved $20 million in milestones triggered by Takeda's commercial and regulatory activities.

Second, we continue to make strong progress with our pipeline, which includes five programs in Phase I clinical trials. We will present data from one of these trials, SGN-CD19A, in non-Hodgkin lymphoma, during an oral session at the upcoming ASCO annual meeting.

We also expect to report data from the SGN-CD33A Phase I clinical trial later this year.

In addition to these programs, our goal is to average two IND submissions per year, and we are on track for that during 2014.

The next ADC we expect to advance into clinic is SGN-CD70A. Beyond our five internal programs, there are also more than 15 ADCs in clinical development among our collaborators that continue to generate data and advance into later stages of development.

And third, we are continuing to conduct innovative research to build upon our leadership in the ADC field. At the recent AACR meeting, we presented data on enhanced linkers and other technology advances along with preclinical data supporting development of ADC programs using our technology.

Our ADCETRIS label expansion and lifecycle management strategy is focused on evaluating its potential in earlier lines of its approved indications and in other CD30-positive malignancies. We are currently conducting four Phase III trials. We look forward to reporting data from the first of these later this year. Specifically, we plan to unblind and report data from AETHERA in the second half of 2014 after all patients have completed their one-year post-treatment scan.

The AETHERA trial is evaluating whether ADCETRIS can extend progression-free survival, or PFS, in a consolidation or maintenance-type setting for Hodgkin lymphoma patients at high risk of relapse following autologous transplants. This study fulfills an FDA post-approval safety requirement, although it is not designated as a confirmatory trial and is not being conducted under a Special Protocol Assessment. If the data are positive, we intend to submit a supplemental BLA in the first half of 2015.

After AETHERA, the next Phase III trial from which we anticipate data is ALCANZA, designed to support registration in relapsed CD30 positive cutaneous T-cell lymphoma. The primary endpoint is objective response rate with duration of at least four months. Currently approved systemic therapies in CTCL have response rates of 30% to 35%.

Data from investigator-sponsored trials with ADCETRIS in CTCL have been significantly better than these historical data. Enrollment is ongoing to the ALCANZA study and our goal is to report data in 2015.

And finally, our Phase III ECHELON-1 and ECHELON-2 clinical trials are designed to potentially redefine front-line therapy for Hodgkin lymphoma and mature T-cell lymphomas, respectively. These studies continue to enroll on a global basis and have a primary endpoint of PFS.

The Phase III ECHELON trials are based on strong Phase I data evaluating the addition of ADCETRIS to components of standard frontline chemotherapy regimens. As patients continue to be followed from these Phase I trials, as well as our pivotal trials, we are observing encouraging trends in PFS.

For example, in the Phase I ADCETRIS plus CHP trial for front-line MTCL, we reported a 71% one-year PFS rate at ASH in December, and we still had not reached median PFS after a follow-up of almost 2 years. Considering these evolving Phase I data and the slower-than-anticipated PFS events in our Phase III AETHERA trial, we and Takeda are evaluating the potential that event rates may be slower than expected in both ECHELON trials. Our review is not based on any actual data from the ECHELON trials as they are blinded to us, but rather our positive experience with the efficacy and tolerability of ADCETRIS when combined with chemotherapy in multiple settings.

Our discussions with Takeda are ongoing and we would then plan to work with the appropriate regulatory agencies on any proposed trial modifications. We will keep you updated in future calls.

At this point, I would like to turn the call over to Chris Boerner, who will talk about our ADCETRIS commercial efforts. Then Todd Simpson will discuss our first-quarter financial results. After Todd, Jonathan Drachman will cover some additional ADCETRIS clinical development highlights and updates from our product pipeline and ADC technology. Then we will open the line for questions. Chris.

Thanks, Clay. ADCETRIS net sales in the first quarter were $38.7 million, which represents a modest increase over Q4. The underlying dynamics of the US business remain favorable for ADCETRIS. Our primary objectives continue to be ensuring that ADCETRIS stays the standard of care in our current indications and that patients are treated consistent with our label.

To that end, the team is focused on reminding customers about the impressive clinical data seen in our pivotal studies and working to ensure patients (inaudible) to progression or unacceptable toxicity.

In addition, we have become commercial planning efforts to support a potential 2015 US label expansion associated with the AETHERA study, which as Clay noted, will read out later in the latter half of this year.

In Canada the majority of key Canadian provinces have now implemented funding for ADCETRIS. We remain in discussions with Quebec, which has its own unique coverage and funding process. We expect to complete this process later this year.

In the meantime, patients are accessing ADCETRIS in Quebec through local case-by-case funding decisions.

Overall, the commercial team continues to execute well. Customer interest in and support for ADCETRIS remains strong, and we continue to expect net sales in 2014 to be in the range of $155 million to $165 million. Now I would like to turn the call over to Todd.

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

Our financial results in the first quarter of 2014 were in line with guidance and we ended the quarter in a strong financial position with more than $355 million in cash and investments. We are well positioned to continue investing in our ADCETRIS program and in advancing our robust product pipeline in ADC technology initiatives.

Total revenues were $68.3 million for the first quarter of 2014, which included ADCETRIS net sales of $38.7 million. We also reported royalty revenues of $12.7 million in the first quarter, reflecting strong progress by Takeda with launches in its territory.

Because we report royalties one quarter in arrears, our first-quarter royalties reflect sales activity by Takeda in the fourth quarter of last year. Our first-quarter royalties include a $5 million sales milestone triggered by Takeda surpassing $100 million in ADCETRIS net sales in 2013.

Exceeding $100 million in annual sales also resulted in an increase in the royalty rate we received from Takeda from the mid-teens to the high-teens. Both of these factors led to increased royalties for the quarter.

Collaboration revenues totaled $16.9 million in the first quarter of 2014, which included the earned portion of milestone and reimbursement payments.

R&D expenses were $54.5 million in the first quarter of 2014 compared to $47.7 million in the first quarter of last year. The year-over-year increase reflects ADCETRIS clinical development activities and continued investment in our five other clinical-stage ADCs and our preclinical pipeline.

SG&A expenses were up modestly year over year, primarily attributable to increased staffing levels. Noncash share-based compensation cost for the first quarter of 2014 was $9.3 million compared to $6.6 million in 2013.

So in summary, we had a strong first quarter and expect to be within our guidance for the year. Our collaborators also continued to make significant progress, achieving milestone events so far this year that have triggered nearly $30 million in cash payments to us.

With that, I will now turn the call over to Jonathan.

Thanks, Todd. I am pleased to update you today on our clinical and research activities. Our efforts are focused on fully defining the potential of ADCETRIS to help patients; on developing future meaningful therapies from our pipeline programs; and on bringing innovative, new technologies and programs into clinical testing as rapidly as possible.

I will start today with ADCETRIS, which we are evaluating across a broad array of malignancies. Beyond the Phase III updates that Clay provided, I want to highlight some compelling data reported in February at the Bone Marrow Transplant Tandem Meetings from an ongoing Phase I/II clinical trial combining ADCETRIS and Bendamustine for the treatment of second line Hodgkin lymphoma. The data from this trial are promising, showing a complete remission rate of 77% with another 15% of patients who are still on treatment achieving early partial remissions.

The trial has been amended to add routine pre-medications to address infusion reactions and no dose-limiting toxicities of the combination have been observed. These data are another example of the progress we're making towards our goal of moving ADCETRIS into earlier lines of Hodgkin lymphoma therapy.

We also continue to evaluate ADCETRIS in diffuse large B-cell lymphoma, or DLBCL. We are conducting a single-agent Phase II trial in relapse DLBCL. We previously reported encouraging activity and tolerability in advanced stage patients who expressed CD30 by traditional methods. Enrollment is ongoing in patients whose tumors do not express detectable CD30 using standard immunohistochemistry methods.

We have also added an arm to the Phase II trial to assess the activity and safety of the combination of ADCETRIS plus Rituxan in relapse DLBCL. And in front-line DLBCL, we're conducting a Phase II trial to evaluate ADCETRIS plus R-CHOP. We plan to report data from these studies later in 2014, and these evolving data will inform our future plans for ADCETRIS in DLBCL.

Another important therapeutic area of investigation with ADCETRIS is peripheral T-cell lymphoma. ADCETRIS was recently added to compendia for relapsed CD30-positive PTCL following its inclusion late in 2013 in NCCN guidelines.

We also plan to report data this year from some of our pipeline programs. Notably, we will have an oral presentation on our SGN-CD19A Phase I trial in non-Hodgkin lymphoma at ASCO. As a reminder, this is an anti-CD19ADC that is in two Phase I trials, one for acute lymphoblastic leukemia and one for aggressive B-cell non-Hodgkin lymphoma. Patient enrollment and dose refinement are ongoing in both Phase I studies.

Later in 2014, we expect to report data from SGN-CD33A, a CD33 targeted ADC that is currently in a Phase I trial for acute myeloid leukemia. AML represents a significant unmet medical need. This is the first clinical trial of an ADC that utilizes our proprietary, highly potent, cell-killing agent of PBD-dimer and our site-specific conjugation technology. Accrual to this trial is strong, and we're continuing dose escalation.

Our third wholly-owned ADC in early clinical trials is SGN-LIV1A. This ADC is targeted to LIV1, which is expressed on more than 90% of breast cancers. SGN-LIV1A is an auristatin-based ADC that uses the same drug linker as ADCETRIS. Our ongoing Phase I trial is for patients with multiple subtypes of metastatic breast cancer for which there are currently no curative therapies.

We remain on track to submit INDs for two additional programs during 2014, including SGN-CD70A, an ADC targeted to CD70 that utilizes the same PBD-based ADC technology as SGN-CD33A.

The potential of our technology is underscored by the progress of our collaborators through clinical data, trial initiations, and milestones. Of the roughly 30 ADCs in clinical development, more than 20 utilize our technology. This reflects more than 16 years of research that we have invested in this field and the substantial expertise of our team.

Some recent highlights include Genentech Roche reporting interim data at AACR from their anti-endothelium B receptor ADC for melanoma. Genentech also has an anti-CD79B ADC in late-stage development for lymphoma.

Celldex initiated a pivotal trial with its GPNMB ADC for breast cancer.

AbbVie initiated a Phase I trial with a second ADC for cancer.

Bayer submitted an IND for an ADC using our technology.

And multiple collaborators reported preclinical data at AACR, including GSK, Takeda, Agensys, Bayer, Pfizer, Celldex, Progenics, and Genentech.

As the leader in developing ADC technology, we along with our many collaborators are at the forefront of changing the way cancer is treated. We're very pleased by the work and innovation taking place within our research group to ensure that we remain the leader in the field of ADCs. The site-specific conjugation technology and potent PBD payloads utilized in SGN-CD33A and SGN-CD70A are examples of this commitment to innovation.

And some of the ongoing advances we are making were apparent at the recent AACR annual meeting, where more than 15 abstracts were presented, highlighting data with our ADC technology. We describe novel auristatin-based drug linkers that lead to enhanced potency, greater stability, and uniform drug-loading technologies that could be applied to future ADC candidates.

Our translational research is helping us design potentially better drugs for tomorrow while testing the state-of-the-art in clinic today.

At this point, I will turn the call back over to Clay.

Thanks, Jonathan. Before we open the call to questions, I'd like to summarize our key upcoming milestones.

Reporting data from multiple ADCETRIS clinical trials, notably the Phase III AETHERA trial in the second half of the year; reporting Phase I data from SGN-CD19A in non-Hodgkin lymphoma in an oral presentation at ASCO; several ADC collaborator presentations are planned for ASCO, including from Genentech, AbbVie, Takeda, and Progenics; reporting data from our SGN-CD33A trial in AML later this year; advancing two new programs into clinical development, including SGN-CD70A; and in collaboration with Takeda, obtaining approvals for ADCETRIS in additional countries worldwide.

The first quarter of 2014 was strong operationally and financially for Seattle Genetics. We are continuing to deliver on our ADCETRIS commercial and clinical development goals, advancing our pipeline toward identifying future product opportunities, and leading the field of ADCs.

At this point, we will open the line for Q&A. Operator, please open the call for questions.

(Operator Instructions). Matt Roden, UBS.

First question I guess is on AETHERA. Jonathan, or Clay, can you talk about what you think the minimum benefit would be on one-year PFS in AETHERA that would be clinically and statistically significant to where it would not be controversial that you could file the sNDA and see utilization in the clinic? And then I have a follow-up.

Matt, we're not going to lay out a specific number that we think would be beneficial. And looking at curves there's always a lot of different data that comes on curves in these types of studies, looking at the one-year time, but also looking at longer time points and the tail of a curve. So there's a lot of data there and anything specific is something that will be between us and the regulators.

You had a follow-up question?

Yes, I did. When you look at the ASCO titles that are out I was a little bit intrigued by I think it's a IST abstract 8507, pilot Phase II study of ADCETRIS followed by ABVD in patients with previously untreated Hodgkin's.

I was just wondering to start with ADCETRIS upfront and then followed by ABVD in the front line, does this work into your clinical development or commercial plans? Should we be thinking about that as a potential path forward?

Matt, we do a lot of different investigator-sponsored trials and they are very, very interesting and informative. At the present time, I would not include that in a model.

Now having said that, if data are very exciting in any of our ISTs we absolutely reserve the right to consider following them up and doing some potential registrational work and things like that. But for now, where this is I think it would be too premature to put it in any models.

Jonathan, would you like to comment on any of this?

Well, I would say that based on our Phase I trial, we are very pleased with the ADCETRIS plus AVD combination that we have taken forward into ECHELON-1. And we like the fact that not only is it including the most potent single agents that I know of that has ever been studied in Hodgkin's lymphoma, but also removing bleomycin, which has the potential for pulmonary toxicity. So we're excited about that.

We're also excited to see that physicians are interested in continuing to use ADCETRIS in different ways and seeing how new data evolves is also of interest to us.

Thanks very much.

Cory Kasimov, JPMorgan.

This is actually Britney on for Cory; I actually have two. First, what is your take on the competitive landscape for CD19 targeted compounds, and in particular, Sanofi's ADC and Novartis' CART?

And then also, curious what the level of investigator interest is at this point for SGN-CD33A, given unmet medical needs. Thanks.

I'm sorry (technical difficulty) again?

The second one is just a level of investigator interest in SGN-CD33A.

Okay. Thank you, I'm trying to write-down your stuff pretty quickly here.

Okay, first one, the competitive landscape, Britney; with CD19, our CD19 program, SGN-CD19A, it is a competitive area. NHL and ALL are the two areas we have been studying, and those are competitive areas, especially NHL. And Sanofi, Novartis with the CARTs, Juno, many other groups are working on different molecules. There is also molecules that Genentech is working on using our technology. There is ibrutinib, which is approved in certain lymphomas but being tested in others.

So there's quite a few molecules. So I think your point is how does what we have fit into that. And that is exactly what we look at and we talk about internally all the time. We try to make sure that our drugs are not only effective for patients and have good safety profile and can be used, but how competitive they are in the landscape and would docs use them, and would they benefit patients in a way and are they differentiated from other folks' drugs.

So I don't want to tell you specifically how ours compare, because that is internal information, but the question you are asking is a very good one, and we discuss it internally a lot.

And your second question on investigator interest in 33A, the accrual has been very strong with that product. AML is a devastating disease and we really needs some more therapies. We think CD33 is a great target. We love that we're using our newest technology, our newest payload, an engineered cystine antibody, this is really the newest and next generation of ADCs in the world. And we think that the preclinical data was very special, and we're excited to be in clinic and investing in this program to see if we could help AML patients. And we very much look forward to presenting data at the end of the year.

As far as investigator interest, there is substantial.

Jonathan, would you like to make comments on either of the two questions?

Sure. So one thing, Britney, I would say is all the competition in the field of lymphoma is something that we keep a very close eye on, but it's nice to know that CD19 is such a promising and exciting target. It is one that we have been interested in, in quite a while and continue to feel that that is a great way to address B-cell malignancies.

As far as CD33 goes, as Clay said, AML, it's just such a horrible disease and there are so few good options for these patients that it is a tremendous need and excitement to physicians.

Great. Thank you.

Jason Kantor, Credit Suisse.

Congratulations on another great quarter. Just wondering can you talk a little bit about the possible changes to the protocol that you are talking about for the Phase III trials? I guess, what has changed in your view? These trials were not started that long ago and you knew you had an active compound at the time. Is something really demonstrably different at this point? And then what are some of the variables you might look to change? Is it lowering the patient number or the type of analysis that you would consider doing in the ECHELON trials? And then also if you can just comment on how enrollment is actually going in those studies? Can you give us any kind of numbers or percent completion or anything like that?

Sure. Thanks for the question, Jason.

Okay, here's what is going on. First of all, ADCETRIS is really a great drug and it's helping a lot of people. And the data is great. ADCETRIS -- with ADCETRIS in many different clinical trials -- and I will ask Jonathan to comment on them in a little while -- ADCETRIS is an important drug. Docs are employing this drug. It is really helping patients.

And we designed the ECHELON trials based on preliminary response rates that we had at the time. And the Phase I front-line trials were still ongoing, and we had yet to combine ADCETRIS with other agents. Since then, we have seen increasing evidence of the positive activity of ADCETRIS in combination with multiple types of chemotherapies and encouraging trends in PFS. And that makes us think that it is important to factor in these positive emerging data as well as that we know we have slower-than-expected progression events in AETHERA and we have reported that multiple times in quarterly calls.

So we think about all these when we think about our event rate assumptions for the ECHELON trials. So we are in ongoing discussions with our partner, Takeda. It is too early to provide specifics. I appreciate you asking questions on the variables and patient numbers and analysis and all that stuff, but it's just too early to.

But we wanted to be very transparent. We think that with AETHERA, we tried to be quarter after quarter very transparent about what we were thinking; that they might need to be changes because of the slow PFS rate. We then said we were going to speak with our partner. We then said we were going to speak with the regulatory agencies. We did all that. We wanted to give a little foreshadowing and be transparent saying, we're looking at E-1 and E-2, as we call ECHELON-1 and 2, E-1 and E-2, and we're looking at them very closely, working with our partner. And in the future, potentially, regulatory agencies and we just want to let you know that we're thinking about it and we're trying to do what is best for the Company, the drug, and for our patients.

Okay, and I will just add a little bit, Jason. So first of all as you know, we are blinded to any data from ECHELON-1 or ECHELON-2, so nothing that we are talking about has anything to do with efficacy data or any emerging data from those trials. It's really based on the lead-in Phase I trial.

I will also just mention that we're not going to comment on enrollment or how that is going, but investigators are enthusiastic about trying to conduct trials that can potentially change and redefine front-line therapy for these CD30-positive diseases.

When we designed the trials, as Clay mentioned, we really had just preliminary response rates and even our pivotal Phase II trials that led to accelerated approval, we had pretty limited duration of follow up. So at ASH, as you may recall, we presented data on the three-year follow-up for the Hodgkin lymphoma trial showing that our median overall survival was greater than three years, whereas historical would be about 1.3 years. And in the ALCL trial in the relapsed refractory setting, we haven't reached median survival after over three years of follow-up, and that is really unprecedented. The median is closer to five to six months based on historical data.

Then the ECHELON-2 trial for MTCL is based on the ADCETRIS plus CHP data. As you will recall, we had 100% response rate. And we presented data -- as Clay mentioned earlier, 71% of patients had not progressed after a year and we still hadn't reached the median PFS after almost 2 years of follow-up. So these are also emerging data that we didn't have.

And finally the ADCETRIS plus AVD trial, where we had a 96% CR rate among the patients in the Phase I trial. If you look at The Lancet oncology manuscript in December of last year, you will see we had very limited follow-up but extremely few patient progression. 95% of the patients in the A-plus-AVD arm had not progressed at the time that that manuscript was written.

So based on all these data which have come and continued to emerge since those trials have started, we think it's important to look at it and to see if our original assumptions need to be re-examined.

Is there an interim analysis built into E-1 or E-2, and if not, is that something that you could consider adding?

There isn't currently interim analyses, and we are not prepared to comment on the different things that could be done with it. The trial, those are negotiations that we are beginning and will be ongoing for a while with our partner, Takeda and with regulatory agencies.

Okay, thanks.

Adnan Butt, RBC Capital Markets.

For the anti-CD19, should we expect NHL alone or is it both ALL and NHL at ASCO? What should we expect data-wise? Has MTD been reached?

And then secondly, Clay, just a higher-level question, I think you mentioned two INDs per year; is that ADCs only? Is that something beyond ADCs and is that proprietary or partnered, combined? And what gives you confidence the pipeline can be as productive as that?

Thanks for all the questions. First of all, the presentation at this year's ASCO is just NHL. It is not an ALL presentation on the CD19A. So that is a straightforward question.

There will be a substantive amount of data in the presentation, and I think that we will let the presentation go for itself and not start talking about specifics of data and MTDs and any of these things. We will wait for the presentation. I think that is appropriate.

As far as the two INDs per year, those don't count the partnered technology. When we say two INDs per year, we are referring to internal programs that either are fully owned by Seattle Genetics or at least half owned by Seattle Genetics if we did a co-development. We are not counting anything where they are out-licensed technologies. If we were counting that it would be a much bigger number year in and year out.

But like for instance, last year, we did more than two. In 2013 we did I think four totally. In 2014 what we're doing is we are guiding to -- that we would do two and we would look beyond. I think you will see some years we will do two; there may be an occasional year where we get three in there. But our pipeline is full. The cabinets where our pipeline sits has a lot of different exciting drugs in it.

And the last thing that you mentioned was is it only ADCs -- no. It is not only ADCs. And in fact, we have some very interesting non-ADCs that have come through our development pipeline and through our research that we would consider working on in the future.

But having said that, you will still see that ADCs dominate our landscape going forward.

So exactly what are these non-ADCs?

Sorry, what are these ADCs?

What are these non-ADCs, yes.

You will find out. For competitive reasons we don't want to state too much of exactly what we're doing. There are quite a few companies that keep a very close eye on what goes on at Seattle Genetics. And they want to know what we're doing.

You may recall even with SGN-CD33A, we had been working on that program for six years; the first time you heard about it was about four or five months before the IND started or filed. And then we put information at the clinicaltrials.gov.

So we try to really -- to hold our programs as close as we can. You now know that the SGN-CD70A is our next IND; we have outlined that. But we have not even outlined what the second one would be in 2014.

You will hear about that in upcoming days.

Okay, I will get back in line. Thanks.

Thomas Wei, Jefferies.

Just on the ECHELON-1 and 2 changes, should I be thinking of it becoming something like a landmark PFS analysis? Is that what you were thinking of? Like switching the endpoint to a responder analysis of the proportion that gets to one-year -- what the on-year PFS rate is or the three-year PFS rate is, kind of similar to what you did with the AETHERA trial?

And then my second question on AETHERA was just a reminder again -- there were a lot of concerns that had been raised at the FDA panel on the design of AETHERA, which led them to say that it could not be the confirmatory study for approval. Can you just remind us what those concerns were and how we should think about that as the AETHERA date approaches here. Thanks.

Yes, first of all, you asked a question about the ECHELON-1, ECHELON-2 trials and what kind of potential changes; I use that word potential, because this is with discussions with our partner, with regulatory people, so nothing can be written into anything that we are either contemplating now.

But your comment, could it be a landmark analysis, instead of an event-driven analysis like such as what we did with AETHERA, that is one of the options. When we look at all the different options, that certainly is not one we're throwing off the table. But I don't want to guide you that that will be it yet. We're still in discussions and contemplating all of the information before any specifics will be made. But I do appreciate your comment and that is certainly one of the multiple of things that could happen.

As far as AETHERA, you do remember correctly there were some issues that the FDA brought up to not make it a confirmatory trial; that it would be something that they wanted for the safety database for certain, so that is written in there. But as far as confirmatory, it was not.

And I think there was a lot of different discussions up and down on AETHERA. It is our assessment that when we complete this trial if the data are good and that is what we certainly are hoping for, and they are good, our intention is to submit this. And we believe that if the data are strong and we submit it, that it will be a review decision by the agency.

Jonathan, do you want to comment on any of the specifics that the FDA might have had any questions with?

Well, I think that the main issue that they wanted to have some more comfort with was the heterogeneity of the patient population. And that is something that we are aware of and we will look at when we have unblinded data to evaluate.

Mr. Wei, are you still there?

Yes. So just to follow up on that, so the heterogeneity of the patient population, they were just concerned that a particular subgroup might drive the overall data, so if you just see a good benefit across the entire population in AETHERA, that would address their concern? Is that the way I should think about it?

I think that is potentially one way to look at that. There are some patients in the subset that are going to be worse off and have more risk factors than other patients. And so I think if the data looks strong across different patient types, I think it will speak loudly. So I think you are correct.

All right, thank you.

Navdeep Singh.

This is Lisa in for Navdeep. So with KOLs that you have consulted, what absolute improvement in relapse rate does ADCETRIS plus AVD need to show over ABVD to be viewed as clinically meaningful?

That is something that we have had quite a lot of discussion with KOLs and a lot of internal discussion, but that's not something that we have publicly discussed, a specific number, so there is a line in the sand.

I think that whenever you are speaking with KOLs and you are speaking internally, it's not necessarily the identical thoughts that any regulatory bodies would have. So until you really get an exact feedback -- until you get exact feedback from regulators, you don't know.

And the other thing that is really important is also looking at the safety. And the safety is something that by taking out bleomycin, we're looking to get rid of the pulmonary toxicity.

So I think it's not just an efficacy line. But I have to say that we believe that it has to not only be just safer; that there has to be an efficacy advantage for doctors to want to use this.

So what we are looking for is a regimen that can redefine front-line Hodgkin lymphoma and decrease the pulmonary toxicity that is debilitating in certain patients, especially because Hodgkin lymphoma is treated in a lot of young people. And we want to get rid of that, and increasing the efficacy.

So is that more maybe say like a 10% improvement, or a 30%? Is there any more greater detail you can give there?

We're not prepared to give a specific number. That is something that is an internal number.

Okay. And then just a follow-up, given the recent increase in scrutiny of drug pricing including oncology drugs, how much more pricing power do you believe you have with ADCETRIS in the US?

Well, I think there has been a lot of scrutiny on drug pricing and that's certainly not going away, and that is going to stay here. And I think that ADCETRIS is a real value proposition. That is something that -- it helps patients -- it helps a very high proportion of patients. And so we have really had incredibly little pushback from insurance companies.

And maybe Chris Boerner wants to comment this. But I would say that when you look to the future, drugs that have very incremental benefit, not like ADCETRIS, but ones with incremental benefit and ones where you can't even tell what patient to use and it works on 20% of people and you have to treat 100%, and with incremental benefit it is going to be very hard for them to get premium price.

So you needed drug that has the attributes of ADCETRIS; that works on a high preponderance of patients and you could tell which patients to go after. And it is an out-patient therapy and it really benefits people. And I think those are the drugs that will continue to have strong ability to price because of their value. Chris.

Yes, I think Clay has hit on all the key points. We have really seen very little pushback in on-label use of ADCETRIS from payers. There has been really no concern about price in the US with respect to this drug on label.

And I think Clay is absolutely right: as long as ADCETRIS continues to have a meaningful impact on patients in whatever setting we believe that the price of ADCETRIS will be, will be appropriate and that we will continue to have a very strong reimbursement climate for the drug.

Okay, thanks. And last question, how many interim safety checks has ECHELON-1 cleared? Thanks.

We don't provide that information. We certainly have a DSMB, but we are not providing that information.

Okay, thank you.

Gena Wang, Leerink Partners.

Actually, I am dialing for Howard Liang. So I have two questions. The first one, when will we see the LIV-1 ADC data? Could you give us an update on the progress?

And the second question is for the Roche, the CD22 and the CD79b data will be presented at ASCO. Wondered if there will be a milestone if Roche advanced one of them to Phase III.

So as far as the LIV-1 ADC goes, that trial is ongoing and it is accruing, and we will present it at the appropriate time when we feel we have an important dataset to present. And I don't want to be specific as to timing right now. It's not going to be presented at ASCO this year, I could tell you that. And I could also tell you that it's not going to be presented at ASH because it's not appropriate for ASH. It is in breast cancer, so it is not a hematologic malignancy. So you won't see it at those conferences.

Now, there are other conferences in 2014 as well as 2015 that we will reserve the right to present it at the appropriate conferences.

As far as the Roche questions, Eric, would you take that?

Yes. Yes, there is a Phase III milestone. I think in all of our ADC deals, there are Phase III milestones, so you would expect that when and if they move it to Phase III.

Thank you.

Mara Goldstein.

I'm not sure if it is premature to ask the question, but with respect to any modifications around ECHELON, how should we think about that in terms of any change in the statistical package for the review of that trial?

Yes, I appreciate the question, Mara. It is too premature to really comment on any of that.

Okay. And then if I could just ask one unrelated question, and that is on ADCETRIS outside the US. Wondering if maybe you could provide us with a little bit of color in terms of what treatment or rather what treatment looks like as it relates to what we see in the US versus territories outside the US now that you are getting royalties and they are building in ex-US territories?

Yes. I think outside the US, treatment paradigms are not that different. Doctors are really employing this.

I could tell you that I was just outside the US and speaking with doctors with our partner -- Takeda had an event. And I was outside the US and speaking the doctors that are very interested and very excited about ADCETRIS and have used ADCETRIS to treat patients.

You know, everywhere in the -- all different territories. Sometimes it is different territorial ways that people use things here and there that are slightly different, but in general, treating in relapsed refractory patients around the globe, ADCETRIS has been a tremendous drug. It helped a huge number of patients. And I hear stories in the US. But now I'm starting to hear some of these amazing stories from doctors internationally.

And it is really why I come to work every day is to make a difference in patients' lives.

So I think, generally, we're seeing pretty similar use.

And would you say or characterize your duration of treatment as consistent with what the rollout was in the US?

That is a tougher question. That is really a question that Takeda monitors outside the US. We monitor in US and Canada. So I don't really have a firm answer for you yet.

But I think it's also hard because as each country comes on board those numbers -- they may change. And so I don't know even how to answer that, but I appreciate your question.

Thank you.

Steve Byrne.

I was wondering if -- I know you are blinded to E-1 and E-2, but are you looking at overall event rate data? And does that support your concern about a lower than expected event rate?

At this point, we're not looking at any -- we don't have any data on the overall event rate. We're still accruing and that is where it is now.

It is really based on the compilation of things that I in Jonathan outlined -- all the data that we have on ADCETRIS in combinations; all of the Phase I data that were the lead-in trials for our Phase III E-1 and E-2 trials, which we now have the luxury of having a couple years' worth of data on them, so we can really understand what is going on in those trials; and how excited we are with the data of ADCETRIS in combination with chemotherapy.

So it is really a compilation of things that we're looking at. And then there is AETHERA, which is really long with the event.

So Jonathan, would you like to add anything?

Yes, I will just confirm what Clay said. Now, this is not based on any data from E-1 or E-2 -- not blinded, not unblinded, nothing. And that is in contrast to the AETHERA trial where we did see a decreasing rate of events. And that led to the decision of how we modified it.

Okay, I appreciate that. Then just with respect to the potential for ADCETRIS in low-expressed CD30 tumors or non-amplified CD30, do you have preclinical data that supports that?

And taking it the next step, for your more potent cytotoxins on your ADCs, do you think there's greater potential for those to be efficacious in low expression antigen tumors?

You know, I think that is actually a good question. I mean we have a lot of data and mounting data on what we call high expression and then undetectable by histology, by standard histology. But then when we start looking at it with other, more modern techniques, we can really see CD30; and we've reported this at various conferences and on conference calls.

So we're learning more and more about what the responses are with higher expression and lower expression. In fact, we have an arm in our DLBCL trial with ADCETRIS, which has an arm which is below standard histology that we call undetectable by standard histology.

So we are treating there. And we have previously talked about data and presented data in CTCL at these low CD30 amounts.

So I think that that is a gathering -- we are gathering information there. We are excited with the potential to treat a broader swath of people in diseases where there is variable expression profile. Some diseases like ALCL, we see it in almost every patient, so it is not an issue, but in some diseases you see variable high and low, and we are trying to really figure this out. And I am excited with the progress we have made there and with how things are looking.

You asked another question on whether -- if we use more potent cytotoxins. Like the PDB-dimers, could we potentially treat patients that have even lower expression profile?

And I think the answer is, potentially, yes. We have to prove it. But Jonathan, would you like to comment on either of the two questions?

Sure. Yes, so based on preclinical data we do have reasons to expect that ADCETRIS could work where you have low CD30 expression. We presented some data at AACR showing that we can get localization of ADCETRIS to tumors in xenografts that express low CD30. And we also showed that in heterogeneous tumors it can be active. So that is also an issue when you look at a tumor biopsy, whether that reflects all of the tumor or just a small area within it.

And then, yes, that is a good question about the higher potency payloads. They could be active when you have a low antigen number, and that's something that we're excited about and actively looking at.

Thank you.

Jason Kantor, Credit Suisse.

I was just wondering if we could get a little bit more clarification on the ECHELON-1 -2 issue. Would you consider changing the design of the statistical plan before seeing the AETHERA readout? It would seem like you made this change with AETHERA and you're waiting on that data. Would it be wise to wait to see how that works out before implementing any kind of change here for E-1 and E-2?

Jason, thank you very much for the question. It's a logical question you are asking. We're not going to give you a straight answer of whether or not we are going to consider AETHERA's data, which will be in the second half of this year, or not, in moving forward. That is not something that I think is appropriate for us to discuss.

We are working with a partner. We then work with regulators. So really giving you that -- speculating on it right now is premature.

Certainly, we are excited to get the AETHERA data later this year; there is no question about that. But I do appreciate your logical question, but it is one that we can't comment on right now.

Thank you.

And I see no more questions at this time. We would like to turn the call back over to management for any closing remarks.

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