Seagen Inc (SGEN) 2015 Q3 法說會逐字稿

Good day, everyone, and welcome to the Seattle Genetics third-quarter 2015 financial results. (Operator Instructions) Please note this call may be recorded. It is now my pleasure to turn today's program over to Peggy Pinkston, Executive Director of Corporate Communication. Please go ahead.

Thank you, operator and good afternoon, everyone. I'd like to welcome all of you to Seattle Genetics third-quarter 2015 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; and Darren Cline, Senior Vice President - Commercial.

Following our prepared remarks today we will open the lines 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 regarding future events or the future financial and operating performance of the Company. Such forward-looking statements are only predictions based on current expectations, and actual results may vary materially from those projections. Please refer to the documents that we file from time to time with the SEC -- specifically, the Company's current report on Form 8-K filed on September 9, 2015 for information concerning the risk factors that could cause actual results to differ materially from those contained in our forward-looking statements. At this point I will turn the call over to Clay.

Thanks, Peg and good afternoon, everyone. Thank you for joining us today.

We've achieved several key milestones over the past few months and are pleased to have delivered on many important goals. We reported record ADCETRIS net sales in the US and Canada for the third quarter and year to date; up more than 20% compared to the same periods last year. Based on these results we are increasing our total 2015 guidance for ADCETRIS net sales in the USA and Canada to a range of $218 million to $223 million, up from our prior range of $210 million to $220 million.

In September we completed a successful public offering raising net proceeds of $527 million. With a total of $736 million in cash and investments at the end of the third quarter, the financing positions us strongly to continue investing in our promising programs.

We have also recently announced several ADCETRIS clinical and regulatory accomplishments that support our goal of establishing it as the foundation of care for CD30-expressing lymphomas. First, in August, we received FDA approval for the treatment of patients with classical Hodgkin's lymphoma at high risk of relapse or progression as post autologous transplant consolidation. This is our third indication for ADCETRIS and is based on positive data from the AETHERA Phase III clinical trial.

Additionally the FDA converted our prior accelerated approval in relapsed Hodgkin's lymphoma to regular approval. There are no post-marketing requirements for the new indication.

Second, we completed enrollment in our randomized Phase III ALCANZA clinical trial for patients with CD30-expressing cutaneous T-cell lymphoma who have received prior systemic therapy. We expect to report data from this trial in the second half of 2016.

Third, we achieved target enrollment in our Phase III ECHELON-1 clinical trial in frontline Hodgkin's lymphoma. Approximately 1,300 patients have been enrolled. The trial will remain open at select sites while Takeda completes enrollment of approximately 20 additional patients to fulfill an ex-US regulatory commitment related to pharmaco kinase. Takeda's recruitment of these additional patients will not impact our timeline and we continue to expect data from the trial in the 2017 to 2018 timeframe.

Fourth, we initiated several other key trials of ADCETRIS including a Phase II trial in relapsed refractory DLBCL, combined with bendamustine and Rituxan and a Phase I/II trial in combination with nivolumab for second line Hodgkin's lymphoma. We are also continuing to study at such assent frontline DLBCL including a new arm in our ongoing Phase II trial comparing ADCETRIS plus Rituxan CHP to Rituxan CHOP.

Lastly Takeda recently received approval of ADCETRIS in two additional countries -- Argentina and Peru. In total ADCETRIS is approved in 58 countries worldwide.

Looking ahead, we will be reporting substantial data on ADCETRIS, SGN-CD33A and other pipeline programs at the upcoming American Society of Hematology or ASH annual meeting. More than 20 abstracts were accepted, including 12 oral presentations. Highlights include for ADCETRIS, data will be presented from numerous corporate and investigator-sponsored trials in both Hodgkin and non-Hodgkin lymphoma. These include follow-up from our AETHERA trial, our pivotal trial in relapsed Hodgkin lymphoma and our Phase I frontline trial in mature T-cell lymphomas.

There will also be data on several novel combinations with ADCETRIS.

For 33A, data from our Phase I monotherapy and hypo methylated agents combination trial will be presented in two separate oral presentations. We are encouraged by these data and are in discussions with FDA and European regulators regarding our regulatory strategy for this program in acute myeloid leukemia.

For SGN-CD19A, two sets of data will be featured at ASH including an oral presentation from a Phase I non-Hodgkin lymphoma trial that serves as the foundation for two randomized Phase II trials in DLBCL. We announced initiation of the first of these trials today in the relapse setting and a second trial planned for next year in frontline DLBCL and we will present data at ASH from two new preclinical programs -- SGN-CD19B and SGN-CD123A, illustrating our continued commitment to advancing the field of ADCs and the discovery of novel agents to treat cancer.

The remainder of this year and into 2016 will continue to be exciting and productive. Of note, we are moving two of our proprietary programs, 33A and 19A, into later stage trials reflecting strong progress within our pipeline. We look forward to keeping you updated.

At this point I'll turn the call over to Darren to discuss commercial activities, then Todd will discuss our financial results after which Jonathan will highlight research and clinical activities. Darren?

Thanks, Clay. During the third quarter of 2015, we saw continued strong growth of our ADCETRIS franchise. ADCETRIS revenues for the third quarter were $59 million, a 7% increase over Q2 2015. Year-to-date ADCETRIS revenues were $163 million, a 24% increase over the first nine months of 2014.

The FDA's recent approval of ADCETRIS for the treatment of patients with classical Hodgkin lymphoma at high risk of relapse following autologous transplant is an important milestone for the brand. While it's too early to provide metrics on the AETHERA launch, feedback from our physicians and our commercial team indicates the updated label is being well received. The commercial organization remains focused on four strategic imperatives in the post-transplant setting.

First, patient identification. As a reminder, there are roughly 1,000 to 1,500 Hodgkin lymphoma transplants conducted each year in the US -- most of which are autologous. Our team identifies and follows patients who have failed frontline therapy and may be candidates for a transplant and consolidation treatment in accordance with the label.

Second, transition of care. We work closely with transplant centers in referring physicians so that in the event the patient returns to their community physician after their transplant, ADCETRIS therapy is not interrupted.

Third, ensuring payer access for the consolidation setting. Early acceptance by payers has been encouraging and they are updating coverage policies to include the new indication. This provides physicians and patients the confidence that ADCETRIS will be reimbursed in the post-ASCT consolidation setting.

Lastly, duration of therapy. Our commercial team is educating providers and patients on the AETHERA trial design and treatment duration. As you recall the study was designed for up to 16 cycles or approximately one year of treatment and the average duration in the ADCETRIS arm was 12 cycles.

With solid execution, our goal is to make ADCETRIS the standard of care on our new label of indication consistent with our success in the previously approved settings of relapsed option lymphoma and systemic ALCL. The ADCETRIS business is strong and growing and I look forward to keeping you updated on our progress.

Now I'd like to turn the call over to Todd to discuss our financial results.

Thanks, Darren, and thanks, everyone, for joining us on the call this afternoon. Total revenues in the third quarter of 2015 were $84 million which included ADCETRIS net sales of $59 million. This represents another quarter of consecutive growth as well as a year-over-year increase of 23%.

For the first nine months of 2015, total revenues were $243 million ,including $163 million in ADCETRIS net sales. As Clay mentioned based on strong sales to date we are increasing 2015 ADCETRIS net sales guidance to a new range of $218 million to $223 million. Royalty revenues were $10 million in the third quarter and $28 million for the first nine months of 2015, primarily related to international sales of ADCETRIS I Takeda in its territory. Excluding a $5 million sales month milestone reported in the first quarter of 2014, year-to-date royalties have increased 23% over last year reflecting strong international sales by Takeda in its territory.

Collaboration revenues were $15 million in the third quarter and $52 million for the year to date in 2015. These revenues were driven by amounts earned under our ADCETRIS collaboration with Takeda and our ADC deals. R&D expenses were $71 million in the third quarter and $220 million for the year to date in 2015, increases from $59 million and $167 million for the same periods in 2014. These increases primarily reflect investment in our pipeline and the upfront payment of $25 million under the Unum collaboration in the second quarter.

SG&A expenses remain on target and increased to $30 million for the third quarter and $92 million for the year to date in 2015.

So in closing, our strong financial performance in 2015 has been driven by record ADCETRIS sales and growing international sales by Takeda, leading to increasing royalty revenue. The financing completed last month generated net proceeds of $527 million and we ended the third quarter with $736 million in cash and investments. This gives us financial strength for the foreseeable future, enabling us to advance our pipeline into later stage clinical trials and leading us to key ADCETRIS data readouts from ALCANZA, ECHELON-1, and ECHELON-2.

With that, I'll turn the call now over to Jonathan to review our clinical activities.

Thanks, Todd. Our ADCETRIS program continues to be a major area of focus for our clinical and regulatory teams under our collaboration with Takeda. We are pleased with the recently expanded label in the US, based on the successful AETHERA trial. ADCETRIS is the first and only drug to be approved as consolidation for classical Hodgkin lymphoma patients that high risk of relapse, following autologous transplant.

Looking ahead we are enthusiastic about the potential for ADCETRIS in CTCL frontline Hodgkin lymphoma and frontline MTCL through our Phase III trials, ALCANZA, ECHELON-1, and ECHELON-2 respectively. Today I would like to highlight our earlier stage product pipeline starting with SGN-CD33A.

As a reminder our 33A clinical development work to date has focused in three key areas for acute myeloid leukemia. First is a Phase I monotherapy dose escalation trial in AML patients who had declined or relapsed following frontline chemotherapy. Interim data from this trial were presented at ASH last year. Additional data from this trial, including complete dose escalation, will be presented in an oral session at ASH this year.

Second, we amended this Phase I trial to add 24 frontline patients who were not candidates for intensive therapy and treated them with 33A combined with hypomethylating agents or HMAs. They could receive either Dacogen or Vidaza. Interim data from these cohorts will be presented in an oral session at ASH this year. We will also have a preclinical presentation at ASH, describing the enhanced activity of 33A and HMAs, when combined.

Third, we are conducting a Phase I/II trial in frontline fit patients, studying the combination of 33A and the standard of care induction regimen of cytarabine and daunorubicin. We expect to report data from this trial for the first time during 2016.

Next, we are expanding our 33A clinical development activities into two additional Phase I/II clinical trials that should commence in the coming months. One trial will evaluate monotherapy in patients with relapsed or refractory AML who are candidates for allogeneic stem cell transplantation. Our strategy in this trial is to utilize 33A to increase the percentage of patients who are negative from minimal residual disease by highly sensitive assays prior to allogeneic transplant.

Data suggests that patients with no detectable disease prior to transplant are less likely to relapse.

In the separate arm of this trial we will also study 33A maintenance therapy following allo transplant as consolidation.

The second new trial planned for 2016 will evaluate 33A in combination with Vidaza for previously untreated intermediate II or high risk myelodysplastic syndrome or MDS patients. MDS is a precursor to AML and CD33 is broadly expressed in this disease. It is therefore a natural extension of our clinical investigation with 33A and AML.

We look forward to our data presentations at ASH and are enthusiastic about the potential of 33A to improve treatment outcomes for AML and MDS patients.

Next I'd like to describe our efforts with SGN-CD19A which will be featured in two presentations at ASH, including an oral presentation on the Phase I non-Hodgkin lymphoma trial. We initiated the first of two planned Phase II trials of 19A. The trial announced this morning is in second line DLBCL evaluating Rituxan ICE plus or minus 19A. Our goal is to increase the pre-transplant complete remission rate, thereby enhancing the number of patients eligible for autologous transport and improving outcomes after transplant.

The second Phase II trial for 19A will be in frontline (technical difficulty) to a 19A containing regimen in newly diagnosed patients. As we have discussed previously the lack of significant hematologic toxicity or neuropathy exhibited by 19A in our monotherapy experience suggests it may combine well with standard chemotherapy regimens.

Our goal with this frontline trial is to identify a tolerable regimen that will increase the rate of durable CRs. We expect to initiate the frontline trial by mid-2016.

As for our other clinical stage programs, we will report interim clinical data from the SG in SGN-LIV1A program at the San Antonio Breast Cancer Symposium in December. Our ongoing Phase I trial is in several subtypes of metastatic breast cancer, including triple negative disease. And we expect to present data from our ASG-15ME and ASG-22ME programs in bladder cancer during the first half of 2016. We are codeveloping these programs with Astellas.

Finally, I'd like to highlight the two emerging preclinical programs that Clay mentioned. One is SGN-CD19B which is a CD19-targeted ADC using our PBD-based ADC technology. With a more potent payload and distinct mechanism of action, the 19A, we expect these two ADCs to have differentiated clinical profiles and utility in lymphoid malignancies.

Preclinical data on SGN-CD19B will be featured in an oral presentation at ASH; and we expect to initiate a Phase I trial in non-Hodgkin lymphoma in the first half of 2016.

Another preclinical program advancing toward the clinic next year is SGN-CD123A, which is a CD123-directed PADC also utilizing our PBD technology. CD123 is the alpha chain of the IL3 receptor. In addition to being broadly expressed across AML subtypes, CD123 is particularly prominent on leukemic stem cells which are difficult to kill and may be responsible for the high relapse rate even following intensive therapy.

We will present preclinical data in an oral presentation at ASH and we plan to start a Phase I trial in the second half of 2016. These programs along with progress across our clinical stage pipeline illustrate our continued leadership position in the field of ADCs and our commitment to developing novel therapies to address the unmet medical needs of cancer patients. We look forward to seeing many of you at the ASH meeting in Orlando.

And with that I'll turn the call back over to Clay.

Thanks, Jonathan. Before we open the call to questions I would like to close by summarizing upcoming events across ADCETRIS and our pipeline. First, presenting data in multiple sessions at ASH on ADCETRIS, 333A, 19A, as well as other pipeline programs. Second, completing enrollment in the Phase III ECHELON-2 trial in frontline MTCL in 2016. Third, initiating another clinical trial of ADCETRIS in combination with nivolumab under our collaboration with Bristol-Myers Squibb.

Fourth, initiating two additional Phase I/II clinical trials of 33A in MDS and pre-allotransplant AML patients. Fifth, initiating a Phase II randomized trial of 19A combined with standard of care chemotherapy and frontline DLBCL. Sixth, reporting interim Phase I clinical data on SGN-LIV1A at the San Antonio Breast Cancer Symposium.

Seventh, reporting Phase I data from ASG-15ME and ASG-22ME at a medical conference in the first half of 2016. And lastly, initiating clinical trials of two novel ADCs -- SGN-CD19B and SGN-CD123A during 2016.

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

(Operator Instructions)

Matt Roden, UBS.

Great. Thanks very much for taking the question. Now that ADCETRIS sales guys are coming from a broader base of segments, do you think you can share the breakdown of sales by segment? If you are not going to give any detail maybe can you describe just qualitatively where segment growth is coming from? We realize the inflection over the last year is coming from compendium listings and recent AETHERA approval. But just wanted to get a bit more color on how we should be breaking this out in our model. Thanks.

Sure, Matt. Thanks for the question. Before I get to your question I do want to just say that in this quarter we have accomplished an awful lot. We are really proud of what we've been doing. On the clinical front we have many new programs. Completed enrollment in two Phase III trials; in regulatory we saw the approval of AETHERA. Commercially we have record ADCETRIS revenues and strong international sales.

We did a great financing. We have more than $700 million in cash -- no debt. And we are in a great position to pursue our pipeline. So we're feeling great about this quarter.

Now getting to your question, our on-label business which, in the past, has been just two labels, now we have a third with AETHERA, but our own label business for the first two took a little while but it became -- it was very strong and in a relatively short time period we got high market penetration rates and we continue in those first two indications with high market penetration rates.

With AETHERA and that newer label, it takes a little bit of time to get to the high market penetration rates and we are doing a good job and there's expansion there; but it takes some time. We're not up to the level of market penetration that we are at the present time with our first two labels -- it's too quick to get there so that's still growing.

As far as outside of our label, we are listed in multiple places in guidelines and we hear about growth there. Clearly we don't promote to those labels outside there but our market research suggests that there is growth and there was both in the third quarter and on earlier lines in therapy and CD30 positive positions -- CD33 positive malignancies that physicians have noticed. So I think that kind of breakdown between high market penetration and our originals and a growing AETHERA and expanding guidelines and that's really what we're seeing. I don't know if that totally addresses your question but we are really excited with the quarter.

Okay. Great. And maybe just on the pipeline, you talked about the CD33 program and that you are planning to start two additional Phase I/II studies but you are also waiting to hear back from the regulators on the registration all plan. Just trying to put the pieces together here.

So do you expect to have that feedback in time for ASH? And with that be a logical time to unveil a registration strategy and, then, presumably whatever that strategy is that would be trials above and beyond the two that you are getting started? How does that all fit together?

So thanks for the question on 33A. You know we continue to say that we are encouraged by the data. So that is something we are firm with and we are excited and really looking forward to ASH; and it allows us to present our initial data on our monotherapy which we previously talked about -- the strong anti-leukemic activity but we are going to continue to show, including completing our dose escalation. And so from past ASH to the current ASH. So we're excited about that.

We also amended our Phase I trial to add 24 frontline unfit patients and we're treating them with 33A plus hypomethylating agents and those are Dacogen or Vidaza. So that's ongoing and we enrolled many patients during 2015.

And so the abstracts -- keep in mind -- are coming out next week. But when you think about this and you think about ASH and what we're doing with regulators -- we are excited to consider this drug for all AML patients. There's really two types of AML patients when you look at frontline.

There is the fit patient that get 7 plus 3 and needs to be hospitalized for the side effects of that and there's the unfit patients that get hypomethylators. We are addressing both of the frontline populations with two different arms of our trial -- one with 7 plus 3 and one with HMAs.

We are planning on presenting the data with HMAs at ASH -- the data with the 7 plus 3, we will probably present it later this year at a different conference.

And we presented previously on our single agent activity. We've shown the strong anti-leukemic activity. We have a number of trials that Jonathan listed that we're proceeding with including bridging patients to transplant, getting more patients into transplant with the of single agent 33A and also looking at MDS, in combination with hypomethylating agents which are already used there.

So what you could see is that this is a really broad program and then getting to your specific question of regulators, while we are discussing with regulators it just is inappropriate for us to make any specific comments but I want to assure you that we are trying our hardest to get this right. This is important -- we are working on patients that have major league unmet medical needs with AML. It is one of the worst cancers of all of them. So it is important that we work with regulators across the globe and make sure this is done right.

So I don't want to give any specific timing on that -- we are looking forward to ASH but the most important thing with this very exciting program is getting it done right for the patients in need.

Understood. Thank you very much for taking the question. Congrats on your progress.

(Operator Instructions)

Adnan Butt, RBC Capital Markets.

Thanks for the question. So, Clay, to follow up a bit more on the 33A, what's the excitement behind going to regulators at the stage of development? It seems to be a bit sooner than the Company might have done for other programs. And then secondly, in terms of the abstract data that coming out will we see combination data in those abstracts and will it be representative of what we'll see at the actual conference?

So thank you for the follow-up question on 33A. So we had said at previous calls that we have decided to try to speak with regulators -- to go speak with regulators both in the US with the FDA and in Europe with the EMA about in of Phase I data. And we have in our abstracts -- that you will see next week -- data in unfit patients in combination with hypomethylators. So I will point you to that as one of the examples of data that we are excited about.

So it would be premature for me to start listing what type of data you will see at the ASH conference when the abstracts will come out next week. Yes, I think that the data that are in the abstracts -- they are representative. It's always a representative data that is in an abstract. I should say always but in this case we feel that it is a representative data set in the abstracts for 33A so that's something that we are really excited that the abstracts will be out next week.

And we will be very much looking forward to presenting data at the time of ASH; and as far as specific comments, we will make them as we can and assume as we can moving forward.

Clay, if I can just get a follow-up here -- a number of other agents are being combined with HMAs and AML so when we look at this data to understand it best we look at the kinds of patients that Seattle Genetics is targeting. Do we look at the response rate? How do we gauge what is meaningful in the abstract and at ASH?

Well, I think as far as patients go, Adnan, we are looking at frontline patients. So these are newly diagnosed and are unfit for therapy and Jonathan can give a little bit more color on the specific patients there. We will provide as much data as we can in our abstract, and in our presentation, but please note that these patients on this arm, if you will, were enrolled during 2015.

So we are following these as close as possible. We are encouraged by the data we see -- and, Jonathan, would you like to add anything more?

No, I think Clay really covered most of it and recall that the type of patients who are generally treated with frontline HMA monotherapy are the ones who tend to be older, who have worse cytogenetics, who don't have curable disease and so without speaking to it exactly the population that we treated and will be in our abstract we are treating a frail older population where the goal is to provide a meaningful improvement in their outcomes without adding a lot of toxicity. And that's one of the things that's really exciting about a targeted agent that can deliver a leukemic cell-killing payload without causing a lot of toxicity.

Okay. Thank you.

Cory Kasimov, JPMorgan.

Hi, guys. This is actually Britney on for Corey. Thanks for taking the questions. Can you provide a bit more detail on the differences between CD19B and 19A? And then also following ADCETRIS's conversion to regulator approval in the US with the approval in the AETHERA setting the summer, what implications may this have from a competitive standpoint?

Sure. Well let me address the second question about the regulator approval and then I think it will be appropriate to have Jonathan talk to you about a little bit of the differences in 19A and 19B and why we are looking at both. So as far as regular approval we are delighted that the FDA confirmed regular approval in the Hodgkin lymphoma and it was not regular to both Hodgkin and ALCL so it was just for the Hodgkin side to be precise.

And it really makes it so that any other drug that comes in now to this setting needs to be compared to ADCETRIS and that's one of the important things. It also has some implications for what the commercial team and how the commercial team works but those are some fine points there that I don't know that you were specifically addressing but it makes it a little easier for us on a commercial front. Jonathan, would you maybe take the 19A and 19B and talk a little bit about their differences and similarities?

Sure. So CD19 is a great target and lymphoma is obviously a really important disease with huge unmet medical need across all the different facets of the different subtypes of lymphoma as well as lymphoid leukemia.

19A and 19B differ primarily in the payload. There's a little bit in terms of the antibody design but 19A has orastatin MMAF payload and 19B has the PBD dimer using the EC-mAb technology. So we are excited about both of these programs. 19A has a lot of Phase I data showing activity in multiple diseases, both in [ALL] and DLBCL and accordingly we are advancing that into two randomized trials to learn a lot more about it. 19B will be presenting the preclinical data so I don't want to speak to that entirely; but with a much more potent payload it has different opportunities to be used in a different settings, potentially in treating lymphoid malignancies. So I think that's the major difference.

That's helpful. Thank you.

Seamus Fernandez, Leerink.

Thanks for the question. So just a couple of quick questions. First off, can you give us a sense of if any of the outlicensed programs that you have, have advanced or will advance into the clinic in the next year or so or are if you are aware of any that may advance into the clinic in the next year or so? And if you might be able to tell us with whom and then how meaningful that is to both the platform and also Seattle Genetics economically? Separately, could you maybe update us on the development plan -- the development plan for SGN-CD123A relative to the CD123A relative to the CD 33A in AML? Thanks.

So as far as the out licensed program some going to turn this over to Eric Dobmeier who leads all those efforts to talk about that. Then we'll take back and we will discuss your second question.

Hi, Seamus. So we have about a dozen ADC deals and there are more than 20 ADCs in clinical trials currently. The deals are structured primarily as outlicenses where we receive fees, milestones and royalties and our partner is responsible for development of the products.

We received over $325 million under these collaborations with a potential for over $4 billion in milestones plus royalties under the deals. And when you look at progress by our collaborators, we announced this quarter that at the AbbVie moved the new ADC into clinical trials and we also expanded the AbbVie relationship by adding in the PBD and EC-mAb technologies.

When you look across our other partnerships there are several that are in Phase II or later trials, including AbbVie, Genentech, Progenics and Celldex. Genentech, in particular, has been really active with our technology with, I think, five or six ADCs in clinical trials right now.

The specifics of those programs really have to be left out up to our partners in terms of reporting data and their specific plans. Like I said, there's more than 20 in clinical trial. There's a number of them that have been reporting data and, financially, it's a nice source of nondilutive capital for the Company.

So I will address your second question about 123A as it relates to 33A. First of all, if you look back at the history of Seattle Genetics, we have been trying to make a difference in patient suffering from AML for some time. We had a drug many years ago that we put into a Phase IIb that was run spectacularly but the data didn't pan out and we went back to the drawing board and we developed much more potent and targeted forms of drugs that led to a number of targets that we decided were the best.

And we thought that the best targets were 33A and 123A and any time we're getting close to clinic and we announce that we have products that we're putting preclinical data and starting in clinic the following year you have to know that we started working on them years ago. So I would first interpret that we started working on 33A and 123A years ago before we really had a full program that we did on 33A.

I'd also said say that 123 is particularly interesting due to that it's broadly expressed across AML subtypes and it's been reported to be prominent on the leukemic stem cells. So it is a different antigen than 33A and due to the incredibly difficult nature of the disease of these patients, we are working incredibly hard and with focus to try to make a difference in those patients' lives and we think going after two separate targets is something that is in the best interest of making a difference in these patients' lives.

This does not detract by any means our excitement with 33A. Moreover what it does is it tells you that we're trying to make a difference in the life of patients with AML.

Thank you.

Christopher Marai, Oppenheimer.

Congrats on the quarter, guys. Just wondering if you could elaborate on a couple of things with respect to 19A.

Number one, it seems like a bit of a crowded space there. How do you anticipate that you will be enrolling these trials and what have you maybe planned for in terms of addressing the potential competing therapeutics in that general target space?

And then secondly, maybe with respect to the Unum collaboration, are there any updates you could share with us regarding progress there -- next targets? And then finally if there were any potential new collaboration targets not unlike Unum that might be on the horizon at SGEN? Thanks.

Sure. So as far as 19A and 19B, yes it is a competitive space and I'll address a little bit and then I'll turn it over to Jonathan to give you more color. But while is competitive in the lymphoma space -- the non-Hodgkin lymphoma space -- in the DLBCL space there are still a lot of patients coming to this disease and we think there's a lot of room in the DLBCL space especially. So we feel that CD19 is a super target. We have some very strong single agent data with 19A and Jonathan can speak to that. It has a tox profile that really enables it to be combined with chemo.

So we think we are in a great shape with 19A to put it into the very type of clinical trials to provide us the answers that we need. And so I think Jonathan addressed the differences between 19A and 19B before, but Jonathan, do you want to talk a little bit about what your interest and excitement is with 19A in this space?

Sure. And yes we acknowledge that this is a crowded space but there is still a need for a potent reliable easy to use off-the-shelf reagent that can be given to patients with B cell malignancies. And we've been impressed with the Phase I clinical data.

And as Clay mentioned, I think we've designed some Phase II trials that are really exciting where we are going to be adding to standard care and trying to improve outcomes for patients who have already failed front-line therapy or for front-line untreated patients. And here's where we believe that by adding a potent directed payload to standard of care we may be able to achieve deep remissions and hopefully cure more patients.

So we're excited -- I think we are doing the right trials with randomized Phase II trials to get that answer.

As far as the next part of your question, you asked a little bit about Unum and you asked about other collaborations. Let me start with the last part of that -- you know, I think that when you look at Unum and what we've done and how we've leveraged the things that we're really good at in working with Unum, absolutely we could consider other types of collaborations like that in the future.

What we like about Unum a lot is that with the CAR-T cells, in most of the current technology that's being used by other companies and doctors, there's really no off switch, if you will. And what we liked about Unum and their technology and their novel way of looking at it is they deliver exogenously as a separate product to antibody.

So if you stop delivering the antibody, which we are really good at working with antibodies -- we know them well -- but when you stop delivering the antibody, that has a half-life and as that gets out of the body then you basically are turning it off. So that was something we really liked from a safety standpoint in that you can manage your efficacy and safety.

And, Jonathan do you want to make any comments? It's a little early to talk specifically about progress with Unum because that deal is not that old yet but maybe a little color you want to talk about, Jonathan?

We haven't talked about any specific targets yet, but we do think that this is an exciting way of potentially addressing targets that may not be completely clean. In other words, I think that some of the limitations of CAR-T cells is that they have activity on normal tissue where there's even very, very few antigens. I think that part of what Clay was referring to was the idea that if you could remove that bridge by allowing -- by not reinfusing an antibody that you could turn off that activity and potentially address a much greater number of targets.

Great. Thank you.

Joe Catanzaro, Cowen.

Hi, guys. Thanks. This is Joe on for Boris -- just a couple of quick questions. So in regards to ADCETRIS you mentioned identifying post transplant patients -- how easy is it for clinicians to identify these high-risk patients? And I know it's early but do you have any insight into how willing patients are to go on to ADCETRIS, post=transplant when the other option is watchful waiting approach? And is that actually a positive for ADCETRIS? (multiple speakers)

Joe, thank you for the question. I'm going to turn this over to Darren Klein, leading our commercial efforts to talk about a little bit about this.

Thanks, Joe. As it relates to high risk prior to ADCETRIS in the consolidation setting where there was no treatment, there really was no definition of high risk. So with ADCETRIS is the option now it's really up to the physician and the patient to determine that and I think how physicians are thinking about it is the criteria into the trial, patients that are refracted or frontline relapse within a year and/or extra nodal disease.

So our market research as we were getting ready for approval and now that we are in it, each patient is different and each physician will determine those risk factors. We are encouraged by what we are hearing.

Secondly, your question on how would the patients feel about the option of watching and waiting versus going on a therapy. Again, in talking to actual patients and physicians leading up to the approval, I think patients really don't want to be on the end of a coin flip. And I think that the data is strong and patients are willing to take on this treatment. And as you saw in the trial scheduled for up to a year and the average duration being 12 months. Again what we've heard so far through physicians has been very encouraging and we look forward to making this a standard of care in consolidation setting.

Great. Thank you.

Actually let me -- this is Jonathan -- let me just make a brief comment on that. The whole process for a patient who is facing having failed frontline therapy is really scary and when they go through salvage therapy and an autologous transplant that's a huge ordeal. They are putting themselves through a lot with the hope of being cured. And I think that, from the physician perspective -- speaking as an oncologist -- and from the patient's perspective, to know that there's something else that they can do on top of that to increase their odds of not having it come back is a very compelling story.

Okay. Great. Thanks. And just a quick follow-up on LIV1A -- so what kind of data are we going to see at San Antonio and how many patients? And then you mentioned triple negative which has seen some early success with ADCs and that's clearly the low hanging fruit in the space. Is that how you picture this asset moving forward?

Thanks for the question on LIV1A. You know it's a Phase I program so with Phase I what you see is dose escalation and we look at safety and efficacy. So I think you will see that we haven't put out a specific number of patients but it's a decent number of patients that you will see so it's not a tiny cadre that you won't be able to make head or tails of. It's a decent number of patients and, yes, you bring up triple negative.

Triple negative is -- I guess you could call it low hanging fruit. I call it a big unmet medical need. These are the toughest patients to treat, literally.

So I think that it's been difficult for drugs to have meaningful activity on triple negative. There's been a few that have come out lately with some hints on this but I haven't seen this problem -- this need solved at this point by far. So certainly we are looking at a lot of patients but if we can address and help patients with triple negative then I would be delighted.

Great. Thanks for taking my questions.

(Operator Instructions)

Mara Goldstein, Cantor Fitzgerald.

Just a follow-up on LIV1A and then one other question. Other plans and does it make sense with the target to look at levels of expression in breast cancer? And stratify on a go forward basis in that indication? And then secondarily, I don't know if you can do this but perhaps maybe you can just give us some color -- I understand that you are engaging with the regulatory agencies on AML, but it would be lovely to get some color just on your feeling around the flexibility of the agency at this point given that AML is really such -- I hate to use the word, but a graveyard for developmental agents?

Sure. As far -- let me start on the second one with 33A and the regulatory agencies in AML. I believe based on everything we have done and all our interactions to date that the agencies globally want to really make a difference for AML patients. I think they are incentivized and I think they are very good to work with and I think that they know and see this great unmet medical need. So I look at it not as a graveyard, I look at it as an opportunity and I've said this before but it reminds me of multiple myeloma and people -- I'm old enough to remember everyone said MM is a graveyard, nothing works there and all the patients were dying.

Then we had REVLIMID and Velcade and Kyprolis and things now work there and people with MM have a chance and can live, and there's some survival and most patients can live more than a short period of time and can live past five years. So, it's very exciting what's going on in MM, from an area that used to be called a graveyard.

I think that AML is an area that we can make a big difference in the patients and we are putting our efforts there and so I think it's a great opportunity for us.

Now concerning LIV1 and switching to that and expression levels and what we're looking at -- Jonathan, I'll turn it over to you to talk a little bit about what our trial looks for.

Yes, so Mara, I don't know if you remember but almost all metastatic breast cancer expresses LIV1 at some level. And yes, we are always looking at expression levels on tumors for our targeted agents to try to understand is there a threshold, the number of antigens or the percentage of tumor cells that you need to be positive to see activity. So those are the kind of things that we ask throughout Phase I and early development.

John Sonnier, William Blair.

Hi, thanks for taking the question and, Clay, congrats on all the progress. I apologize if you or Darren covered this -- I didn't hear it -- but I'm curious since the publication of the AETHERA data and approval, if you are seeing a difference in the thought process among prescribers relative to duration? Are you seeing that number move up?

Darren, do you want to take this?

Hi, John. It's a good question and as you recall the trial was set for up to a year. We saw the average duration up 12. It's too early right now to really see what the duration is going to be but it's something that we will absolutely monitor as we look at the metrics of our approval here.

I think also he -- I don't know, John, maybe I'm wrong but I think you were referring to the duration on the on label in the relapse patients and will it impact that? Is that what you are also asking?

That's right. That's right. I'm just wondering if having a data set out there that kind of instructs physicians that patients do okay on therapy longer even though it's in a slightly different population has had impact on the duration of use in the current indications?

I think that it's too early to tell. I think that before going into this -- before the AETHERA regimen was approved ,that was one of the things that we discussed with -- what would be in the mindset of docs on this. Because if you recall back to our trials for our first two labels there was an average of eight cycles and yet in real life we've been averaging closer to six and we've been reporting that. And so the question we had was as docs get more used to using this and seeing the power of it in AETHERA because they are using more cycles, would that rub off on to other earlier approved labels to go back to maybe get closer to the eight cycles that we published on? And we've shown our data in the relapse setting and that data is very strong.

I would say your question is a good one and it's too early to know. But we are watching that.

Thanks a lot.

And we have no further questions today. I'll turn the program back to Ms. Pinkston for any closing remarks.

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

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.