Seagen Inc (SGEN) 2016 Q3 法說會逐字稿

Good day, everyone, and welcome to the Seattle Genetics third-quarter 2016 financial results conference call. Today's call is being recorded. (Operator Instructions)

At this time, I would like to turn the conference over to Peggy Pinkston, Executive Director, Investor Relations. Please go ahead, ma'am.

Thank you, operator, and good afternoon, everyone. I would like to welcome all of you to Seattle Genetics's third-quarter 2016 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, Executive Vice President, Commercial.

Following our prepared remarks today, we will open the line for questions. If you are unable to get 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 projected.

Please refer to the documents that we filed from time to time with the SEC, including the Company's Form 10-Q for the quarter ended June 30, 2016, for information concerning the risk factors that could cause actual results to differ materially from those contained in any forward-looking statements. And with that, I will turn the call over to Clay.

Thanks, Peg, and good afternoon. Thank you for joining us. This quarter marks the five-year anniversary of the US approval of ADCETRIS. Since then, more than 30,000 lymphoma patients have been treated worldwide, and we have made a meaningful impact on patient outcomes.

The approval has also enabled Seattle Genetics to transition from an R&D company to a commercial oncology organization. Over the past five years, we have been steadily growing the ADCETRIS business while also advancing important phase 3 trials designed to address additional unmet medical needs and expand the market opportunity.

In parallel, we have continued our commitment to expanding and advancing our pipeline. Now, in addition to ADCETRIS, we have a proprietary phase 3 clinical program, vadastuximab talirine, or SGN-CD33A, for acute myeloid leukemia. And we recently reported promising data from enfortumab vedotin, or ASG-22ME, in urothelial cancer.

These programs are in addition to nine other clinical- and late-stage preclinical programs for both hematologic malignancies and solid tumors. Our progress is moving us closer to our goal of becoming a global multi-product oncology company.

This afternoon, I will highlight recent activities across our lead programs. First, we have made substantial commercial progress with ADCETRIS and reported record net product sales in the third quarter. Total revenues in the third quarter were $106 million. This includes ADCETRIS net sales of $70 million, up 19% compared to the third quarter of 2015. Based on our performance to date, we are tightening our guidance and now expect 2016 ADCETRIS net sales in the US and Canada to be in the range of $260 million to $270 million.

And clinically with ADCETRIS, we reached another exciting milestone during the third quarter. In August, we reported positive top-line data from the phase 3 ALCANZA clinical trial in CD30 expressing cutaneous T-cell lymphoma. This represents the fourth consecutive positive outcome from an ADCETRIS pivotal trial.

We reported that the trial met its primary endpoint, demonstrating a highly statistically significant improvement in the rate of objective response lasting at least four months or ORR4 versus the control arm, as assessed by an independent review committee. The ORR4 was 56.3% in the ADCETRIS arm compared to 12.5% in the control arm. The P value was less than 0.0001.

Key secondary endpoints, including progression-free survival, complete response rate, and reduction in the burden of symptoms during treatment were all highly statistically significant in favor of the ADCETRIS arm. The safety profile of ADCETRIS was generally consistent with the existing prescribing information.

We are pleased that the full data set from ALCANZA will be featured in an oral presentation at ASH in December. We plan to submit a supplemental BLA to the FDA in the first half of 2017 seeking an indication for ADCETRIS in CTCL.

Now I would like to turn to the ECHELON-1 phase 3 trial in front-line Hodgkin lymphoma. Today we are updating our expected timeline for top-line data from ECHELON-1 to be during 2017, an update from our previous expectation of data in the 2017 to mid-2018 time frame.

ECHELON-1 was designed to redefine the way newly diagnosed advanced Hodgkin lymphoma patients are treated. Our goal is to improve progression-free survival among these generally young cancer patients by establishing an ADCETRIS-containing regimen called A+AVD as the new standard of care.

Lastly on ADCETRIS, very soon we expect to complete enrollment of 450 patients to the ECHELON-2 phase 3 trial in front-line mature T-cell lymphomas. The unmet need in T-cell lymphoma is significant, as these are generally aggressive forms of non-Hodgkin lymphoma that are currently underserved by existing chemotherapy regimens.

Our goal with ECHELON-2 is similar to ECHELON-1: to redefine the front-line standard of care for mature T cell lymphomas to be an ADCETRIS-containing regimen called A+CHP. We plan to complete enrollment soon, and we expect top-line data in the 2017 to 2018 time frame.

I will now turn to our next most advanced clinical stage program, vadastuximab talirine. We are conducting trials in AML and myelodysplastic syndrome, both of which broadly express CD33. Our planned initial registration pathway is in front-line older AML, which we are evaluating in a global phase 3 trial called CASCADE. This randomized trial is comparing 33A plus decitabine or azacitidine to either of these hypomethylating agents alone, with planned enrollment of 500 patients.

We believe 33A has the potential to improve overall survival in a disease setting where outcomes have not meaningfully changed in decades. Our 33A program also includes several earlier-stage trials in AML and MDS.

Notably, we are evaluating 33A in combination with the chemotherapy regimen known as 7+3 in younger AML patients. We are pleased at the first data from this trial, as well as three other 33A abstracts, were accepted for oral presentations at the ASH meeting in December.

I will move on now to two ADC programs that we are codeveloping with Astellas: enfortumab vedotin, also known as ASG-22ME, and ASG-15ME. At the ESMO meeting earlier this month, we presented encouraging data from both programs. 22ME targets Nectin-4 and 15ME targets SLITRK6.

These two ADCs are being evaluated in phase 1 trials in patients with metastatic urothelial cancer. There is a substantial unmet medical need in urothelial cancer, which consists primarily of bladder cancer, but also includes ureter and renal pelvis carcinoma. An estimated 77,000 people are diagnosed annually in the United States with urothelial cancer.

While patients with early-stage disease are treated with curative intent, outcomes are poor for patients diagnosed with locally advanced or metastatic disease. Front-line therapies in this setting consist of chemotherapy combinations with limited clinical benefit. PD-L1 and PD-1 inhibitors are emerging as therapeutic options in urothelial cancer; but importantly, as many as 80% of patients treated with checkpoint inhibitors failed to respond and are in need of improved therapies.

In our phase 1 trials, at the recommended phase 2 doses, 22ME had a 59% objective response rate, and 15ME had a 50% objective response rate. Notably, both agents induced objective responses in heavily pretreated patients, including those who had previously received one or several therapies, including platinum-based chemotherapy, checkpoint inhibitors, and taxanes, as well as those with liver metastasis.

Duration of response data continue to mature. Both ADCs were generally well tolerated, with side effect profiles similar to other MMAE ADCs. The phase 1 trials continue to enroll, with an increased focus on checkpoint inhibitor treated patients.

Based on a review of the safety and activity data and the expression of Nectin-4 on urothelial cancer, Seattle Genetics's goal is to move forward rapidly with 22ME, given the global unmet need in this disease. We are working closely with our partner, Astellas, to define next steps for 22ME, including potential later-stage trials and discussions with regulatory agencies. We look forward to keeping you posted on our progress.

Beyond ADCETRIS, 33A, and 22ME, we continue to invest in building a strong pipeline intended to improve outcomes for cancer patients in need. I am pleased by the progress we are making across our programs as we transition into a global multi-product oncology company and look forward to several near-term milestones.

At this point, I will turn the call over to Darren to discuss commercial activities. Next, Todd will discuss our financial results. And then Jonathan will cover key research and development progress. Darren?

Thanks, Clay. Q3 was a strong quarter, reaching $70 million in ADCETRIS net sales for the first time. We delivered sales growth of 6% over the second quarter of 2016 and growth of 20% for the year to date compared to the first nine months of 2015.

In addition to sustained high patient shares in our initial launch label indications, we are pleased with the results of our ongoing efforts to establish ADCETRIS consolidation as standard of care for Hodgkin lymphoma patients at high risk of relapse following transplant or the AETHERA setting.

The commercial team is continuing to raise awareness among physicians of the importance of assessing patient risk of relapse as well as supporting the transition of patients on ADCETRIS consolidation from the transplant center back to their referring oncologist.

Our commercial team continues to prepare for the launch of the potential new ADCETRIS indication in CD30 expressing CTCL, based on the strong results of the phase 3 ALCANZA clinical trial. While ADCETRIS was added to the NCCN guidelines for CTCL in early 2015, we believe that being able to promote ADCETRIS in this indication will increase the number of patients treated with this rare disease and deliver incremental ADCETRIS revenue.

With our vision for ADCETRIS to be the foundation of care for CD30 expressing lymphomas in mind, we look forward to the results of our ECHELON-1 and ECHELON-2 trials, which could bring ADCETRIS into the front-line treatment of advanced HL and CD30 expressing MTCL. We plan to be commercially prepared for these additional indications, subject to approval.

In closing, the ADCETRIS business is strong, and we look forward to updating you on our progress as we continue to support and grow the brand. Now I would like to turn the call over to Todd to discuss our financial results.

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

In addition to significant pipeline progress, we once again had a very strong quarter financially, with record ADCETRIS sales. Total revenues in the third quarter increased by 26% to $106 million, and by 29% to $313 million for the year to date in 2016.

Revenues included record ADCETRIS net sales of $70 million for the quarter and $195 million for the year to date. As Clay mentioned, we have tightened our guidance for 2016 ADCETRIS net sales in the US and Canada to a range of $260 million to $270 million.

Collaboration revenues in 2016 increased to (technical difficulty) for the year to date. And royalties increased $12 million in the third quarter and to $54 million for the year to date. Excluding the $20 million milestone payment recorded in the first quarter, royalty revenues for the first nine months of 2016 increased by 19%, reflecting strong ADCETRIS sales growth by Takeda in its territory.

R&D expenses increased to $93 million in the third quarter and to $271 million for the first nine months of 2016. The year-to-date increase over 2015 reflects investments in ADCETRIS, 33A, and our growing pipeline. We are narrowing our 2016 R&D expense guidance to be in the range of $370 million to $390 million, which is within our previous guidance.

SG&A expenses were $35 million for the third quarter and $98 million for the year to date. We ended the quarter with $632 million in cash and investments and now are in a strong financial position to drive our key initiatives forward.

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

Thanks, Todd. Good afternoon, everyone. As Clay discussed, we have made tremendous progress at Seattle Genetics, and there are important developments and data disclosures with our lead programs, ADCETRIS, 33A, and 22ME, as well as our growing clinical pipeline.

I will begin with ADCETRIS, which continues to generate impressive clinical data, including more than 20 presentations just this past week at the International Symposium on Hodgkin Lymphoma in Cologne, Germany. Data were featured from studies that span the entire range of treatment for Hodgkin lymphoma, from front-line elderly to salvage, consolidation, and relapsed/refractory settings. And at ASH in December, there will be many more ADCETRIS presentations, highlighted by the first disclosure of the complete results from the positive phase 3 ALCANZA trial and interim results from our ADCETRIS plus nivolumab trial in relapsed Hodgkin lymphoma.

Importantly, as patients from earlier trials continue to be followed, multiple data sets demonstrate that ADCETRIS can achieve durable, long-term remissions -- either as monotherapy or as part of novel combination regimens.

As published last quarter in the journal Blood, the five-year overall survival rate was 41% in our pivotal trial of ADCETRIS monotherapy for relapsed/refractory Hodgkin's lymphoma patients who had failed in autologous stem cell transplant. And earlier this week in Cologne, we reported updated data from the phase 3 AETHERA trial, demonstrating sustained benefit approximately 4 years since the last patient was enrolled.

Also at ISHL, we showed that the combination of ADCETRIS and dacarbazine appeared to increase the durability of response without increasing toxicity in this frail population. The current data demonstrate an estimated PFS of 49% and survival of 95% after two years.

And finally, at ASH we will present four-year survival and durability data from our phase 1 trial of ADCETRIS plus CHP in front-line MTCL and five-year survival data from our pivotal phase 2 monotherapy trial in relapsed and refractory systemic ALCL. Taken together, in the five years since approval we have accumulated substantial data suggesting that ADCETRIS is improving long-term outcomes for patients with CD30 expressing lymphomas.

Another exciting development is our clinical collaboration with Bristol-Myers Squibb, under which we are evaluating ADCETRIS in combination with nivolumab. In addition to the two ongoing clinical trials, one in second-line Hodgkin lymphoma and one in relapsed and refractory non-Hodgkin lymphoma, we recently expanded our collaboration to evaluate the combination of ADCETRIS and nivolumab in front-line older Hodgkin lymphoma patients, continuing our efforts to identify a well-tolerated and curative regimen in this frail population.

We are also expanding the non-Hodgkin lymphoma trial that Bristol-Myers is conducting to evaluate the combination of ADCETRIS and nivolumab in primary mediastinal B cell lymphoma and gray zone lymphoma -- two subtypes of large B-cell lymphomas that generally express CD30. We are enthusiastic about the progress under our collaboration with Bristol-Myers and pleased to be extending our investigation into these additional disease areas.

Now, turning to acute myeloid leukemia, vadastuximab talirine continues to be a major focus of our clinical group, with five ongoing clinical trials. The CASCADE phase 3 trial is off to a strong start, with investigator enthusiasm and patients being enrolled around the world. 33A will be featured prominently at ASH with four oral presentations, including the first interim data for 33A in combination with 7+3 for younger front-line AML.

As Clay discussed, we recently reported at ESMO that 22ME has demonstrated promising phase 1 data for patients with relapsed and refractory urothelial cancer, which remains a population with significant unmet need. We look forward to working closely with our partner, Astellas, and talking with regulatory agencies to define next steps for this program.

Turning now to the rest of our pipeline, there are a number of upcoming events. In November the first clinical data from SEA-CD40 will be presented at the Society for Immunotherapy of Cancer Annual Meeting, or SITC. SEA-CD40 is a novel immuno-oncology agent targeted to CD40, utilizing our proprietary sugar-engineered antibody technology.

In December we will present additional data on SGN-LIV1A at the San Antonio Breast Cancer Symposium. LIV1A is in a phase 1 trial for metastatic breast cancer -- in particular, triple negative disease.

And we are continuing to advance innovative and exciting programs from our research group into clinical trials. These include three ADCs and a novel immuno-oncology small molecule.

First, we recently initiated a phase 1 trial with SGN-CD123A in AML. CD123 is expressed across AML subtypes and is particularly prominent on leukemic stem cells, which are difficult to kill and may be responsible for high relapse rates.

Second, we are on track to initiate a phase 1 trial with SGN-CD352A for multiple myeloma within the next few months. Third, we are advancing SGN-CD48A towards clinical trials for multiple myeloma. SGN-CD48A utilizes our latest ADC technology, including a new, highly stable hydrophilic linker; more drugs per antibody; and increased antitumor activity in vitro and in vivo. Preclinical data will be described in a poster presentation at ASH, and we plan to submit an IND for a phase 1 trial during 2017.

And fourth, we are advancing SGN-2FF into a phase 1 trial for solid tumors during 2017. SGN-2FF is a small molecule immuno-oncology agent that can enhance activity of multiple arms of the immune system by inhibiting the addition of fucose to proteins. Preclinical data from SGN-2FF will be presented at the SITC meeting next month.

Finally, we have decided to discontinue further development of SGN-CD70A. This anti-CD70 ADC was evaluated in a phase 1 trial for non-Hodgkin lymphoma and renal cell carcinoma. While treatment resulted in objective responses, these data did not meet our criteria for advancing to later-stage development within our robust portfolio.

We are excited to have encouraging data in multiple programs across both hematologic malignancies and solid tumors. Our R&D team continues to perform innovative, cutting-edge research to maintain our leadership in the ADC field, as well as expanding into the area of immuno-oncology through both proprietary programs and novel combinations of checkpoint inhibitors with our ADCs. Now I will turn the call back over to Clay.

Thanks, Jonathan. Before we open the line for questions, I would like to recap a few of our key upcoming activities.

For ADCETRIS, these include reporting data from multiple trials at ASH, notably an oral presentation on our phase 3 ALCANZA trial in CTCL; submitting a supplemental BLA to the FDA for ALCANZA in the first half of 2017; reporting data from the phase 3 ECHELON-1 in front-line Hodgkin lymphoma in 2017; and reporting data from the phase 3 ECHELON-2 trial in front-line and TCL in the 2017 to 2018 time frame.

For 33A, we are advancing the phase 3 CASCADE trial in front-line older AML. In addition, we will feature 33A in four oral presentations at ASH.

And lastly, there are two areas to highlight in our earlier-stage pipeline. In solid tumors, we will be engaging with regulatory agencies on next steps for 22ME as well as presenting clinical data on LIV1A in December.

And in multiple myeloma, we are advancing two ADCs to novel targets that utilize our newest technologies. For SGN-CD48A, we will present preclinical data at ASH, and an IND is planned in 2017. And for SGN-CD352A, we plan to initiate a phase 1 trial by early 2017.

It has been a very productive year so far in 2016, and we have strong momentum going into the remainder of the year. We will keep you updated on our progress and look forward to seeing many of you in the coming months, including at ASH in December.

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

(Operator Instructions) Michael Schmidt, Leerink Partners.

Clay, one on ASG-22ME: what is your latest thinking here on the potential path to market? I saw you expanded the trial to look more in checkpoint inhibitor. In your expectation, is that sort of a more likely scenario that you could envision the drug to achieve registration in?

Yes, thank you for the question. And it is -- you have seen correctly. We have a partnership with Astellas on this program. The partnership is strong, and our interpretation of it is that both of the partners are really excited with the data.

We presented at ESMO, as you know, and both programs, 22ME and 15ME, had exciting data, with 22 being prioritized. And I think that our priority is to try to go into later-stage trials.

One of the areas, as you noted, we are expanding into even more than we already started were in patients that have previously seen immuno-oncology agents, particular PD-L1 and PD-1 inhibitors, which are obviously benefiting patients. And it's exciting that these immuno-oncology agents are available now for these patients would urothelial cancer.

But that is the good news. The bad news is it is 20% or less of the patients that actually respond well. And so the vast majority of patients still need therapy. So it really makes sense for us to look at patients that have experienced immuno-oncology agents and then need something else.

Great, thanks. And then one on the ECHELON-1 trial, where the data is coming up in 2017, as you said. So as I understand it, the trial is conducted in stage 3/4 patients in front-line.

And my question is: would you expect -- it's obviously an early question, but would you expect the label to potentially reflect the studied patient population? And I'm asking because in speaking with KOLs, it appears there's a potential for the drug in a broader patient population, potentially in the front-line setting. How do you think about that constellation?

It really depends on data and depends on working with regulators on that. We are excited for ECHELON-1 to -- now our guidance will be 2017. I think that we might be able to look at the AETHERA label and see that in AETHERA -- with AETHERA, while we did have different patient populations entering the label and working with regulators in advanced Hodgkin lymphoma. And so that is something that may occur here. It depends on a lot of factors, but I certainly wouldn't be -- it wouldn't be surprising to see a label saying advanced Hodgkin lymphoma.

It also is possible it could say stage 3 and 4 as well. But I think that's something we will be keeping a very close eye on going forward.

Okay, great. Thank you very much.

Kennen MacKay, Credit Suisse.

Maybe one for Darren or maybe for Clay. So in CTCL, I was just wondering if you could walk us through where we should be anticipating growth based on inclusion of this indication in the label, as opposed to off-label usage from NCCN guidelines? Is this going to be more focused on patient identification and screening, or how should we be thinking about that?

Things for your question, Kennen. It's a very good question. Darren, do you want to take a stab at that?

Sure, Kenny. Yes, we are really excited about the data set. It actually further validates ADCETRIS making a difference in patients' lives.

And I think in the CTCL patient population, this patient population is being treated by a more specialty hematologist or oncologist in large centers. And we think by the additional -- by having the label will give us, the commercial team, the opportunity to really focus in on who those treating physicians are and be able to raise awareness of the data set, identify the patients, and really talk about the data that we have.

And by doing that with our commercial team, we will be able, we think, to drive incremental revenue of what we are potentially already seeing without a label with just NCCN guidelines.

Got you. Thanks, Darren. And maybe just one additional question, sort of commercial-focused here.

So on the narrowed guidance, it looks like the low end of the guidance could actually imply a slight decline in next-quarter ADCETRIS quarter over quarter. Just wondering if you could help me get a sense as to what kind of scenario that can lead to something like that? I'm just trying to wrap my head around it. And then obviously, on the high end, that would imply about a 7% growth.

Yes, you know, business would ADCETRIS is strong. And we guided early on in the year we're still in our target guidance range, so I don't want you to read too much into that.

There are quarterly variables that happen at end of year, and at different years we've seen different variables. But overall, keep in mind that this is a 20% year-over-year growth. And that is really important, and that's what is important here ahead of getting data for E-1 and then later for E-2.

Darren, do you have anything else you want to --?

Yes -- no, I think, Clay, you said it. We feel very confident in hitting the new guidance -- the refined guidance range of $260 million to $270 million. Clay alluded to -- the business is strong.

We do see quarter variability based on seasonal buying factors, selling days in a quarter. But we remain very confident in the guidance range that we have narrowed down here.

Yes, Kenny, this is Todd. If you just look at our exit rate from Q3, that would essentially put us right in the middle of our guidance.

Yes, yes, okay. Got you. Thanks so much. No, I was just trying to get a sense of whether something else could be coming into play here. Thanks so much for taking my questions.

Adnan Butt, RBC Capital Markets.

Thanks, folks, and congrats on all that clinical progress. So first of all, I have to ask question [round one], when in 2017 do you expect to tighten that timing further? And assuming results were positive, is there any commercial or manufacturing cut that needs to be done before you expand into the front-line population?

Yes, so as far as the manufacturing and all that, we are ready to go. We are ready to support patients in need, so that is not an issue.

As far as the timing goes, we will not confirm or deny that we will be changing or updating this. I think that the timing is pretty good, and it may stay the same. So I wouldn't say that there is any expectations for us to change guidance at this point, because we will be in 2017 within two months.

So we are happy that we have been able to narrow the guidance for when E-1 comes out, and really looking forward to getting our goal of changing the life history of Hodgkin lymphoma patients by increasing the activity of the front-line therapy with the addition of ADCETRIS and the removal of [gliavysin].

Okay. And then if I can get a question on CD33A: The Company made a decision pretty quickly for older patients. Do you think the decision for a next pivotal for CD33A -- how close is the Company for deciding something like that?

So, yes, we're excited with the program. We are excited that CASCADE is underway. And the trial so far has been strong. We are pleased with how the trial has been initiated, and all the trial sites opening and the accruals. So everything is doing great with CASCADE.

As far as doing additional trials, I think it's a goal of ours to have multiple phase 3 trials with this program. But the rest of our data are a little earlier. We intend to present at ASH the younger patients with 7+3 in combination with 33A.

We have a trial going on in myelodysplastic syndrome, amongst many different trials. So I think that to us, it's a very important program in an area where it is one of the largest unmet medical needs of any cancer. And so we are really excited to be trying to really make progress for all those patients that need additional therapies.

Okay, thank you.

Cory Kasimov, JPMorgan.

I guess first, to follow up on the 33A program: with the data that we are going to see at ASH in combination with 7+3, are you able to say roughly how many patients or how much follow-up we might see in San Diego?

You know, I will turn that over to Jonathan and see what Jonathan is willing to tell you.

All right. So Cory, thanks for the question. We can't disclose exactly the details of the number of patients or the follow-up. This study has been going on for a while, not a huge amount of time.

And just as a reminder people about the front-line younger patients and what the goal is: this is really an area where more than half the patients are treated aggressively with 7+3 or a similar regimen, with an intent to try to cure those patients. There are pretty high CR rates, and there is a substantial number of patients who are cured with 7+3 consolidation with or without allogeneic transplant in remission.

So it is a complicated space. It's really like trying to redefine front-line therapy with curative intent. So it's something that we're looking at really closely. We're excited about our interim data. And we will -- when we present it, I think it will be a good time to evaluate whether we feel like we are making a difference at that time and then what our next steps will be.

We are also going to be presenting data on type of endpoints such as minimal residual disease. And I think that that is something that, along with CRs, it's: how good is the CR?

And that has been an emerging force in AML that I think regulators are looking at and doctors are looking at is: what matters? What is a real good response? And it goes back to, are CRs all the same, or is an MRD-negative CR better, which a lot of people conjecture?

So we're going to -- we are on the leading edge of that, and we are trying to really work at that. We have talked about this before at various venues. But that's something to continue looking at with our data and looking at what our MRD-negative CR data look like.

Okay, okay. That's helpful.

Then I had one of the follow-up, another upcoming clinical question. That is for the SCA-CD40 trial at SITC. Just curious if that's an all-comers type of study, or did you enrich for a particular tumor type?

Yes, so that trial was open for patients with solid tumors. And the data that we will be presenting at SITC are going to be interim data during dose escalation.

So it, at this point, has not been particularly enriched for any population. We have recently expanded the trial to open it to lymphoma patients as well.

Okay, all right, perfect. Thanks, guys.

Geoff Meacham, Barclays.

One on ECHELON-1; then I have a follow-up. I know a lot has been made on the timelines for data. I'm assuming update today's based on the event rate.

So, Clay, was there anything that implied there that was surprising, or maybe not within what you guys are thinking? And obviously, you win on efficacy, but what can you tell us so far about the tolerability assumptions with the ABVD and discontinuations, in particular?

Well, first of all, keep in mind that when we started with our guidance of 2017 through 2018, we had -- the number of patients in that trial was initially a little more than 1,000. And then we decided and made an announcement to add 300 additional patients to now be over 1,300 patients in the trial.

And we didn't change our assessment -- or our guidance, I should say, of 2017 through 2018 until we started to get a handle on the trial and how it was progressing in total. And so we made that change.

So I think considering the addition of the patients into the trial, this makes a lot of sense to us. And so this is not surprising to us. This was really -- it's really the intention of expanding a trial is to try to bring in a trial. So I think it totally makes sense.

The second part of your question -- oh, yes, the safety. We can't report data on this trial while it's ongoing. I can tell you that from our lead-in trial in ECHELON-1, the safety was as expected.

And we know ADCETRIS incredibly well. We have now treated more than 30,000 patients with this drug. We have put it in combination with probably a dozen different regimens. We know its safety profile; docs know its safety profile. And from the lead-in study, there was nothing that was surprising or differentiated that we didn't already know about this drug.

And so while I can't tell you anything about the trial, we certainly had a data safety monitoring group with the trial, and we are now no longer treating anybody. Everyone has been treated and off drug. So we are -- so that is all done.

Got you. Okay, that's helpful. And then the second question is our brand ImpactRx data -- it says very limited uptake so far for OPDIVO in Hodgkin's. Is that surprising to you guys? When you think about combination therapy, you called out older patients if you go to a combination in first-line; but are there any other subpopulations that you feel like you can get a trial done in a reasonable time frame?

First of all, we are doing a combination with ADCETRIS and OPDIVO, and we are very proud of our collaboration with Bristol-Myers Squibb. We are excited about it; I believe, based on the comments, they are. They have even recently expanded it, as we pointed out in our prepared remarks -- that the trial now has additional -- you know, or there are additional trials going on within our collaboration.

So that is exciting. We expect to present data on first of our trial at the ASH conference, so you could see that. In fact, we are also expecting that there is going to be a second presentation at ASH from investigators that are combining the drugs, because both are commercial. So there's a lot going on there.

I think there are opportunities to test these and move them into populations of patients that are perhaps underserved. But our vision is that for front-line, ADCETRIS plus ABD will be what is the dominant regimen -- and that our expectation is that our data will be good. And obviously, we don't have the data yet. But our lead-in trial -- the data was superb. And if it's anything remotely close to that, we think that we will change the front-line therapy of Hodgkin lymphoma after 40 years of using ABVD.

And at that point, there will be -- after that, there will be much less patients to treat, so that -- you know, our hope is the cure rate goes up substantially. And so for those patients that still need additional therapy, one opportunity could be ADCETRIS/nivolumab.

And I think that that is something that we are excited to pursue. And that is why we're doing this -- part of the reason we're doing the collaboration with Bristol. And you will see data of ADCETRIS plus nivolumab in second-line.

Additionally, we have also -- we have some really nice data of ADCETRIS plus bendamustine in the second-line. And so there is -- I think that there are going to be options for the patients and, hopefully, the very few patients that don't go into long-term CRs with its ADCETRIS AVD. Jonathan, do you have anything you would like to add to this -- these comments?

Well, I think in Hodgkin lymphoma, we are looking at opportunities to combine with checkpoint inhibitors or nivolumab in the population that aren't addressed by the ECHELON-1 trials.

So those would be the front-line elderly, the salvage population, and relapsed/refractory with the ECOG study that Clay referred to. So I think we're looking at all those populations, as well as in non-Hodgkin lymphoma.

Got you. Thanks, guys.

Tazeen Ahmad, Bank of America.

One on CD33A, if I might, just to follow up on some of the conversations we have been having so far on the call: obviously, this is going to be something that we are all going to be looking for at the ASH meeting, but in terms of how you are thinking of its profile versus other drugs that are in development -- you know, there are a few companies that are trying to go for similar populations in AML, whether it be AbbVie, Otsuka, Boehringer, or a number of other companies.

What should we really be looking for? Should we be looking for differences in efficacy or safety at this early stage?

Well, thanks for the question. Clearly there are a lot of companies out there working in cancer, and there's other companies working in the leukemia space and looking at AML.

We are very pleased that they are, quite frankly, because we are AML patient supporters, and this is a tough disease. And it may not just take any one of these drugs. We may need many drugs to really impact them -- like has been seen with other diseases, where having multiple ways to treat is always a benefit for the patient. So we are pleased that there are other drugs.

And I think that we are very pleased with our program. We are pleased that we are able to transition exciting data into phase 3 and get this trial open and enrolling.

There are quite a number of drugs, like you bring up -- Abbvie with venetoclax. That's a very interesting drug that they have approved for CLL. And we know that they have made presentations in AML space. We have not yet heard any specifics of a phase 3 trial, but they certainly presented data showing that the drug is active in AML.

Are there other drugs that are also active in AML. There's other hypomethylating agents. There is HDAC inhibitors; there are BCL2 inhibitors. So there are few, but as far as a drug targeted with an antibody and delivering cytotoxic, like our antibody drug conjugate, we are very happy with our positioning in this field and think that this could make a big difference for patients.

And because CD33A is expressed on all these tumors with AML, basically all of them could be very user-friendly from a combination standpoint, much like ADCETRIS is user-friendly from a combination standpoint in Hodgkin lymphoma. Because CD30 is expressed on all Hodgkin lymphoma, basically, and we could use it in combination with other types of therapies -- whether they be old-school therapies, like cytotoxins; or newer therapies, like some of the checkpoint inhibitors.

So we think that ADCs make extraordinary regimen partners, if you will, with other drugs. And we're going to continue doing that.

Okay. And then one question on ADCETRIS, if I might. Are you able to give us a little more granularity on the quarter-over-quarter impact from price hike versus volume demand?

Just the impact of demand versus price.

Oh, sure. It was majority driven by volume. We really had a really strong quarter, driven mostly by demand. It was really true demand.

Okay, thanks.

Andrew Berens, Morgan Stanley.

Two questions; one on ADCETRIS as a consolidation setting. Just wondering if you could give us some color around the usage patterns you are seeing, like the number of cycles on the docs you are using currently relative to where the data in the trials were. And then I wanted to ask a question to follow up on OPDIVO plus ADCETRIS.

Sure. Darren, would you talk a little bit about what we call the AETHERA regimen or consolidation?

Absolutely. Yes, we are really pleased with the progress thus far. We got the label a little over a year ago.

And this is the new treatment paradigm for physicians, for transplanters, that really had nothing -- that really watched and waited and see what -- patients' outcome prior to the AETHERA setting. We are pleased with progress. Our market penetration rate is about 50% in the AETHERA label patient population. Our duration is about 9 to 10 cycles.

But we still have plenty of opportunity ahead of us. We are pleased, but we continue to raise awareness with the transplanters around the risk of relapse for these patients -- as well as when the treatment decision has been made, that we ensure that once it has been decided at the transplant center, that it gets transitioned back to the community physician, and we keep duration going.

So again, really pleased with our progress. But we feel we are well on our way to make it the standard of care in this post-transplant setting.

Okay, great. And then in regards to OPDIVO and ADCETRIS, at ASH, is that going to be an oral presentation or a poster presentation?

Oral presentation.

It will be oral. Okay.

Yes.

And then -- yes, congratulations on that. You have a lot of orals, it seems.

In terms of Bristol's incentive to do this, is it driven -- I mean, I know you're doing it in elderly patients who probably can't tolerate chemotherapy, but is it driven by difficulty combining OPDIVO with AVD, do you think? Is that part of the reason they want to test it in this setting?

Or do they feel like it will be very difficult if ECHELON-1 is positive to ever penetrate the front-line setting? I'm just curious why you guys think they are expanding that cohort or going into that new indication, I guess.

Right. I think that you are talking specifically about the elderly?

Well, in the front-line.

In front-line elderly? Yes, I think that's an important unmet need. And I think that in the younger patients, it's not clear that there will be an unmet need after ECHELON-1 reads out. That is at least our perspective. I can't speak for where Bristol-Myers is.

Right, okay. Is there any concern, though, that AVD plus OPDIVO may not be as effective, given the impact on the immune system?

I can't speak to that.

We don't have data on AVD/OPDIVO, if that's what you are referring to. And whether or not checkpoint inhibitors need an intact immune system to have full power or not is also -- is uncertain. I don't know that there is a ton of studies on that. Certainly, you could combine OPDIVO with a number of drugs, but AVD is heavy-duty chemotherapy.

I would like to -- maybe I'll just take a moment to speak to the general feeling that ADCs might be ideal partners for checkpoint inhibitors, not just in -- with ADCETRIS, but across the field of cancer; because they do in a targeted way kill the tumor cells, release antigen, and we have shown now that the auristatin payload can also cause immunogenic cell death, which helps cause a more inflammatory microenvironment. So we're really excited about the whole concept of combining ADCs with checkpoint inhibitors going forward.

Okay, thanks a lot. I appreciate it.

Salveen Richter, Goldman Sachs.

This is actually Tom on for Salveen. Thanks for taking the question.

I just wanted to come back to the commercial side for ADCETRIS, following up on a prior question. So if we look at the narrowed ADCETRIS guidance, can you confirm whether you are seeing any kind of pressure on underlying demand from commercial PD-1s or PD-1 clinical trials as those start to ramp up?

What I could tell you is that we just had a record quarter for ADCETRIS, and on top of the quarter before that was a record quarter. And the PD-1s are out there, and they have been out there all quarter -- or at least nivolumab.

And so we still see ADCETRIS being a very important drug that is widely used for its labels. We also have ADCETRIS that is in guidelines for a number of different indications. And so we do not see what you are suggesting is some kind of selloff or decrease or impact on there.

We hear that the checkpoints are used a lot according to their label, which is after ADCETRIS. And so we don't hear a lot different than that. But the sales of ADCETRIS have been very strong. And so we are delighted to say quarter after quarter record ADCETRIS sales.

Okay, great. Thanks again for the question.

Mara Goldstein, Cantor Fitzgerald.

I had a question on the SGN-33A trial with a hypomethylating agent. I'm just curious as to how the -- given the diversity of the data sets regarding hypomethylating agents in AML, how this might affect the powering of the trial, and how you came to the conclusions around the power for the trial, if you are able to speak to that?

Sure. Jonathan, do you want to take that?

Sure. So, Mara, we can't speak to the exact statistical underlying assumptions in the trial. The other thing I would say about -- as you look across AML at different data sets in older, unfit patients, it is very hard to compare from one trial to another, because the exact patients that get enrolled are quite variable.

We really felt like -- that's why we felt like it was important to move to a randomized setting to really understand impact of 33A with hypomethylators.

And within the context of the study and defining it out -- and again, this issue around the diversity of the trials and the data sets -- we have seen different things, particularly as it relates to different histologies. And is that something that we should expect to look at upon subset analysis of this trial?

I'm not quite sure what you mean by histologies. So there's lots of different subtypes of AML.

Subtypes, excuse me, sorry.

Yes. I think in the older patients, you tend to see patients who are unfit due to either advanced age, or frailty, or underlying myelodysplasia, or other things that are poor risk factors. So because CD33 is expressed on essentially all AML, we are able to enroll that broad group of patients who are not eligible for intensive therapy.

Okay. All right, well, thank you. I appreciate it.

Yatin Suneja, SunTrust Bank.

Just a couple questions on the bladder cancer program. You have touched on the efficacy profile for both the programs. Could you maybe talk about the -- your comfort with regards to the safety profile? And what about the ocular AEs that we saw earlier in the trial? Thank you.

Yes, thanks for the question, Yatin. So with 22ME and 15ME, we certainly outlined the efficacy. With 22ME we saw 59% objective response rate; with 15ME we saw 50%. So both of them have outstanding, with 22ME being a little bit higher in the expansion cohort.

As far as safety goes, they both are well tolerated. Now, the ocular toxicity that we reported at ESMO was really seen more in the 15ME trial.

And so when you look at the data -- you know, they had some different toxicities. All cancer drugs have some sort of toxicity that you look at, and you balance, and you see what the benefit/risk profile in that is. And I think that we said in this call that we are prioritizing 22.

And that -- you know, at least on two fronts you can see from our ESMO data; one is that we have a slightly higher objective response rate with 22ME. And on the safety front, we really -- it's a much reduced, if any, ocular toxicity issue that you see with the 15ME. So just from that standpoint, it made sense to us to prioritize 22ME. And I hope that makes sense to you.

Sure, definitely. And then so on 15ME, could you study that compound in any other indication? And then we read some literature, and there is some expression in the eyes. Could that be a problem in future development, if you plan to study 15ME in, let's say, any other indication?

You know, that's something where we have not announced what we are specifically doing. I think when we started this and had these two products for urothelial cancer, I think that if you had told me before we did that we would have both of them having a 50% or greater objective response rate, I would have been delighted, because that is the way higher than anything else reported.

And the fact that both of these, as antibody-drug conjugates, one targeted to Nectin-4, which is 22ME, and one targeted to -- 15ME to SLITRK6, both had that kind of efficacy and a relatively safe profile. I would be delighted.

The fact is that, like I said, 22ME may have slightly better attributes in the efficacy and safety standpoint. So we are focusing on that.

So as far as what we're going to do with 15ME going forward, that is something that we are not repaired really to discuss. That would be something we would have to discuss with our partners at Astellas. But let's just focus on 22ME as really what we are going to be prioritizing.

Great. Thank you very much.

Tony Butler, Guggenheim Partners.

The question is around LIV1A, which I find very fascinating -- and more importantly, will we actually have only triple-negative breast cancer data? Will there be some HER2 negative data as well at San Antonio?

Moreover, will you actually have not only objective response rates, but any PFS rates that will have occurred in this particular study? Thanks very much.

Yes, so we have two different cohorts with LIV1. One is triple-negatives, and then we added a separate cohort of patients that are HER2 positive. And this is done in combination with Herceptin.

And so we were excited to add that second cohort, but that is newer. So as far as what we plan to present this year at a conference like San Antonio, it would be focused on the triple-negative data. And as far as the specifics of the data and what type of responses, that will just have to wait until the conference.

And, Clay, just one additional point there. Will we actually get responses? Will we actually see that, other than just safety data?

Absolutely. Look, we have already reported that there is efficacy with this -- objective responses with LIV1A. We [have] treated more patients.

The drug is an active drug. There's no doubt. You'll be seeing additional activity, antitumor activity, and additional safety data and things. So it's something that we're just broadening out what we're doing and trying to really understand this exciting drug.

We are especially excited, because more than 90% of breast cancer patients -- if you get tumor samples from those patients, they are positive for LIV1A. That gives us a big opportunity to help people.

And so we are studying this. We've made a very effective antibody drug conjugate that clearly has activity. And we're just -- it's not as advanced, so I don't want to tell you too much about this. We're not saying, like we did with 33A, we are putting it into the phase 3 today. But it is absolutely a drug of big interest within Seattle Genetics.

Thank you. And then lastly, how is the enrollment for the HER2 positive cohort coming along?

You know, my -- what I've heard from the project team is that we are doing very well with the entire program. And so I think we should leave it just at that.

Thanks for your time.

Kennen MacKay.

I guess, Clay, this is probably a question for you, and it's relating again to development of 22ME. We have had a lot of conversation about potential development in either post-PD-1 and post-PD-L1 landscape, given atezolizumab's approval, but I wanted to get an understanding why you wouldn't develop this post-progression on adjuvant or new adjuvant therapy, given that this 59% ORR really is the highest that we have -- and is sort of even double what we've seen with the PD-L1s, even in high expressing patients.

I think it's a really good question, and we're not trying to rule out anything, first of all. We just -- we had a question earlier that we are expanding -- because you can see on clintrial.gov, we were expanding treating patients that have previously seen immuno-oncology agents, PD-L1s and PD-1s, because as you know, also the PD-1 data with Keytruda and OPDIVO also look good in urothelial cancer. So it is our expectation that there will be multiple checkpoint inhibitors approved in the not-too-distant future for urothelial cancer.

So it is sort of -- when you treat most patients, they will have pretty quickly seen these drugs. So one thing as a practical standpoint is going ahead and treating patients, and in a population where more than 80% of these patients are going to need therapy really fast. So to us, that seems like a very expedient way to consider looking at development of this.

But absolutely, we're going to be looking at other ways and combinations. And Jonathan, would you have anything you would like to add to this?

Yes. So Kennen, I think it's a good question. And we should -- we're definitely looking at various places where enfortumab vedotin could be useful in bladder cancer. And after chemotherapy, in combination with checkpoint inhibitors, or after are all things that we are very interested in.

Being able -- as I mentioned before, the combination with the checkpoint inhibitor may be able to get the response rate that we are seeing with the high durability that is seen in a small percentage of patients with checkpoint inhibitors. And that could be very exciting.

Got you. Okay. Thanks for the follow-up.

And at this time, there are no questions. I would like to turn the conference over to management for any additional or concluding remarks.

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

That does conclude today's presentation. We do thank everyone for your participation.