Seagen Inc (SGEN) 2018 Q1 法說會逐字稿

Good day, and welcome to the Seattle Genetics business update conference call. Today's conference is being recorded.

At this time, I'd like to turn the conference over to Peggy Pinkston, Vice President of Investor Relations. Please go ahead, ma'am.

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seattle Genetics First Quarter 2018 Conference Call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial 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 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 as those, among others, relating to the company's 2018 financial outlook, including anticipated second quarter ADCETRIS sales and future revenues, costs and expenses, the company's potential to achieve anticipated regulatory and clinical milestones and expected timing thereof including data availability from ECHELON-2 as well as well other planned and ongoing critical trials, including for enfortumab vedotin, tucatinib, tisotumab vedotin and ladiratuzumab vedotin. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include that the company may be delayed in its planned clinical trial initiations, the enrollment in and conduct of (inaudible) the clinical trials, obtaining data from clinical trials, planned regulatory submissions and regulatory approvals in each case for a variety of reasons, including unexpected adverse events or regulatory discussions or actions and the inherent uncertainty associated with the pharmaceutical development and approval process. More information about the risks and uncertainties faced by Seattle Genetics is contained under the caption Risk Factors included in the company's annual report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission.

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

Thanks, Peg. Good afternoon, everyone. The first quarter of 2018 was extraordinary and provided us with powerful momentum towards our goal of building Seattle Genetics into a global oncology company. The approval of an ADCETRIS-based regimen in front-line Hodgkin lymphoma establishes a new standard of care option for Stage III and IV patients and the launch is off to a strong start. We received breakthrough therapy designation from the FDA for enfortumab vedotin in metastatic urothelial cancer, underscoring the strength of our data and the unmet medical need. And we completed the acquisition of Cascadian Therapeutics securing global rights to the late stage breast cancer program tucatinib.

Today, I'll outline key activities with our lead programs, Darren will discuss our commercial progress, and then Todd will discuss our first quarter financial results and provide some updated financial guidance. After that, Jonathan will highlight recent progress with our earlier stage pipeline.

On March 20, we received FDA approval of ADCETRIS in combination with chemotherapy for the treatment of newly diagnosed patients with Stage III or IV classical Hodgkin lymphoma based on the successful outcome of the Phase III ECHELON-1 clinical trial. This approval has the potential to be transformative for patients, where the standard of care has not changed in more than 4 decades. FDA previously granted breakthrough therapy designation for this setting. Approval came 6 weeks ahead of the FDA priority review action date of May 1, underscoring the importance of a new treatment option for patients in need.

Our first quarter sales of ADCETRIS in the U.S. and Canada were $95.4 million, a 36% increase over the first quarter of 2017. Based on the new label for ADCETRIS in front-line Hodgkin lymphoma, the full year 2018 sales guidance we provided in February no longer reflects our outlook. While it is difficult to provide accurate annual guidance at this earlier juncture of the E1 launch, we expect sales of ADCETRIS to be in the range of $105 million to $110 million for the second quarter of 2018. We look forward to providing further guidance as we monitor the dynamics and trajectory of our sales in front-line Hodgkin lymphoma. Looking forward, we anticipate reporting additional key analyses from the E1 trial to further inform the clinical community on patient outcomes from this large global study.

Notably, at ASCO, we will present data on patients treated in North America. We believe these data are a useful indicator of what we would expect to see when ADCETRIS+ AVD is used in conjunction with North American standard of care. In addition, we will report efficacy data from patients who received primary prophylaxis with G-CSF, which were shown to optimize outcomes and reduce adverse events of the ADCETRIS+ AVD regimen. We believe another key driver of ADCETRIS growth in the future will be frontline peripheral T-cell lymphomas, also referred to as mature T-cell lymphomas. This is the setting of our Phase III ECHELON-2 trial. In the E2 trial, we are evaluating PFS of ADCETRIS plus CHP compared to standard of care CHOP chemotherapy in newly diagnosed patients. Approximately 4,000 patients are diagnosed annually in the U.S. with CD30 expressing PTCL. We expect to report data from the E2 trial this year.

Our clinical stage pipeline is an increasingly important part of Seattle Genetics. We believe our multiple and promising late-stage programs will be a primary driver of future growth for the company and enable us to achieve our goal of bringing new medicines to people with cancer. Our lead late-stage clinical program is enfortumab vedotin or EV, which we are codeveloping with Astellas. Our initial focus with EV is in patients with locally advanced or metastatic urothelial cancer, who had previously been treated with a checkpoint inhibitor or CPI. We recently received breakthrough therapy designation from the FDA in this setting and acknowledgment of our Phase I data and the lack of available options for these patients. Updated data from the Phase I clinical trial of EV will be presented in an oral session at ASCO in early June.

We are conducting a single-arm, single-agent pivotal trial of EV known as EV 201 in urothelial cancer patients who have previously received a CPI. The primary endpoint of the trial is confirmed objective response rate. Most patients in this setting have also been treated with cisplatin or carboplatin, 2 platinum-based chemotherapy agents commonly used in urothelial cancer. We are evaluating 2 CPI-treated populations, platinum-treated patients and those who have not received platinum. We expect to complete enrollment in the first group of patients before the end of the third quarter of this year, positioning us for data in the first half of 2019. This represents a potential expedited pathway to registration in patients who have already received both platinum and a CPI.

In addition, we and Astellas plan to expand the program and continue enrolling patients with urothelial cancer who have received a CPI but not a platinum agent. We believe data from this separate subgroup of patients could potentially serve as the basis for a second label indication. Complementing our single agent strategy, we are conducting a Phase Ib trial of EV in combination with pembrolizumab for first or second line metastatic urothelial cancer. This could serve to provide data on EV in an earlier line of therapy and allow us to further understand the potential value of combining ADCs with CPIs.

Lastly, in mid-2018, we and Astellas plan to initiate a Phase III trial of EV in the post-CPI setting. This study, called EV 301, will enroll approximately 550 patients and is intended to serve as a confirmatory trial and support global approvals. The primary endpoint will be overall survival. Our next late-stage program is tucatinib, which recently entered our pipeline through the acquisition of Cascadian Therapeutics. Tucatinib is an oral small-molecule tyrosine kinase inhibitor, or TKI, that is highly selective for HER2. We believe tucatinib has the potential to be a best-in-class TKI based on its tolerability profile and its potential in patients with HER2 positive metastatic breast cancer. We are evaluating tucatinib versus placebo, each in combination with capecitabine and trastuzumab in a randomized pivotal trial called HER2CLIMB for patients with HER2 positive metastatic breast cancer, with or without brain metastasis. The primary endpoint is progression-free survival. The trial is intended to support applications for approval in the United States and European Union as well as in the rest of the world.

Despite major treatment advances, there remains a high unmet need and no standard of care exists for third line HER2 positive metastatic breast cancer and management of brain metastasis. Patient accrual in HER2CLIMB has been robust and is expected to be completed in 2019. In addition to the initial registration pathway in the third-line setting, tucatinib may have a role in earlier lines of metastatic breast cancer as part of a combination regimen, such as with TDM-1 as well as in other HER2-positive solid tumors such as metastatic colorectal cancer. We are currently evaluating the potential for a broader development plan with tucatinib. Tucatinib expands our breast cancer portfolio alongside ladiratuzumab vedotin or LV. LV is an ADC for metastatic triple-negative breast cancer. We are conducting multiple Phase II clinical trials with LV, both as a monotherapy and in combination with CPI.

Lastly, with tisotumab vedotin or TV, we and our partner Genmab are on track to initiate a pivotal Phase II single-arm, single-agent trial for women with advanced cervical cancer in the first half of this year. Target enrollment is 100 patients and the primary endpoint is confirmed objective response rate. The trial is intended to support regulatory submission under the FDA's accelerated approval regulations. In addition, we expect to initiate a Phase II trial later in 2018 evaluating TV in combination regimens for first line cervical cancer. We also believe that TV may have applications across other solid tumor types based on data from a Phase I dose escalation trial. We plan to initiate a Phase II basket trial that will enroll multiple solid tumor types that express tissue factor. As an update matter, based on a thorough review of our portfolio, we have decided to no longer develop 19a, and our clinical stage PVD-based ADCs. This decision allows us to focus resources on our most promising programs.

As I said in my opening, 2018 is off to a great start and the first quarter marked several significant accomplishments. ADCETRIS together with our later stage EV, tucatinib, TV and LV programs strongly position us to address unmet medical needs across both hematologic malignancies and solid tumors.

At this point, I'll turn the call over to Darren to discuss our commercial activities. Darren?

Thanks, Clay. ADCETRIS net sales were $95.4 million in the first quarter, up 14% over the fourth quarter of 2017. This is the highest sequential quarter-to-quarter growth since 2014. Net sales increased 36% compared to the first quarter of 2017. There were 2 main contributors to the growth in the first quarter: first, we began promoting ADCETRIS plus AVD chemotherapy for frontline treatment of patients with stage III and IV Hodgkin lymphoma following FDA approval on March 20. This approval was based on the Phase III ECHELON-1 trial, which was presented at ASH last December and simultaneously published in the New England Journal of Medicine. And second, we continue to see adoption of ADCETRIS for the treatment of primary cutaneous ALCL and CD30 expressing mycosis fungoides following FDA approval for this indication in November of last year. The commercial team was ready for the early FDA approval of ADCETRIS+ AVD and immediately began promotion. Initial launch metrics are encouraging. Our expanded sales force has already reached a significant portion of target physicians and over 150 new community-based accounts ordered ADCETRIS since March 1. Utilization in the community setting, where the majority of front-line Hodgkin lymphoma patients are treated, has been very positive. A regimen that eliminates bleomycin and has the potential to increase long-term disease-free survival appeals to both patients and oncologists. Our goal is to ensure treating physicians are familiar with the frontline data so that they are prepared to offer it to the appropriate newly diagnosed patients. This incident population is treated for up to 12 cycles or about 6 months. I'm pleased with the way the commercial team has executed on the launch of ADCETRIS in frontline Hodgkin lymphoma. Doctors and patients are enthusiastic about the regimen and reimbursement to the label is going very well. I look forward to sharing more details about the launch in future quarters.

I will now turn the call over to Todd to discuss our financial results.

Thanks, Darren, and thanks to everyone for joining us on the call this afternoon. We ended the first quarter in a strong financial position, while accomplishing a lot with ADCETRIS and across our pipeline. We also closed the acquisition of Cascadian, completed an equity financing and entered into new technology and licensing deals. Several of these transactions during the quarter were not reflected in our prior guidance, causing our expenses to exceed consensus, but these activities are intended to drive our future growth.

Today, I'll summarize our financial results for the first quarter as well as provide some revisions to our financial outlook for the year as a result of the events in the quarter. Total revenues in the first quarter of 2018 were $141 million. This included record ADCETRIS net sales in the U.S. and Canada of $95 million. As Clay mentioned, we are guiding for second quarter ADCETRIS net sales of $105 million to $110 million. We are very early in the launch and as we gain more experience with ADCETRIS in the frontline settings, we will provide further updates.

Royalty revenues in the first quarter of 2018 were $16 million compared to $17 million in the first quarter of 2017. Beginning in 2018 and in accordance with the new accounting standards for revenue recognition, we now report royalty revenues in the same quarter of drug sales by Takeda. If not for this change, we would have reported total royalties of $23 million in the first quarter, reflecting strong year-over-year sales growth by Takeda in its territory. Collaboration revenues were $30 million in the first quarter of 2018, driven by amounts earned under our ADC collaboration with Takeda and our ADC deals. This included an $8 million milestone payment from AbbVie. To date, we've generated approximately $400 million from our ADC collaborations, primarily from upfront and milestone payments. There are now 3 ADCs in late stage development using our technology, 1 by each of Roche, AbbVie and GSK. Under these deals, we are entitled to receive substantial milestones and single-digit royalties on sales of ADCs that use our technology.

R&D expenses increased to $153 million in the first quarter of 2018. The increase reflects higher investment in TV, LV and in the rest of our pipeline.

As a result of the recent acquisition of Cascadian, we are increasing our expectations for 2018 R&D expenses to now be in the range of $530 million to $580 million. These factors in the ongoing cost of tucatinib development as well as expenses in the first quarter related to upfront payments under our recent collaboration agreements with Pieris and PharmaMar. SG&A expenses increased to $66 million in the first quarter of 2018. This increase reflects transaction costs associated with the acquisition of Cascadian and increased commercial cost to support the launch of ADCETRIS in front-line Hodgkin lymphoma. We are updating our guidance for total SG&A expenses for the year in 2018 to now be in the range of $220 million to $240 million. For both R&D and SG&A expenses, first quarter results reflect one-time items that are not expected to continue, but are included in our guidance for the year. For R&D, this includes $35 million in business development-related cost, and for SG&A, it includes $15 million in costs associated with the Cascadian acquisition.

We ended the first quarter with $400 million in cash and investments. During the first quarter, we completed an equity financing, raising $658 million in net proceeds. This was primarily used to fund the acquisition of Cascadian for $614 million. Not included in our cash position is $180 million related to our common stock holdings in Immunomedics and Unum. We marked these shares to market, and as a result we reported a noncash charge of $19 million during the first quarter.

And with that, I'll turn the call over to Jonathan.

Thanks, Todd. Today I'll highlight some of the exciting technologies and programs in our earlier stage pipeline. Many of our recent advances were featured at the ACR Annual Meeting earlier this month in 9 separate presentations. Our scientists continued to perform groundbreaking research and provide many exciting preclinical programs to fuel our pipeline. There are 3 themes from these presentations as well as other publications: first, we continue our leadership in the field of ADCs through the development of novel payloads, linkers and antibody technologies. Our latest program to advance into the clinic, SGN-CD48A, is an example. It uses our second generation MMAE drug linker, which our preclinical research shows to have a wide therapeutic index due to increased chemical stability, reduced hydrophobicity and greater number of drugs per antibody.

Second, we're generating data that support the potential for ADCs to be a preferred partner for checkpoint inhibitors due to targeted cell killing and immunogenic cell death. Ongoing combination clinical trials are evaluating CPIs with ADCETRIS, EV and LV.

And third, we have a growing pipeline of proprietary and innovative immuno-oncology programs that are differentiated and target critical elements of the tumor microenvironment.

Some highlights from AACR include the following: our new technologies were described in 2 presentations. We reported preclinical data on a new proprietary payload referred to as NAM PT inhibitors, which may have an enhanced therapeutic window. In addition, we presented our masked antibody technology, a novel approach to producing antibodies that selectively bind their target when activated within the tumor microenvironment. This technology can be applied to targets with potentially problematic normal tissue expression for future development. Also at AACR, we presented preclinical data with 3 of our auristatin ADCs, ADCETRIS, ladiratuzumab vedotin and SGN-CD48A, including in combination with checkpoint inhibitors. These data demonstrate additional mechanisms of action, including the ability of ADCs to cause immunogenic cell death and support the clinical trials being conducted across our ADC portfolio in combination with CPIs. And finally, we made 2 presentations on our non-ADC portfolio. First, we reported encouraging biomarker data demonstrating inhibition of [hucopulation] with a novel immuno-oncology agent SGN-2FF at the first dose level of our Phase I trial in patients with solid tumors. And second, we presented preclinical data with SEA-BCMA, which employs our sugar engineered antibody technology to enhance ADCC. We plan to advance SEA-BCMA into a Phase I trial for multiple myeloma this year. It's a remarkable time in the field of oncology, with unprecedented advances for patients and novel therapies for solutions. Seattle Genetics is strongly positioned to harness its leadership in ADCs, its expertise in targets in antibodies and its focus on developing innovative new medicines for people with cancer.

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

Thanks, Jonathan. I'll close with a short summary of key milestones expected over the remainder of 2018. They include: reporting data from the ADCETRIS Phase III ECHELON-2 trial; completing enrollment in the EV pivotal trial, EV 201, in urothelial cancer patients, who have previously been treated with a platinum and a CPI; continuing to enroll the HER2 client trial of tucatinib in metastatic breast cancer; and initiating the pivotal trial of TV in cervical cancer. At this point, we will open the line to Q&A.

Operator, please open the call for questions.

(Operator Instructions) And we'll take our first question from Cory Kasimov from JPMorgan.

I guess my first one on ADCETRIS. It was a nice quarter for the product and I wanted to follow-up on Darren's comment regarding E1 approval. Is -- that the E1 approval on March 20 was a contributing factor to the step up in sequential growth you saw. And it's pretty impressive given how little time there was left at the end of the quarter at the time of approval. So I'm curious if you're seeing some sort of warehousing effect with docs holding patients for the anticipated launch of this drug?

Cory, thank you for the question. Places don't really warehouse our drug at all. These are drop shipped and used as needed. What it more reflects, I think, is that our data came out of ASH and that was in December, and we published simultaneously in the New England Journal and doctors started seeing this. And while it wasn't like -- it wasn't on label yet, but anybody that potentially had pulmonary insufficiency or things like that, docs have to consider things, not using bleomycin in certain patients. So I think that there might have been some use there, although, not in a huge way until we approved it. Darren, you want to make any additional comments?

Yes, Cory, we saw -- we had been in the field. We expanded our sales force as I stated in the last call to 90 sales representatives, and we were ready. They had been deployed. We did see a little bit of use, as Clay alluded to, post ASH and post the New England Journal publication. But nothing of significant note until right at approval. We were ready to execute and we have. You might be referring to, did physicians hold on to patients or what have you. I do not get a sense that they did that. And so we're really pleased with the uptick so far. Particularly, in the community, as I alluded to, and we're off to a great start.

Okay. Yes, and I was referring to hanging on to patients, not of warehousing the drugs. And one follow-up question, and, again, with the understanding it's only been 1 month since you got the E1 approval, but I'm curious if you could talk a little bit more about the response you've seen in these early days from payers. Has there been any pushback in terms of access? And are you aware of doctors trying to get Stage IIb patients onto treatment?

Yes, so thanks, Cory. We feel that there is a very strong alignment with payers right now in our label for sure and that's what we're promoting to our label. As far as your question on other tumor stages, Stage IIb is treated very similar to stage III and IV on our labels, and Stage III and IV. So certainly we've heard of questions from some docs, but that's really where we are now. It's pretty early in this game. Darren, you want to add to that?

So I think III, IV, Cory, we're absolutely aligned with the label. No issues there. And I think it's too early on the IIbs to see how that plays out, but were focused strictly on within the III, IV label, and docs are very, very pleased with a new treatment now. They haven't had one in 40 years and ADCETRIS+ AVD in III, IVs, is really, really exciting to both patients and their physicians.

And we will take our next question from Geoff Meacham from Barclays.

This is Jason jumping on for Geoff. I just had a follow-up for ADCETRIS. I was curious, you mentioned that the response has been overwhelmingly positive. Has there been any pushback from docs who, I guess, are more used to bleomycin and kind of what are your expectations for kind of moving this population over to the E1 label?

So it's a good question. Thank you for that. Doctors have been leaning on a bleo regimen called ABVD for 41 years. And largely this has been a chemotherapy success story. It really changed the lives and improved the lives of patients. What we did is take it up a notch further. We have now gotten rid of the toxic effects that are in bleomycin by not using bleomycin. And at the same time, this was the first time that any regimen, and there have been at least 10 different trials looking to get rid of bleomycin, the first time anyone's shown a higher level of long-term disease-free survival. So we did the 2 accomplishments we wanted to do, get rid of bleo and improve the outcome on patients. But as you mentioned, doctors have been using ABVD for a long time and over 4 decades. And so they don't all just on day 1 change and say, "Okay, we're just going to drop everything." That’s not the way docs work. But I could tell you, that since March 1, we've had 150 new accounts coming on board, which is a lot. And as we talk to docs and we hear from them, docs are excited about this. They've all had experiences -- not all but a lot of them, I should say, have had experiences where they see the toxic side of bleomycin and a really bad result. And docs hate treating patients with a drug that actually hurts the patient more than helps the patient at times. And so they're really excited to have this new regimen to work on. And I think that with time, it's just going to continue to grow and grow and grow as our staff, our field staff is out there talking about the data. I just think we're in a really good position. And Darren, you may want to add something to that.

Yes, I think the evolution of the brand over 6 years, we started relapse refractory and we've gone to consolidation posttransplant. And now in the frontline setting, there is a new audience of physicians now that will be treating patients that haven't used ADCETRIS in the past. So our mission is to go out and educate them on the data and that will take some time for some of those that you refer to that will be a little bit later in the adoption curve. But we're also -- another key piece of this patient population, the front-line stage III, IV, is it's a younger patient population and they seek information. And we have things in place that are able to educate patients. And I think what you'll also see is patients coming in and talking about this option with their physicians. So we feel, over the long haul, the data really, really stands on its own. Physicians have been waiting for it, patients have, and so we couldn't be more excited about the future.

Jonathan, you have a comment as well?

Yes, I haven't heard anything from any physician about missing bleomycin or wishing that they could continue to use ABVD for their patients. So I don't think that's going to be an issue at all. And in fact, for decades they've been trying to minimize or eliminate bleomycin.

As a quick follow up, what is your expectation for guidelines and how those would change and kind of what that impact is going to be?

That is a second question, but not a quick question. So I'll try to give you a quick answer, and we'll let someone else ask questions as well so everyone gets a turn here. We are in guidelines already in stage III and IV. So that's really good. I think that when you -- I'll tumble to the most important part. As we put out more data like the North American data at ASCO and those get published, absolutely those kind of data will be brought to guidelines, and guidelines like to see publications and more data and we're going to be doing that. And I think that could only help us and not hurt us. I would encourage you to go to ASCO and look at our North American data. We're pretty darn excited about it.

And we'll take our next question from Kennen MacKay from RBC Capital Markets.

I was going to congratulate you in getting added to NCCN Guidelines and I just had a question on that. I had wondered about the amendment to your NCCN Guidelines to do a PET scan after 2 cycles and restage these patients. And just wondering how we should be thinking about the average number of ADCETRIS cycles that patients are getting. Can you help us understand how many patients after 2 cycles and a scan would be Deauville 1 through 4 and getting 4 more cycles versus Deauville 5 and switching to other therapies, potentially switching to other therapies, I should say?

So thank you for the question. Jonathan, would you like to opine on this?

Sure, Kennen. The whole idea of doing the PET scans after cycle 2 is really driven by the raffle approach to try to get rid of bleomycin early. And it's isn't really applicable to the A+ AVD regimen at all. So I think that it's now becoming more of a standard of care, particularly in patients who aren't using A+ AVD, because it's an indication that the treatment is not working if the PET scan's positive and they should switch to something else or try to get rid of bleomycin early. But that really isn't relevant to our setting and there's no data regarding stopping ADCETRIS at any point in the regimen.

So I'll add to that. Our expectation here is a little different than the expectations that we had coming into relapse refractory patients, where in our trial, we averaged about 8 doses of ADCETRIS and those were every third week. And when you do that in the relapse refractory patients in a trial, and then you get out into the real world of treating doctors, there's a lot of things that happen. And some patients get on going to CR pretty quickly when it's transplant. And we get 4 cycles and it was a total success, but we were averaging about 6 to 6.5 cycles in those patient populations. This is a different population. This is in a frontline setting, with a curative intent. And so patients should be getting their 12 doses and the doses are they get 2 a month, so it's every second week. And we think we're going to get a high percentage of patients to actually stay on and get their full cycles, because this is upfront with curative intent. It's not patients that have been treated and failed other things. So it's a little bit different, and I'm not sure you were asking about that, but it occurred to me. And Jonathan has another comment.

Yes, just one more thing. There will be an abstract at ASCO on looking at the effect of the cycle 2 PET scan in the ECHELON-1 trial. And we reported in the New England Journal article on the actual differences in PET negativity. This will also address outcomes for those patients based on whether they were PET negative or PET positive and I think that'll be informative to physicians.

We're looking forward to, and excited about, that presentation.

I guess, 1 other follow-up question there. It seems like in all stage III/IV classic Hodgkins there was an NCCN category IIb rec. But in patients without any neuropathy, it was a IIa recommendation. I guess, can you help us understand that baseline and what percent of these patients have any neuropathy whether it could be a sort of a IIb versus don't have anywhere would be a IIa. And then I guess, moving on from that is there any sort of additional data, again, you talked about presenting some of the data at ASCO from the North American experience, which remembering back at the ASH data had looked much more impressive, both from an efficacy as well as a safety perspective than the rest of the world experienced. Is that something that could maybe help move this recommendation again all the way up to a IIa?

Sure, go ahead Jonathan.

Okay, we'll just start with a very few patients who are -- these are generally younger patients and untreated will have neuropathy at baseline, so I don't think that's a major issue. You're right, that hazard ratio was very different for North America on that, as shown in the publication and the presentation, and we'll have a lot more data on that. I think it's important for physicians to understand that there are some regional differences potentially in the way patients are treated. And we think that'll be an instructive presentation.

And we'll take our next question from Adnan Butt with Guggenheim Securities.

I have to ask, at this time are you able to shed some light on what you're using as assumptions for your second quarter guidance number for ADCETRIS?

Sure, Todd?

Thanks for the question. So as I think you heard on the call already, we're very early in the launch. We just got label right at the end of March. So we're starting to collect some market data. And we're launching launch trajectories, and we're trying to do the best we can to provide a little bit of color on kind of how we think this is going right now. But recognize, this is really early and we just really need to have a little bit more time to study what's going on. And I think as we do that, we'll be in a position to provide a little bit more color on how we think this is going to go. But for right now, we wanted to hold our guidance to just Q2.

Sure, Todd. But then in the second quarter, can you say how much, if any, frontline sales you're expecting?

We don't break that down, Adnan. We've never broken down the different categories. Because now this is our fifth label and we've also said that we do get some off-label use based on guidelines, which include for instance, B-cell lymphoma, CD30-positive B-cell lymphoma. So there's a lot of pieces and parts to this and we just don't provide that level of guidance. But keep in mind, in this quarter, we went up from a quarter-to-quarter, from the fourth quarter to the first quarter we went up 14%, which was the largest quarter-over-quarter sequential gain in 4 years, okay? And we're guiding to another pretty large sequential gain that could be close to another record kind of quarter in gain on a quarter-to-quarter sequential basis. So we're thinking about this really -- I mean, this is really great. We are out there. Docs are employing this. We have a lot of new docs ordering, a lot of docs that ordered in the past are ordering. We're helping patients. We're moving upstream. But as, we were asked the question earlier, it is a regimen, ABVD that's been used for 41 years. So our salespeople are out there, they're doing a great job in educating, and we will build this market. We are excited about it. But as Todd said, it's really -- it's hard to provide accurate guidance now. That's why we withdrew our guidance for the year and just to giving a quarter now. Because it's super important for us to be accurate and reliable when we give out guidance. And so we will at our soonest possible time, when we feel comfortable, we'll come back with more guidance and go back to annual guidance. But we're just suspending it for a short period of time while we learn a lot.

Let me switch tacks and ask a pipeline question, please. It's for enfortumab, can just clarify the timelines for the platinum exposed versus nonexposed patients? And is that the same Phase II pivotal that you're talking about? And then when -- which one reads out -- when they readout, please?

Sure. So what we announced at this -- in this call, is that we will be done with enrollment of patients, urothelial patients that have seen both platinums and CPIs by the third quarter, okay? So sometime between now and the end of the third quarter, we'll complete enrollment that what we need for that to our study, which is intended for registration. And I'll remind you we recently got breakthrough therapy designation for EV. What has come to attention is that there really is a large amount of patients that have seen both platinum and checkpoints. It's a much smaller amount of patients that have not. And the playing field's changing. And -- so Jonathan can comment a little bit on the playing field in urothelial cancer. But we think by putting together a data package on the third line, if you will, that have seen both platinum-end checkpoints, and there's really no other option for the patients, that's the quickest way that we could get to registration. While we continue to enroll to the patients that have just had checkpoint and were ineligible for platinum, which is we're viewing as a separate population. And Jonathan, do you want to give a little bit more color to that?

Sure. It's a rapidly changing area with checkpoint inhibitors coming in to relapse refractory patients and now moving up to frontline and there's combinations. And so because of the way it's been introduced, most patients at this point have seen one of the 2 platinum compounds, either cisplatin or if they are ineligible for that, they get carboplatin. So what we're seeing is that the majority of our patients have been exposed to the checkpoint inhibitors and one of the platinum compounds. And that enrollment is going so well, we don't want to hold up anything. We want to move as quickly as possible to finish that off and get it submitted. As things are changing and people are starting to look at using checkpoint inhibitors without platinums, there's an increasing number of patients that will be coming and we'll be able to enroll those and then have another submission.

And we'll take our next question from Salveen Richter from Goldman Sachs.

And you'd mentioned earlier that there are over 150 community-based accounts that have ordered ADCETRIS. Can you just put this in context in terms of the community oncologists that you have targeted to date?

Sure. Thank you for the question. And I will let Darren give you some more color in here. But I'll start by saying that, in the frontline setting it's probably something about 3/4 of patients are treating at the community setting. So it's different than the later stages, where in the past, before ADCETRIS, I mean, you would get ABVD and then there wasn't really anything else approved and docs would throw some chemotherapy that wasn't approved at patients and they didn't know what to do and they had to call the cancer centers like the Memorial Sloan Ketterings or MD Andersons and say, I don't know what to do. That's where we started in 2011 with our approval saying, "Okay, here's an option there." This is very different. This is in frontline, where the regular doctors want to keep their patients and have a high chance to use a well-tolerated regimen and get a long-term disease-free survival and cure, because in Hodgkin lymphoma you can get that. Darren, you want to talk a little bit about community and what this represents?

Yes, Salveen, it's as Clay said, 3/4 of the patients are diagnosed in the community. There's roughly 7,000 or so community individual physicians throughout the country, but they're around group practices, academics and then large community settings. We've been -- in the 6 years, 6.5 years ADCETRIS has been on the market, I've been calling on majority of the academics and a lot of the community. But now over time, have branched now into some of these other community accounts. And again, these are new community physicians that are currently ordering, and we anticipate to see more as we continue to reach into these new customers and tell the story of ADCETRIS and Hodgkin lymphoma. And we'll continue to update on our progress as we move forward.

And then just with regard to TV and tucatinib. Can you just provide us with some timelines for when we might see the pivotal data sets?

Well, with TV, I would tell you that we are going to start the registration study in the first half of this year. So that means in the next few months. And we're working closely with our partners at Genmab on that. And I was recently over in Utrecht, which is where they're based. And I visited their site, which is outside of Amsterdam and they've been here in Seattle. So we have a really great collaboration going on with Genmab. And so we haven't given -- until you start a study and get it to enrollment we're not going to give you when this is going to be completed. But we're going to be starting the pivotal study in only 100 patients, cervical cancer patients, with a readout of objective response rate. And so we think this could go and get accrued very rapidly. And then it's very fast to get the data on this. So we think this is a not-too-distant opportunity for us with TV. You asked about tucatinib, and I'm really excited about this, this is why we went ahead and acquired Cascadian. The HER2CLIMB trial is accruing in a robust fashion and I could tell you that I'm going to be disappointed if we don't expand pretty dramatically different ways we're interrogating tucatinib to help cancer patients, because there is a lot of different data that was out there generated in trials such as in combination with TDM-1, or such as what's ongoing in colorectal carcinoma. And so there's a lot going on right now with tucatinib that has been going on. And I think we're well positioned to look at this and consider expanding this program. We're not going to outline the specifics of what we're doing now, but we'll certainly be -- I think it's obvious we'll be expanding this program.

And we'll take our next questions from Tazeen Ahmad from Bank of America.

Maybe one about the results for the quarter. Can you just remind us how many days in the quarter you were promoting the full label for ADCETRIS? And then in terms of trying to get expansion, you talked about getting a second expanded label. And also, I wanted to get your thoughts, Clay, on whether or not you think it's useful to run a study in Stage I/II patients as well?

Okay, so let's do these one at a time. As far as -- how many days were we out there promoting to it, our approval was on the 20th and I believe there was 6 business days.

Selling days, I believe so.

Selling days there, because the rest were weekends. So we were promoting starting on April 20, we did not...

March 20.

At March 20, sorry. We started promoting that day, because we had trained and were positioned and everyone was out in the field. So it was not -- we didn't waste an hour. And so every day, every business day since March 20 through the end of the quarter, we were out there promoting this. You asked about Stage I and II and let's go to that one. So there are quite a number of studies, I don't remember, it's 5 or 6 different trials, and we're supporting these with grant dollars. And these are investigator or consortium trials that are looking at Stage I and II. There was in fact, one of these trials, which came out of Memorial Sloan Kettering was presented, the data was presented at ASH 2017 and was presented by the lead doc, Anita Kumar. And she gave a resoundingly beautiful presentation showing how effective ADCETRIS AVD was in the Stage I and II patients that they were looking at. And every one of these trials is a little bit different, but the data that she presented on behalf of her consortium was outstanding. And I have to think with these 5 or 6 trials that are going on in different consortiums and with the data coming out that, especially, after the first data set, which was so powerful that at some point we have a decent chance to get in guidelines in earlier stages of Hodgkin lymphoma based on the preponderance of the work that is ongoing right now. I don't know if that was your exact question. And then you asked one more thing on expansion of label and can you ask that again? I don't remember what you were asking.

Yes, it's related to that. And perhaps over time and maybe that's in the near-term, you can get included in compendia based on the studies that have been completed in Stage I/II. But I guess, in your mind, how important is it to have an actual label for Stage I/II given that physicians are often known to use off label within oncology?

Right. Well, first of all, judging based on being on the market for many years now with ADCETRIS, physicians do use ADCETRIS off label and that happens and we know it and we try to track it as best as we can, it's hard to track perfectly. It's not something we report on, but we are aware of that from physicians. And looking at Stage I and II, I can't say now, it's so early, whether there'll be off label use in those stages. I have to think that I would be surprised if there was none and that docs do, as you know, oncology docs do tend to use this, depending on the patient, depending on the situation. And I think that what Darren said, a lot of young people get Hodgkin lymphoma and they're very savvy, very tech savvy and they read about not using bleomycin and the side effects of bleomycin. And they go in and they ask their doctors about it. We've already heard that from our sales people, that patients come in and say, "Hey, I'm diagnosed with Hodgkin lymphoma, I read about this, what about this." And they talk about the options. So it's kind of interesting to have them selling it to themselves based on not wanting to use bleomycin and getting an increased long-term disease-free survival, so the data supports itself. I don't see the company right now, and I don't want to say permanently, but right now I don't see us doing a corporate study in Stage I and II. I think it would be a very long study and take a lot of patience to do, both in terms of number of patients and my patience, thing to do. And I think that we're better off right now funding and through grants, consortiums and docs doing investigator sponsored trials and group studies, and the ROI on funding those types of events, based on what we've done historically, such as in cutaneous T-cell lymphoma is so high. So a very high ROI taking a drug like ADCETRIS. And when doctors come to us say, "Hey, we want to do all this exploratory work." And with the grants that we're giving, it's a pittance of dollars compared to what a corporate trial costs. So it's very cost effective. And really gets ADCETRIS out there into a lot of doctor’s hands in Stage I and II. And the more doctors that want to touch it in Stage I and II, they're going to get used to this, they're going to get used to not using bleomycin and that's a good thing.

Tazeen, this is Todd, I wanted to add one more piece of color. When you think about the growth that we saw in the first quarter and the March 20 approval date, I think it's important to factor in a couple of growth drivers for the quarter. Certainly, the approval was one of them and the work that Darren and his team were able to do from a promotional aspect once we got approval. But I think as you also know, the data were presenting at ASH there was a New England Journal of Medicine publication on the results. So the data were out there early. But the other growth driver in the quarter was, Darren and his team had a full quarter to work with the ALCANZA label in cutaneous T-cell lymphoma. So there were a number of good things that happened during the quarter, they didn't just happen on March 20.

And then maybe if could just ask a pipeline question. You're expecting the HER2CLIMB trials to complete enrollment in 2019. So I guess, best guess when do you think, Clay, we can see a readout on the study?

Well, it's a trial that is enrolling great, like I said. And we have not given a specific date on the readout of it. But we have said that we'll complete enrollment in 2019 and that's looking very good based on the enrollment that we're seeing right now and the accrual that we're seeing right now. So I understand your question, but I think we haven't yet given specifics on this and when it'll readout. But we're really bullish on this. We think that tucatinib is a very active and effective HER2 TKI, but without the side effects that you see in some other -- in the other 2 HER2 TKIs that are on the market. And probably because it hits HER2 TKI very strongly, but it hits EGFR very, very weakly. I wouldn't call it 0, but much weaker than the other ones. And that's where you get the rash and the diarrhea and these toxicities that you get are, we think, largely due to hitting the EGFR TKI. So this is just a more specific TKI to HER2. And we think that, that could change the paradigm of the safety profile, but also if it's -- with that added safety, patients could stay on this drug longer. And it may result in even better efficacy because patients could stay on. So we think we really like this program and we're working hard on it.

And we'll take our next question from Boris Peaker with Cowen.

I'll just throw one question out there. And maybe this one is for Darren. Just curious what are you seeing in terms of adoption of checkpoint inhibitors in Hodgkin lymphoma and kind of what is your strategy to work with that landscape?

Well, Darren could certainly answer that. We don't track -- I mean, that's not our product, checkpoint inhibitors. So you're asking about what's the adoption there. Largely they're used after ADCETRIS, that's really how they are employed by doctors in there, so we're pleased they're there, it's an option for patients. But going into frontline and getting more long-term disease-free survivals, and we think which will result in more cures, hopefully we're not treating people as much in the later -- late stages of Hodgkin lymphoma. Additionally, we have this trial that's ongoing in collaboration with Bristol-Myers Squibb called CHECKMATE 812. And it's in patients that have relapsed and that's an ongoing study of ADCETRIS plus nivo versus ADCETRIS alone, and which is based on strong, strong data that we reported at ASH last year on the combination of ADCETRIS and nivolumab in relapsed patients. So incredibly strong data. We're pretty fired up about those data.

And just to clarify, I just want to know, in terms of the duration of treatment are you seeing any impact on the number of cycles, because now you have another option after ADCETRIS that the physicians didn't have, or is there really no impact on the duration of treatment in relapse refractory patients?

Boris, as Clay alluded to, in the relapse setting where the CPIs are approved, ADCETRIS is first. And physicians really haven't -- it hasn't impacted their approach to treatment and around duration. Duration has held steady at around 6 in the relapse setting.

And we'll take our next question from Mara Goldstein with Cantor Fitzgerald.

Just on tucatinib. There have been some other studies, ISTs, I believe, that are underway with tucatinib, one of which is MOUNTAINEER, which might have some interim data, and is that still anticipated? And the second is, if I could just go back to the ADCETRIS in the community setting. Do you think now that you're seeing this influx of physicians in the communities saying they hadn't been really previously using ADCETRIS, that these docs will be essentially keeping more of relapse patients in the community rather than referring them out?

So first of all, thank you for the question on tucatinib. And yes, I mean, there are some ISTs. I imagine as you look to the future, there will be more. And MOUNTAINEER is -- I think that's the colorectal cancer IST, and yes, that is still operational. And we look forward to, at some point, the data being presented, absolutely. We are certainly in contact with the physicians that are working on these programs. And I don't want to tell you anything specific about this, but we're very excited about what's going on with tucatinib outside of breast cancer, outside of HER2 breast cancer. There's other areas of HER2 positivity such as colorectal cancer, which are pretty exciting, so you'll hear more about that looking to the future. And you asked about a question, which is about the community docs, and with the influx of community docs in the frontline, will they use ADCETRIS more in the later lines because they become more comfortable using it. Darren, do you want to make a quick comment?

Yes, I think they will keep the patients and not send them to an academic setting. We've seen this transition in the 6.5 years, so we will continue to see that.

And we'll take our next question from Yatin Suneja from SunTrust.

Just a couple of question, maybe we'll start with tucatinib. It looks like there will be a presentation at ASCO looking at the retrospective pool analysis. Could you tell us what we should be anticipating from that presentation?

Well, the titles are now out, but that data -- the abstracts are not out and the data is not out, so you could see the title but any more than that we really need to present this at the conference by the presenters. So I don't feel that we should be talking about the specifics of what we're going to be presenting there, but we're really excited that tucatinib will be represented at the ASCO event. We have quite a lot, I don't know exactly, maybe 10 or so presentations at ASCO across our pipeline. So we're really looking forward to ASCO being a big event for us. And historically, all of you know that historically, ASH has been our big event and we've been doing a lot of focus there. But I would say that ASH and ASCO are going to be both our big events now. And so we're transforming a little bit, becoming a multi-product company and doing both heme and solid tumors and so go ASCO and go Ash.

Great. Maybe just 2 quick questions. The first one is, were there any changes to inventory level in Q2? And the second one, just a little broader question, now that you have approval in the frontline setting, frontline HL or Hodgkin setting, I think probably the biggest indication of the currently approved indications that you have, and we acknowledge it's early days, how are you looking at the profitability, I mean, any high-level comment on when and how quickly you might achieve that?

Sure. As far as inventory levels, we've been manufacturing this for years and we have great inventory on it, and we keep the right amount. I don't think we saw any -- there was not people storing it in some channel, if you're asking at all. This is -- it's a drug that people drop ship, they order it, they get up the number of vials they need. They treat the patients. When they need to retreat the patients, whether it's a frontline or later line of patients, they reorder it in 2 weeks or reorder it in 3 weeks, they get it the next day. They get it a couple days ahead of when the patients come in. And it's on time delivery, there's really no stocking of this, if you're asking, so that didn't get affected. The other thing you asked us is about profitability now that we're in frontline and thank you for the question. We want to be profitable, we expect to be profitable and we certainly could be profitable now based on our revenue if we skinny down everything and didn't do what we’re doing, but we have a vision that we could make Seattle Genetics into a much more powerful, big, expansive company and helping a lot of more patients. And have 2, 3, 4, 5 drugs on the market and really become one of the success stories in biotech like you see with other companies like Biogen and Gilead and Celgene and we aspire to doing things like that and becoming a really valuable, important company for cancer patients. And we think we have the nucleus to do it, we have the pipeline to do it. So it doesn't feel like it's the right time to pull off the gas pedal and make being profitable our top priority, even though we want to be profitable at the earliest possible time. We're investing in some late-stage products and we're no longer ADCETRIS and a bunch of early-stage products, we're now multiple late-stage products across oncology. And we're really excited about this and think we have a great future.

And we'll take our next question from Andy Hsieh from William Blair.

Just one quick one. On E2, I believe Clay provided maybe a couple of quarters of potentially moving this to a landmark study. Any sort of update on that?

Yes, I never mentioned that we were moving it to a landmark. I said the events were coming slower than we thought and we were going to be connecting with regulators, and the questions I got from analysts were could it become a landmark study? And I said it could, that's one of the options. So I just want to be clear with that. And I'm not saying you're inferring that I said that, but it is an option for that, but not the only option. Absolutely, we are confident with our discussions with regulators. And our guidance is that we will have the data this year. So that is unchanged.

And there are no more phone questions at this time.

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

And that concludes today's presentation. Thank you for your participation. You may now disconnect.