Seagen Inc (SGEN) 2018 Q2 法說會逐字稿

Good day, and welcome to the Seattle Genetics Second Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn today's call over to Ms. Peggy Pinkston, Vice President, 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 Second Quarter and First Half 2018 Conference Call. With me today are Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Roger Dansey, Chief Medical Officer; and Darren Cline, Executive Vice President, Commercial.

Following our prepared remarks today, we'll open the line for questions. If we're 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 third quarter ADCETRIS sales and future revenues, costs and expenses. The company's potential to achieve anticipated clinical and regulatory milestones and expected timing thereof, including data availability from ECHELON-2, as well as other planned and ongoing clinical trials, including enfortumab vedotin, tucatinib and tisotumab vedotin. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Among the factors that may cause such a difference include the inherent difficulties in forecasting sales, particularly proximate to a new launch, that the company may be delayed or encountered challenges in its planned clinical trial initiation, the enrollment in and conduct of its 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 regulatory 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 quarterly report on Form 10-Q for the quarter ended March 31, 2018, filed with the Securities and Exchange Commission.

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

Thanks, Peg, and good afternoon, everyone. We're approaching the 7-year anniversary of the first FDA approval of ADCETRIS for 2 relapsed lymphoma indications. That milestone transformed Seattle Genetics into a commercial organization, bringing ADCETRIS to patients in need. Since then, we've expanded into Canada, and in collaboration with Takeda, ADCETRIS is now available in 71 countries. We've grown the ADCETRIS franchise with 3 additional indications in the U.S., most recently, frontline Hodgkin lymphoma, based on results from the Phase III ECHELON-1 trial. The approval in late March for frontline Stage III and IV for Hodgkin lymphoma drove a record quarter of ADCETRIS sales, up 28% from the first quarter of the year. We're still early in the launch but project third quarter ADCETRIS sales in the U.S. and Canada to be $130 million to $135 million.

I'm pleased by the strong uptake of ADCETRIS in the first full quarter since ECHELON-1 approval. This highlights the reception of our data among the oncology community and our ability to bring the first new treatment option to frontline Hodgkin lymphoma patients after more than 40 years.

Outside the U.S., our E1 submission to Health Canada was recently accepted, positioning us for a regulatory decision in the first half of 2019. In addition, Takeda completed its submission of the E1 data for proposed approval in the EU and anticipates an EMA decision by the first quarter of 2019. Looking ahead, we have an opportunity to further grow the ADCETRIS brand with the ECHELON-2 trial in CD30-expressing mature T-cell lymphomas, also referred to as peripheral T-cell lymphoma or PTCL. We now expect these results early in the fourth quarter. Patients with newly diagnosed PTCL fare poorly with standard of care CHOP chemotherapy, and there's a significant opportunity for ADCETRIS combination to improve upon the decades-old regimen. Approximately 4,000 patients are diagnosed annually in the U.S. with CD30-expressing PTCL, representing a substantial unmet medical need and opportunity for ADCETRIS. We believe E2 has the potential to further solidify ADCETRIS as the foundation of care for CD30-expressing lymphomas.

ADCETRIS is an important drug, and it's becoming a mainstay for lymphoma physicians and patients worldwide. Beyond growing ADCETRIS franchise, our late-stage pipeline has significant potential with 3 programs in ongoing pivotal trials. The most advanced, enfortumab vedotin, is in a pivotal trial for metastatic urothelial cancer patients who previously received a PD-1 or PD-L1 inhibitor. Earlier this month, we and our partner Astellas completed enrollment of a cohort of patients in the pivotal trial who received a platinum-based chemotherapy agent and a checkpoint inhibitor. This positions us for top line data in the first half of next year, which could support a potential regulatory submission later in 2019 in the U.S. under the FDA's accelerated approval pathway.

We also recently treated the first patient in a Phase III trial of enfortumab vedotin intended to support global regulatory approvals and to serve as a confirmatory trial in the U.S. More than 45,000 people are diagnosed annually in the U.S. and the EU5 with metastatic urothelial cancer.

Up to 80% of patients treated with checkpoint inhibitors failed to respond and required further treatment options, making this a substantial unmet medical need.

We're also evaluating EV in combination with pembrolizumab in first-line patients and look forward to presenting data, when it's available, at an appropriate medical conference.

Tucatinib is another exciting late-stage program in our portfolio with worldwide rights. Our primary focus is on the global Phase II HER2CLIMB trial in HER2-positive metastatic breast cancer, which is enrolling very well. As we work with tucatinib, we see several opportunities beyond HER2CLIMB for this differentiated HER2 tyrosine kinase inhibitor. We believe tucatinib has potential in early reliance of metastatic breast cancer as well as in other HER2 expressing solid tumors. We plan to invest in expanding the potential of tucatinib with the goal of building it beyond the single HER2CLIMB trial and into a broad development program, including multiple tumor types.

Our third late-stage program is tisotumab vedotin, which we're developing with Genmab. We've achieved 2 recent milestones. We've dosed the first patient in a pivotal trial for women with recurrent or metastatic cervical cancer, and we started a Phase II basket trial, evaluating tisotumab vedotin in other solid tumors. These trials are intended to support an initial accelerated approval pathway in cervical cancer and inform opportunities to broaden the program.

Our ADC collaborators are also making substantial progress with programs using our technology, underscoring the growing importance of ADCs in the treatment of cancer. An example of this was yesterday, during the GSK Q2 results and R&D update, where they highlighted their BCMA ADC in multiple myeloma, which utilizes our technology. GSK presented a broad development strategy, including several pivotal trials with this ADC as monotherapy and in combination regimens. They project an initial launch in 2020.

Seattle Genetics is on the path to becoming an important global multiproduct oncology company. By executing on the potential of ADCETRIS, advancing our late-stage programs and delivering noble molecules and technologies, we can further transform Seattle Genetics.

With that in mind, I'd like to welcome our new Chief Medical Officer, Dr. Roger Dansey. Roger has extensive drug development expertise. He joined Seattle Genetics in May, most recently from Merck, where he was responsible for late stage oncology development. He lead KEYTRUDA development and registration activities across multiple tumor types, including many regulatory submissions to the FDA and other regulatory authorities worldwide. We're pleased to have Roger on the team.

Next, I'm going to turn the call over to Darren to discuss our commercial activities; then Roger will provide an update on our clinical programs; and lastly, Todd will discuss our second quarter financial results. Darren?

Thanks, Clay. ADCETRIS net sales were $122 million in the second quarter, up 28% over the first quarter of 2018. This is the highest sequential quarter-to-quarter growth rate since the product was launched. Growth was driven by increased volume and reflects strong adoption of ADCETRIS combination therapy in frontline Hodgkin lymphoma. The second quarter was the first full quarter of sales for our ADCETRIS frontline indication. Our expanded sales force has reached over 85% of our targeted physicians, most of which are in the community setting. These community oncologists are the primary treaters of frontline Hodgkin lymphoma. They have been receptive to the superior efficacy that is offered by ADCETRIS+ AVD chemotherapy for Stage III and IV patients while removing the unpredictable and sometimes severe pulmonary toxicity associated with bleomycin. In addition to our expanded field-based efforts, we've launched a multichannel marketing campaign aimed at educating health care providers, patients and caregivers.

From our market research, we know that newly diagnosed Hodgkin lymphoma patients and caregivers spend a significant amount of time online researching the disease and treatment options before their initial therapy begins. We received several reports of patients asking their physicians to be treated with the ADCETRIS+ AVD regimen. We've had a strong start to the frontline launch and remain confident in our belief that ADCETRIS+ AVD chemotherapy will be the standard of care in Stage III and IV HL.

Looking ahead, we started launch preparation for ECHELON-2 and potential approval in CD30-expressing PTCL. This could represent the sixth indication for the brand and a significant additional commercial opportunity for ADCETRIS.

In addition to our efforts with ADCETRIS, we're actively preparing for the potential launch of enfortumab vedotin. Working with Astellas, we're building out a brand team and collaborating on commercial plans. We're pleased with our progress during the quarter and look forward to keeping you updated.

I'll now turn the call over to Roger to discuss our clinical activities.

Thanks, Darren, and good afternoon, everyone. I'm pleased and excited to join the Seattle Genetics team and to participate in today's call. I've been with the company for 2 months now, and I'm impressed by the strength in both the late- and early-stage pipelines, the science-driven culture and the dedication the company has to improving the lives of cancer patients.

To patients, every day matters. So my focus will be to ensure that we move all our clinical stage programs forward as efficiently and as rapidly as possible, including our registration trials. Today, I'll primary address ADCETRIS in our late-stage programs.

ADCETRIS had a strong showing at ASCO in June, where we highlighted several additional analyses from the ECHELON-1 clinical trial in frontline Stage III and IV Hodgkin lymphoma. Notably, we reported data from a prespecified analysis of patients treated in North America, which showed a relative reduction of 40% in the risk of a progression event or death compared to standard bleomycin-containing chemotherapy with a hazard ratio of 0.6. This translates to a 10.6% absolute improvement in 2-year modified progression-free survival in the ADCETRIS-containing arm over the ABVD arm. We believe that this data likely reflects the impact ADCETRIS can have in patient care when treatment is consistent with medical practice in the United States. Looking ahead, in the ECHELON-2 trial, we are evaluating ADCETRIS plus CHP compared to standard of care, CHOP chemotherapy, in newly diagnosed peripheral T-cell lymphomas. The primary endpoint of E2, which enrolled 452 patients, is progression-free survival.

As we've previously commented, PFS events in the E2 trial have occurred at a slower rate than expected. As a result and based on discussions we've had with the FDA regarding timing of the primary analysis, we are now planning to report top line data from the E2 trial early in the fourth quarter.

Moving on now to our late-stage pipeline. I'll start with recent highlights and upcoming activities with enfortumab vedotin or EV, which we are codeveloping with Astellas. At ASCO, updated data from a Phase I trial of EV in metastatic urothelial cancer was featured in an oral session. In 112 patients, the majority of whom had received at least 2 prior therapies on metastatic setting and were treated at the recommended Phase II dose, we reported a 41% confirmed objective response rate. We also observed an encouraging similar response rate of 39% in the subgroup of patients who had liver metastases, a particularly poor prognostic sector. EV was generally well tolerated in the trial, with a manageable safety profile. These Phase I data form the basis of the breakthrough therapy designation granted by the FDA for EV in patients with locally advanced or metastatic urothelial cancer who had previously been treated with a checkpoint inhibitor. Importantly, we recently also completed enrollment in the first cohort of the EV pivotal trial called EV-201, which is evaluating single-agent EV in metastatic urothelial cancer patients who previously received both platinum-based chemotherapy and the PD-1 or PD-L1 inhibitor. The primary endpoint of this trial is confirmed ORR, and we expect to report top line data from this cohort in the first half of 2019. These data could potentially support registration under the FDA's accelerated approval mechanism.

We achieved another recent clinical milestone in the EV program with treatment of the first patient in the Phase III single-agent randomized trial called EV-301. We expected to enroll 550 patients with metastatic urothelial cancer who've been previously treated with a platinum-containing regimen or a PD-1 or PD-L1 inhibitor. The primary endpoint of this -- in this trial is overall survival. This is an important trial because it is intended to support global regulatory submissions for EV as well as serve as the confirmatory trial to EV-201 in the United States.

I'll turn now to our tucatinib program, which we're developing in HER2-positive metastatic breast cancer. Tucatinib is an oral small molecule TKI that's highly selective for HER2 and has the potential to be best-in-class. One key attribute of tucatinib is that it does not significantly inhibit EGFR, which reduces the rate of clinically meaningful toxicities such as rash and diarrhea. Based on this profile, we believe there is broad potential for tucatinib in metastatic breast cancer as well as other HER2-expressing malignancies.

The Phase Ib trial results of tucatinib were recently published in The Lancet Oncology, and the triplet regimen of tucatinib, capecitabine and trastuzumab was well tolerated, with most patients being able to continue on the full dose of tucatinib. The safety and tolerability of a tucatinib regimen compares favorably to that reported with other HER2-targeted TKI-containing regimen and supports the rationale for the pivotal trial, HER2CLIMB.

HER2CLIMB is an ongoing randomized trial of tucatinib versus placebo in combination with capecitabine and trastuzumab for patients with HER2-positive metastatic breast cancer with or without brain metastases who have previously received trastuzumab, pertuzumab and TDM-1. The primary endpoint of this trial is progression-free survival, and key secondary endpoints include PFS in patients with brain metastases and overall survival. We expect to complete enrollment of HER2CLIMB in 2019. This trial is intended to support regulatory submissions of tucatinib in the U.S. and globally.

In the coming months, we plan to expand the tucatinib program with new studies in earlier lines of metastatic breast cancer. Data from the Phase Ib study of tucatinib in combination with TDM-1 that were recently published in JAMA Oncology supports this plan to consider a combination as a potential registration approach.

We are also interested in pursuing tucatinib in other HER2-expressing solid tumors such as colorectal cancer and gastric cancer.

Our third late-stage clinical program in our pipeline is tisotumab vedotin or TV, which we are codeveloping with Genmab. We recently treated the first patient with TV in the pivotal Phase II single-arm monotherapy trial called innovaTV 204 in women with second- or third-line cervical cancer. Target enrollment is approximately 100 patients, and the primary endpoint is ORR. The trial is intended to support regulatory submission under the FDA's accelerated approval pathway.

We and Genmab are also planning a trial of TV in combination with other agents with the goal of understanding TV's potential in earlier lines of cervical cancer. This study will likely start in 2019, initially in the second-line setting with the goal of moving into first-line. Lastly, another recent accomplishment with the TV program is that we treated the first patient in a Phase II basket trial. This trial is enrolling 4 solid tumor types that highly express tissue factor, including pancreatic, head and neck, colorectal and non-small cell lung cancer. This study is designed to inform a potentially expanded development program of TV.

Now I'll turn the call over to Todd, who will review our financial results. Todd?

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

In addition to substantial progress with ADCETRIS and across our pipeline, we had a strong quarter financially. Today, I'll summarize our financial results for the second quarter and year-to-date as well as provide some updates to our financial outlook for the year. I'll also comment on our net income in the second quarter.

Total revenues in the second quarter were $170 million and were $311 million for the year-to-date in 2018. This included record ADCETRIS net sales in the U.S. and Canada of $122 million and $218 million in the second quarter and year-to-date.

Growth in 2018 reflects the recent label expansions. And as Clay mentioned, we are guiding for third quarter ADCETRIS net sales in the U.S. and Canada of $130 million to $135 million.

As we continue to gain experience with utilization of ADCETRIS in the frontline setting, and monitor market dynamics, we'll provide further updates. Royalty revenues in the second quarter increased to $21 million compared to $12 million in the second quarter of 2017. And for the first 6 months of 2018, royalty revenues were $36 million, compared to $29 million in the first half of last year. We expect royalties to increase throughout the years as Takeda's sales grow and as those increasing sales trigger higher royalty rates.

Collaboration revenues were $27 million in the second quarter, which includes amounts earned under our ADCETRIS collaboration with Takeda and our ADC deals. This included clinical milestones totaling $17 million under our collaborations with Genmab, GSK and AbbVie.

The first half of the year included items that result in us increasing our expectations for 2018 collaboration revenues to a range of $65 million to $75 million. Also bear in mind that collaborator milestones are progress-dependent and therefore, result in quarterly variability. To date, we've generated more than $400 million under our ADC deals. In addition, we're entitled to receive single-digit royalties on sales of ADCs that use our technology, and 3 collaborator ADCs are now in registrational trials.

R&D expenses were $123 million in the second quarter of 2018 and $275 million for the year-to-date. The increases over 2017 reflect higher investment across our late-stage and earlier-stage pipeline programs. As discussed during our last call, year-to-date expenses include $35 million in upfront payments related to technology licensing agreements entered into in the first quarter of 2018.

SG&A expenses were $58 million in the second quarter and $124 million in the first 6 months of 2018. Expenses in 2018 reflect transition costs associated with the acquisition of Cascadian last quarter and cost to support the commercial launch of ADCETRIS in frontline Hodgkin lymphoma.

We ended the second quarter with $458 million in cash and investments. This is in addition to more than $200 million in common stock holdings in Immunomedics and Unum. These shares are mark-to-market, which resulted in a gain of $105 million for the second quarter, and that resulted in us reporting net income as you saw in our press release this afternoon.

I will mention one last corporate housekeeping matter. As you may remember, we have a registration rights agreement with Baker Brothers Investments, our largest shareholder, who has participated in our financings since 2003. We filed a registration statement several years ago that will expire soon. As a result, we will be filing a prospectus supplement later today to keep those shares registered.

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

Thanks, Todd. I'll close with a short summary of key milestones expected over the remainder of 2018.

They include: first, reporting data from the ADCETRIS Phase III ECHELON-2 trial in early Q4; second, executing upon the EV pivotal trial, EV-201, in urothelial cancer, positioning it for top line data in the first half of 2019; third, continuing enrollment in the HER2CLIMB pivotal trial of tucatinib in HER2-positive metastatic breast cancer; and lastly, advancing the pivotal trial of TV in cervical cancer.

I'm excited by the substantial progress we are making and the opportunities in front of us to bring additional drugs to patients in need.

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

(Operator Instructions) And our first question will come from Cory Kasimov with JPMorgan.

Nice, impressive quarter there. So I guess, 2 questions for you. One on ECHELON-1 opportunity, one on E2. Given your first full quarter of sales in frontline Hodgkin, I guess I'm wondering a little bit more specifically the feedback from physicians regarding their early experience and uptake. And really wondering how many moving parts there are still, potential impediments at this point in the launch, and maybe what's preventing you from issuing full year guidance at this point? And then the second question is with regards to the ECHELON-2 opportunity. And you've talked in the past how you think this matches up with the patient population on E1 in terms of overall size. And I'm wondering if that's based on literature, your own market research. And does this take into account the percentage of CD30 expressers?

Well, first of all, thank you for the nice comment on our quarter. Yes, I think we did a great job in the quarter. So on the E1 opportunity, we've had great feedback from docs. I mean, it's been really good. Docs are using ADCETRIS+ AVD in the Stage III and IV, and we expected the community docs to really bring -- use this more initially and take it into how they treat patients faster than the academic docs. And we've talked about that on a number of conference calls. It's been over 40 years since there's been a change in frontline Hodgkin lymphoma, and we expect that there'll be a little bit of time for the academic docs who focus on this a lot to take it up. But we're doing a great job out there in the field. We're talking to docs, and I think we're making great progress. And I think you'll see that quarter-to-quarter.

As far as the first quarter sales, we were a little bit surprised pleasantly with the 28% rise that we had. We didn't expect it to be that fast, quite frankly. We thought it would be a little less. We got a lot -- early adopters moving right onto it, but we think that going forward, it'll be more gradual. We'll have good quarter-to-quarter growth. And as far as full year guidance goes, we will do this and go back to full year guidance. You know we did this for many years, and we will go back to this at our earliest possible convenience, once we feel confident with what's going to happen in the quarter, and we're working on that. We're looking at it really closely. We're not doing it yet, but stay tuned, and certainly, we want to get back there. But we want to make sure we provide to the analysts and the investors out there some guidance that we really feel strongly about, and we don't want to go through and provide a whole year guidance until we feel really strongly about that. So at our earliest possible convenience, we'll do it.

And as far as E2, it does -- the opportunity does match the E1 size of the Stage III and IV, and they're both about 4,000 or so, a little bit more than 4,000 for Stage III and IV Hodgkin lymphoma. If you look at the entire Hodgkin lymphoma group, that's obviously bigger than T-cell lymphoma. But when you look at the CD30-positive T-cell lymphoma and just Stage III and IV Hodgkin, it is about the same size. And that's been -- we've studied that. We have market research on that, and demographics and everything. So we're pretty confident with that type of population.

And that is -- and they're all CD30-expressers?

These are the -- what we're focusing on those 4,000 are the CD30-expressers, exactly.

Our next question will be from Kennen MacKay with RBC.

Wondering -- just housekeeping a little bit upfront. Wondering if there is any inventory build associated with the expansion in sales or ahead of the June 28 price increase that we saw for ADCETRIS. Or even if there is sort of pull forward of some orders ahead of the July 4 holiday in the U.S. And then was wondering, Clay, in regards to your comment maybe about the percentage of providers and physicians that you are targeting, that haven't been detailed yet, just wondering sort of how you have prioritized these clinicians? And sort of what population this represents, the remaining sort of to-be-detailed?

Kennen, thanks for both of the questions and thanks for the nice commentary on the quarter. So typically, we don't really see this inventory build. We don't see the accumulating inventory. But Darren, can you give a little bit of color on that and what we do?

Yes, Kennen. When we launched ADCETRIS 7 years ago, we built a very efficient distribution model just in time access to the product for physicians. And we typically don't see that, and particularly, if you think about the frontline indication, where 75% of the patients are diagnosed in a community, this is not a drug that typically gets stocked or has a lot of inventory. Some academic settings that just for ease of scheduling and treatment, based on the volume of their patients, may stock a week or so. But again, we don't see it. We haven't seen it traditionally and don't see it here with the E1 uptake.

Yes. And then the second part of the question, I'll also turn it over to Darren. It's about the percentage of providers that we're targeting and what we're detailing. And we're doing a really great job. I'm really proud of our commercial team. Darren, can you talk a little bit about that?

Yes. Sure. So Kennen, when we -- if you'll recall, we expanded the sales force. We completed it in the fourth quarter of last year, and that allowed us to really focus in on where we saw the opportunity in the frontline setting was, was in the community. And the whole entire universe of oncologists in the United States is about 7,500 to 8,000. But based on volume, geography and a couple of other factors, we're able to really narrow and target to about 3,000 or so, in which we know that majority of Hodgkin will be presented and treated there. Now we've reached about 85% of those physicians and -- but with -- our model, obviously, will be to continue to call on those docs and continue to educate about the benefits on the data in the frontline indication.

Our next question will be from Salveen Richter with Goldman Sachs.

Just 3 questions from me, one around the quarter. So given that 20% -- 28% quarterly growth in Q2 and your guidance, I think, at the high end looks like 10% for quarterly growth in Q3. I recognize that there's a bit of conservatism as you watched this early launch, but is there anything that you're seeing that make you think this would be more gradual? Or is this truly just conservatism as you kind of look out over the rest of the year? Secondly, with regard to ECHELON-2, could just walk us through how this population differs from the population you studied in the earlier trial? And is it just stratified for ALC-positive? And I'll come back with my last question.

Okay. So first of all, in the first quarter, we were up -- first full quarter, I should say, we were up 28%. But -- and our guidance is at 5% to 10% up this quarter going forward, we don't believe that's conservative. I mean you'll remember, this is quarter-to-quarter. This isn't annual guidance. And I'd be delighted if each quarter that we go looking forward, we're 5% to 10% every quarter. I mean it's -- I don't know where we'll be, and we're not giving annual guidance yet, but it takes time to build market share in a setting where the standard of care hasn't changed in 40 years. I mean it just takes time, and we are off to a good start. Our commercial team was ready. They were ready. They jumped on this, and we got the rapid adopters in. But the rest of the time, we're going to be making stepwise moves up there. So I don't want you and the other analysts to believe we're just giving you a very conservative number and go way past that. That's not what we believe based on our market assessment of what's going on. We were, and I'll repeat this just because it's important, we were a little surprised initially with our uptake of how much it was, and we're pleased by it. And I think that's a reflection of how poised we were and positioned we were to jump on this, and we expanded our sales force, and we were really ready to get this out there on to the market. And -- but we think it's going to be an uphill climb to keep on taking docs and transitioning to them to the new ADCETRIS+ AVD. As Darren mentioned, some patients come in now. They go to the Internet when they're trying to figure out what to do about their disease, to learn about this. They learn about ADCETRIS+ AVD, and they're asking for it. So we're really excited with that aspect.

Going on to your second question with E2. The population that we have treated in our lead-in study, it's very similar to what we're treating now. It's not -- it's a small -- it's a smaller number, a much smaller number than what we're treating now, 452 patients in E2. We're really excited to come out with that data. We have had discussions with regulators and the event number was slower than we predicted. So we spoke with regulators and came up with a good time to -- where the trial was mature, and the data was mature. And that's really the most important thing. This is under SPA, and so early in the fourth quarter -- and that's new for this call. Early in the fourth quarter, we will be unbinding this and reporting top line data.

And then just a last question just on tucatinib. Maybe if you can just give us a sense of how you're thinking about moving into earlier lines in HER2 breast cancer and then time lines around moving into the other HER2 cancers?

Yes. So you -- say that again, the 2 questions of moving earlier.

So moving into earlier lines of breast cancer, which you talked about, how you're thinking about that. And then time lines around moving into the colorectal and gastric cancer studies.

Got you. Okay. Well, let me take the second one first. So when you look at colorectal, if you go to clinicaltrials.gov, there already is a clinical trial in colorectal cancer, and it's an investigator-sponsored trial, and it's ongoing. And we're very happy with how that is going in colorectal cancer. In gastric cancer, we have not announced anything specifically. Clearly, HER2 is expressed in pretty high density in gastric cancer. It's an important cancer, and we're excited with the possibility outside of breast and colon cancer to go forward. We've made no commitments yet, but I think you're spot on with your question in gastric cancer. We've noticed it. We are thinking about it. So I would say stay tuned on that. And then, Roger, perhaps you would like to talk a little bit about how we're thinking about tucatinib, and in general, we're going from HER2CLIMB as a trial that we bought from Cascadian to making this into a program. And Roger, maybe you can talk a little bit about that.

Sure. Thanks, Clay. So as Clay has articulated, we do see tucatinib as really representing a program rather than a trial in breast cancer. So for example, the data that was reported out on TDM-1 plus tucatinib is quite encouraging.

Response rates are interesting, and there is an example of a potential combination that we could consider in an earlier line of therapy as a potential registration approach. We're also interested, and we are thinking through what possibility could exist in your adjuvant treatment. The profile of tucatinib is such that it's favorable for very early use based on its safety profile. So those are 2 examples of where our thinking is.

Our next question will be from Tazeen Ahmad with Bank of America.

First one, Clay, can you give us a sense on what you're expecting for the average cycles of use in the frontline HL setting? And secondly, do you have a sense of whether the label is preventing physicians from adopting use across all of frontline? Meaning, are you seeing patients that are potentially Stage I or Stage II also getting treated in the frontline setting? I realize that you're early in the launch but just wanted to get some color on that.

All right. Well, I'll answer the second question. I'll turn the first one over to Darren. Our label is in Stage III and IV, and so we promote the Stage III and IV. And I think that, that's something that we really stick with very much in our commercial team. Now we do hear a little bit from docs about earlier stage, especially in patients where you have like pulmonary insufficiency and they really can't get bleomycin or a patient that starts on ABVD and then they have some pulmonary toxicity and are looking for an alternative. I think there are cases where you can see it there, but I think by and large, it's not part of the label. And so we're not really getting substantive sales there despite hearing a few anecdotes here and there. And then I'll turn it over to Darren to talk about the average cycles. The average number of cycles in frontline Hodgkin lymphoma, what we're seeing in our clinical -- what we did in our clinical trials to what we're seeing out there. And it's a little early to give you something that's solid on this. But Darren, any thoughts on this?

Yes, I mean, the trial -- ECHELON-1 was for 12 cycles. That was the intent. And I think when you think about this disease, and if you look at just across -- just about all oncology trials and the utilization in the academic centers and community, there is a little bit of discordance there, typically for various reasons. But I think in this frontline curative setting, our physicians aim to give planned dose on time for the full 12 cycles, and we're seeing physicians embrace this approach, also with ensuring that growth factor is onboard right out of the gate to ensure that these patients, again, can get the planned dose on time. So to your point, it is early. We will be monitoring this and studying it and understanding what the utilization, how it's shaking out, but that's the absolute intent for these physicians.

Yes. I think that when you have curative intent like frontline in Hodgkin lymphoma, which is not the same with all tumors, as you know, a lot of tumors, unfortunately, there's not curative intent even in frontline because it's just a matter of getting longer survival or PFS or even a response, depending on the cancer. But in this case, since there is curative intent in a fairly high percentage of patients, patients really want to stay on and get their full cycle. So I think that we'll probably see something pretty close to the 12 that we had in our trials. That was different. And perhaps, you're asking the question because in a relapsed/refractory setting, which is a very different thing, these were patients that had 2 prior cycles in our first approval. We did about 8 cycles in our clinical trial, and then we averaged about 6.5 out in the real world. And so I understand that question. I think it's a fair question, and I think with the curative intent upfront and with the healthier patients, and I think that we'll probably see something pretty close. But it's a little early to say, but a fair question.

Okay. And then related -- one last question related for the E2 population, would you expect to see the average number of cycles be closer to real-world setting that you just mentioned of around 6.5 cycles?

With E2, I think it depends on the data. I mean, we don't have the data yet. And if our data come out, and they're strong, and you see a ton of white space between the 2 Kaplan-Meier curves like we did with ALCANZA, I mean, you'll have patients wanting to stay on this, absolutely, and try to see if there's some -- with curative intent. And so I think that's different. I think when you look at CHOP chemotherapy, there are some long-term disease-free responses there. But it's substantively less than 50%, and when you start looking over years, and there is an initial CR rate of about 45% or so, but some of those patients relapse. And so I think it depends on our data. And if our data are strong, you bet patients will stay on it. You bet.

Our next question will be from Adnan Butt with Guggenheim Securities.

Congrats on the strong ADCETRIS results. One on ADCETRIS and one on enfortumab. For ADCETRIS, are there any plans to conduct a Phase III/IV type of study in a similar or maybe broader patient population with growth factor support?

First of all, it's a good question. I think that it is -- there are a lot of possibilities we're discussing. I don't want to commit to anything. I mean, if you're asking about are we going to do a registry study and just include all growth factor support and try to see what kind of data that we really get, if we do this, what we think is something that we'd learned from our 1,334 patients. Trials are also learning experiences, and we went in this and knowing some details, but now we know a lot of details. I think we know more about treating frontline Hodgkin lymphoma patients than probably any other company. And I think that you're going at this in a way that is we've learned that is the most appropriate way, which FDA has advised in their label the way to do this, and so we think that they did, the label is great. But if we do a registry study, I think we're going to get potentially in the high 80% and pushing close to 90% in cure rate. I mean, we could potentially get there. I mean, it is feasibly possible when you look at all our data. We have our North American data that we talked about and presented at the ASCO trial. We're writing it up, and we're looking for putting it into a major medical journal and trying to get this published soon. But if you look at -- with docs that were experienced in ADCETRIS, and using prophylactic growth factors and doing all the things, the data are very exciting. And we're really excited. So if you're asking are we considering a registry study, the answer is yes.

Okay. I would look forward to that. Then on enfortumab, are there any differences in the patient populations between the Phase I lead-in and the pivotal Phase II? That could lead to differences in either response or duration?

So in the Phase I population, we had -- most of the patients had prior platinum and a checkpoint, okay. But there were a couple of patients that were -- couldn't get platinum, but it was very few patients that just had a checkpoint. So the vast majority of them had 2 prior cycles. And when you look at what we did in the pivotal study, we really have both. There's 2 different cohorts, if you will, and we're -- well, we talked about on our last conference call was that we're going to go -- we're going forward with the cohort of the platinum and the checkpoint is what we're -- we just completed the patient enrollment form, and that's the one that's going to go forward first. And the treatment of urothelial cancer has been changing a little bit. There has been some things going on with whether they're high or low PD-1s in frontline. So that's a little bit different. That has not touched at all patients that get platinum and then checkpoint inhibitors. So in that regard, I would say, by and large, we're using almost an identical patient population, to answer your question.

Our next question will be from Yatin Suneja from SunTrust Bank.

Maybe I'll start with E1. Could you guys go on a little bit more detail on the feedback you have received from the regulators? Are you making any changes in the [public] assumption to enable an early 4Q readout? And also talk about what the bar is for approval? Is that -- and also maybe the bar for uptake in that setting, and I do have another question after that.

Okay. Just to clarify, you asked about E1, and I think you meant E2.

E2, yes, sorry.

Yes. And you're just testing me, and I am listening to you. So as far as feedback from regulators, we did meet with regulators. We had said at earlier conference calls, we were going to meet with regulars, we have met with regulators, we've talked to them. The most important thing, Yatin, here is that we a mature data set. How many patients are out, 18 months, 2 years, 2.5 years, 3 years. Where -- what are the events and how are the events. We said the events are coming slower. That's what we've talked about. So FDA got to see a lot of different information, and we had great discussion on it, very collegial, very positive. When you look back, ADCETRIS is 5 for 5 with registration studies and approvals. So this is #6 up, and we have #7 behind it in CHECKMATE 812 and then maybe more in the future. But right now, we're working on #6 on E2. We feel really good about our interaction with regulators, and you asked about the bar for approval. I don't have a line in the sand. The FDA doesn't make lines in the sand like this, but the endpoint, we have PFS and we're -- you have to see a difference. When we get -- the control arm is it's CHOP chemotherapy. CHOP has been out there for about 35 years, and as you know, it was standard of care for T- and B-cell lymphoma. And in B-cell lymphoma, I mean, we had a transformation with RCHOP, and that was great for patients. But unfortunately, after 3.5 decades, there's been no such a transformation in T-cell lymphomas, nothing. It's still just chemotherapy, 4-drug regimen. So we're sitting here, we're saying, look, we want to drop out one of the latter, drop out Oncovin, because we don't want to add neurotoxicity on top of this. And with CHP ADCETRIS, we have some -- our lead-in trial is spectacular. I mean we haven't had an event in years. We keep on reporting that by the way, over and over, we're out 5 years now, and it's like the event line is flat. And yes, that's a single arm trial, but it's -- we haven't hit medium after 5 years. Our OS after 5 years is 80%. These are unprecedented numbers granted for a very small lead in trial. And you have to prove it on the bigger stage. And that's what we're doing. We're putting our money where our mouth is. We put in 452 patients, and the data, this has been a 5-year track through doing this. It's been a long track. Try to do this and change frontline T-cell lymphoma. And we are now -- I mean, we're now not years away, we're months away. And we're guiding to early fourth quarter. So I think that we just need to see statistically significant data. I think if it's not statistically significant, and we have -- the hazard ratio is bad, and the 2 lines in the Kaplan-Meier plot are so close, no one is going to care. But we'll just have to see our data.

And then just to clarify, so the early 4Q guidance is based on the assumption that you will reach a prespecified number of events naturally, or was this trial -- is there any change to go for a landmark analysis to enable that readout?

We haven't come up and said the specifics of what we're doing. But we have a date, and so we're going to be pulling this out on a date. So we know -- we feel very confident when this will come out. It'll be coming out early fourth quarter.

Got it. And then just a question on ADCETRIS in frontline Hodgkin. Can you maybe comment a little bit on the patient mix, Stage III versus IV? And also I think on the last quarter call, you did give an update on the new accounts that you added in the first 2 months. I think it was 150. Could you give us an update there, what happened in Q2?

Sure. As far as frontline Stage III or IV, when you look at the entire data set, counting all the international sites, there was a little difference. But when you start getting down into the North American data with docs that have experience, there really wasn't a difference. And so I don't think that -- I don't believe that there is much of a difference there for you to be looking at. And I don't think docs look at it that way. So I think that that's -- it's a fair question, but I just don't see that there's a difference there, don't believe it. And the other question, Darren, yes, go ahead.

Yes, we continue to see new accounts, and I again go back to 75% of these patients, frontline Stage III, IV patients, present in the community. So we've seen nice breadth and depth during the quarter, and we anticipate that trend to continue.

Our next question will be from Boris Peaker with Cowen.

So my first question is ADCETRIS and the frontline, just a follow-up to prior questions. Is there maybe a subgroup of patients that's responsible for the early adopters, specifically maybe younger versus elderly patients or any other kind of a subgroup division?

I really think there's not. I think it's really the community setting. And maybe Darren, do you want to expand on that?

Yes, I think it's too early to really parse out the type of patient, Boris. I think that what we do know though is they come from the community. These patients again, the average age of diagnosis is 35, and they present right in the community. And now doctors are treating with ABVD, and I think we've seen in the community some of these early adopters that have replaced bleomycin with ADCETRIS, and they're off to the races. And so we'll see as we move forward, but we're pleased with the startup.

Great. And my second question is on EV and urothelial. Just curious what is the overall response rate or duration response rate that you think you'd need to meet to support accelerated approval certainly in the post checkpoint inhibitor failure setting.

There is no real line in the sand. We had BTD, as you know, in EV. So we have had some pretty hefty discussions with FDA and other regulators, and there's a lot going on with this drug, a lot. It's a whole program. We had in our lead-in trial, we had a 41% objective response, and I will point out, importantly, 39% objective response in patients with liver mets, and so that's really, I think, eye-opening. But -- and you mentioned the PD-1 to PD-L1 got approval in this setting or in a similar setting. That was based on ORR of 14% to 21%, depending, 14% was atezo, 19% was nivo, 21% was pembro, and then there was a couple others. There's 5 of them approved, but all between 14% and 21%. So we're sitting back with our lead-in trial with substantial data, with the 41% objective response, and these are patients that have seen checkpoints. So we're afterwards, which is why it's a single agent -- it's a monotherapy trial, single arm, because we're looking at getting a strong, durable response rate in those patients. So I don't know the line in the sand. FDA doesn't give us that, but I think we're -- we don't need data as good as we have, I believe, to get approval.

Our next question will be from Andy Hsieh with William Blair.

So this has to do with back in 2015 at ASCO, I believe, Clay, you and I talked about the frontline DLBCL opportunity. And I think the company decided to forgo that opportunity because that field has become crowded. And given the fact that I believe ibrutinib kind of failed in that setting, maybe the market has opened up. Has that changed your calculation in that particular setting?

First of all, thank you for the comments, and thank you for the -- coming back with the question on DLBCL for ADCETRIS. When we look at ADCETRIS, DLBCL, we are in guidelines. So we're in the NCCN Guidelines, and we get used there. We hear it from doctors all the time. I mean there is use and growing use in that setting. And while it's not in our label, it is in guidelines. So doctors are pretty confident they'll get reimbursed, and they use it. I've actually gone -- I'm not in the commercial group out in the field every day, but I've even gone out in the field and talk to some doctors periodically, and they use it for DLBCL. And it is screening for CD30 at these clinical centers. When you have lymphoma, it's kind of standard now. I mean it's just not like an outlier that maybe 10 years ago they didn't. But now you come in with lymphoma. They screen you for a series of different things, like CD20, CD30 and all these others. And so they know that ADCETRIS is there. And if you're CD30-positive and you've gone through the Rituxan shop and Rituxan this and Rituxan that regimen, and they need some -- a drug to use, they know they could use it. And I've talked to docs who say they like it a lot. And they see 40% to 50% objective response in this setting. So I think that the question comes down to economics a little bit, and doing a trial that we would need to do in the setting, in a randomized setting probably is a 4-year, pretty big, very expensive trial. And so the question is, is it financially worth it, so -- since we are getting a lot of use there under the NCCN guidelines. And that's what's something we talk about strategically internally, but -- so I can't give you any set answers, and I'm not promising you anything, but it's really a financial consideration at this point.

Our next question will be from Chad Messer with Needham & Company.

This is Gil Blum for Chad Messer. My question relates to the potential E2 expansion. Do you guys think there might be any overlap with the kind of physicians that you currently have using ADCETRIS moving forward with the E2 expansion?

Did you say E2 expansion?

E2, yes, expansion of the label. Yes.

Roger, do you want to take that?

Well, I think lymphoma docs are lymphoma docs. And so the likelihood is that there is, in particular, overlay. Darren, do you want to make a comment?

Yes, I can add some color on that. I think that there will be, particularly in the academic setting. We see current frontline T-cell about 60%, 65% of patients are treated in the academic, the others being community. And I think in the academic centers, there's a little bit of an overlap. But I think much like E1, I think, with really good data, we could see a transition to the community setting. And again, in some of these big clinics, you'll have lymphoma-focused docs that will treat those patients. So that's how we're thinking about the opportunity.

So you are expecting that the commercial expansion can continue with the docs that are already using ADCETRIS.

Yes. So I'll comment on that. When we -- a little bit further. When we do the expansion, we actually took into account for the ECHELON-2 label expansion in our geographies and territory sizing. So we could absolutely accommodate for it.

Yes. So I guess I'm understanding -- I thought you were talking about the market opportunity. You're talking about the number of sales reps and our expansion of sales reps and our ability to do that. We feel we are in great shape to do this. We know the docs. We call on the docs. We are absolutely on top of this. And since we now know when this is going to come out, and then we're going to hop on submission to regulators, based on our data, of course. We're going to be ready to go. And I actually think that if our data are strong, there is a bigger unmet medical need in a way in T-cell lymphomas than there was in Hodgkin lymphoma only because the standard of care doesn't work as well. In Hodgkin lymphoma, the 4-drug cytotoxic cocktail had a higher CR rate, although toxic, and we're very pleased with bleomycin. But it's a higher CR rate than you see through the 4-drug cocktail CHOP in T-cell lymphoma. So I think there's a bigger opportunity to get a very fast uptake into the market because of that need. So it all depends on our data, and we're getting close to it. We're all very excited about trying to get there, and I think this is a real big upside opportunity for Seattle Genetics.

Our next question will be from Geoff Meacham with Barclays.

This is Jason Zemansky on the call for Geoff. Real quickly, just kind of owing off an earlier comment, but to what extent do you think with regards to the E1 adoption your community docs are kind of bimodal distribution where you have early adopters versus late adopters? And I know it might be kind of difficult to anticipate or predict, but do you have a sense of when guidelines will be updated to include both the data and the North American cohort?

Thank you for that question. We have -- ADCETRIS has been in many different types of NCCN Guidelines and will continue to, we think, going forward, as we have more data sets. So that's something that -- it's hard to give you a predicted time frame. This is not the FDA. These are NCCN Guidelines, and so historically, we haven't like given guidance to say, here's when that will happen, because I don't think it's the right thing to do. This is from doctors, and doctor assessed, and doctor groups making the vote, providing the votes going forward. So I think though that overall, you're asking a really good question. We have our eye on this. We're working on seeing how we can get the right data into guidelines and doing the best we can on that. So thanks for the question.

Great. And just again, out of -- do you think that's an issue that's either limiting or driving uptake, the lack of guidelines with regards to the E1? Or is it something else?

I think that we're very happy with the uptake so far. We look forward to a day we have a bigger -- more commentary on NCCN Guidelines and more data such as the North American data. We'd love to have the data there. I don't want to give you guidance of when, but we would love to have the data there, and I do not think in any way that this will hurt us. I think it will help us pretty dramatically. Darren, do you want to comment?

Yes. No, I don't think it's been a barrier. I think that was your question, kind of the early adopter versus late and what that transformation. I think that over time, as we continue to reach more of our physicians on a more frequent basis, our ability to articulate the full data set within the E1 trial, we'll get past the early. We'll get to the folks that are just a little bit later adopters, and that will take time. And I think there'll be external things like the North American data that they'll take into consideration when they actually look at the U.S. experience with ADCETRIS. And so I think this will -- as we've stated, this is a marathon, not a sprint. And we couldn't be more pleased with our start, and we look forward to executing the remainder of the year.

And I am showing no further questions in the queue at this time.

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

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.