Seagen Inc (SGEN) 2018 Q3 法說會逐字稿

Good day, and welcome to the Seattle Genetics' Third Quarter 2018 Financial Results Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Peggy Pinkston, Vice President Investor Relations. Ma'am, please go ahead.

Thank you, operator, and good afternoon, everyone.

I'd like to welcome all of you to Seattle Genetics' Third Quarter 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 are unable to get to all of your questions, we will be available to do so 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 fourth quarter and 2018 ADCETRIS sales and future revenues; costs and expenses; the company's potential and anticipated timing to achieving future clinical and regulatory milestones; and published data for ADCETRIS, 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. Among the factors that may cause such a difference includes the difficulty in forecasting sales, revenues and expenses and the 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 June 30, 2018, filed with the Securities and Exchange Commission.

Now I'll turn the call over to Clay.

Thanks, Peg, and good afternoon, everyone.

We've made tremendous progress in 2018 and delivered on several significant milestones. This has positioned us more strongly than ever. For ADCETRIS, we received approval and launched in front-line Hodgkin lymphoma, where we are providing a new treatment option to replace a 40-year old standard of care. In addition, we reported top line results from our Phase III ECHELON-2 trial in frontline peripheral T-cell lymphoma, showing a 34% reduction in the risk of death in the ADCETRIS-containing arm. E2 is the sixth consecutive ADCETRIS pivotal trial to produce positive results.

In our late-stage portfolio, we made significant progress toward our goal of becoming a multiproduct oncology company. We completed enrollment ahead of expectations in the pivotal trial of enfortumab vedotin in urothelial cancer. We're rapidly enrolling the tucatinib pivotal trial for HER2 positive breast cancer. We've advanced tisotumab vedotin into a pivotal trial for cervical cancer, and we're making progress in multiple trials of ladiratuzumab vedotin.

In our earlier-stage pipeline, we are advancing several programs in clinical trials as we continue to bring multiple novel agents into the clinic each year.

Today, we'll update you on our key recent and upcoming activities. For the third quarter and year-to-date, we reported record ADCETRIS net sales in the U.S. and Canada, up more than 50% compared to the same periods last year. We've grown ADCETRIS revenues sequentially in each quarter of 2018. This included a particularly strong second quarter, during which we saw rapid uptake by early adopters of ADCETRIS+ AVD in frontline advanced Hodgkin lymphoma, following approval in March. For many physicians treating advanced Hodgkin lymphoma patients, this is a paradigm shift from an entrenched standard of care that will take time. We remain confident in the long-term growth trajectory of ADCETRIS towards becoming a blockbuster brand in the United States. Darren will provide more specifics on our commercial activities during his remarks.

We project fourth quarter ADCETRIS sales in the U.S. and Canada to be $128 million to $133 million, which would result in 2018 net sales in the range of $473 million to $478 million. This is an increase of approximately 50% over 2017. One key component of future growth is frontline PTCL, and earlier this month, we reported positive top line data from our Phase III ECHELON-2 trial. We believe the data are groundbreaking based on the statistically significant and clinically meaningful benefit achieved for patients treated with the ADCETRIS-containing regimen over standard of care for progression-free survival and, importantly, overall survival.

We're excited to share the full E2 results at ASH. Given the strength of the data, we've had discussions with FDA and we plan -- we expect to submit the supplemental BLA in November. In addition, our partner, Takeda, plans to submit these data to regulatory authorities in its territories.

Recently, Takeda received approval in Japan for ADCETRIS as a frontline treatment option for CD30-positive Hodgkin lymphoma patients based on the E1 trial. This triggered a $10 million milestone payment to us. In addition, Takeda submitted applications for approval of ADCETRIS in combination with AVD in previously untreated Hodgkin lymphoma to several other authorities, including the EMA.

There are more than 100 ongoing or completed trials involved -- involving ADCETRIS, including both company- and investigator-sponsored trials around the globe. These trials are evaluating ADCETRIS as monotherapy and as part of combination regimens mostly focused on earlier stage front-line Hodgkin lymphoma, elapsed Hodgkin lymphoma and B-cell lymphomas.

For example, we published earlier this year strong data from a trial of ADCETRIS plus bendamustine in relapsed or refractory Hodgkin lymphoma, which showed a 93% objective response rate, including 74% complete remission. We are reviewing data such as these for potential regulatory interactions, which could further support our goal to establish ADCETRIS as the foundation of therapy in CD30-expressing lymphomas.

In parallel with building the ADCETRIS franchise, we are advancing and expanding our pipeline. Our most advanced program is enfortumab vedotin, or EV, for locally advanced or metastatic urothelial cancer. We're developing EV in collaboration with Astellas. In July, we completed enrollment in the EV-201 pivotal trial cohorts of patients who receive a both a platinum-based chemotherapy agent and a PD-1 or PD-L1 inhibitor. Based on progress to date, we now expect to report top line data from the pivotal trial in the first quarter of 2019. This could support a regulatory submission in 2019 under the FDA's accelerated approval pathway.

In anticipation of potential FDA approval and launch of EV, we have aligned with Astellas on the specifics of how we will govern its global commercialization. As you know, the companies contemplate a 50-50 profit share worldwide and -- with the companies working jointly on global commercialization plans. In the Americas, Seattle Genetics will book sales, while Astellas will book

sales in the rest of the world.

The United States, EU5 and Canada are profit-share territories. Other parts of the world are royalty territories, with individual rates designed to approximate a 50-50 profit share. We believe this structure utilizes the strengths of each organization and, once approved, will best position EV in the marketplace and help ensure that we bring EV to appropriate patients in need.

The next most advanced program in our portfolio is tucatinib. This is an oral, small molecule HER2 tyrosine kinase inhibitor that we believe could be best in class. Tucatinib is differentiated from other TKIs, given its high affinity for HER2 without significant inhibition of EGFR, which may reduce the rate of clinically meaningful toxicities. Our primary focus with tucatinib is the ongoing pivotal HER2CLIMB trial in HER2 positive metastatic breast cancer, including patients with or without brain metastasis.

HER2CLIMB is enrolling rapidly, and we expect to complete the enrollment target of 480 patients in early 2019. This supports the analysis of the primary endpoint of PFS. In addition, after communicating with the FDA, we now plan to continue enrollment up to 600 patients. This change strengthens the analysis of the key secondary endpoints, which are overall survival and PFS in patients with brain metastasis. This is the result of our evaluation of the trial following our acquisition of Cascadian earlier this year.

Given how rapidly HER2CLIMB is enrolling, we anticipate completing an accrual of 600 patients by mid-2019. HER2CLIMB is intended to support global regulatory submissions. We also plan to expand the tucatinib program into earlier lines of metastatic breast cancer as well as in other HER2-expressing solid tumors, such as colorectal and gastric cancers.

At this point, I'll turn the call over to Darren to discuss our commercial activities. After that, Roger will provide an update on our clinical programs, and then Todd will discuss our third quarter financial results. Darren?

Thanks, Clay.

ADCETRIS net sales were $127 million in the third quarter, a 4% increase over the second quarter of 2018. We are pleased with our overall progress in launching ADCETRIS in Stage III and IV classical Hodgkin lymphoma, or HL. In the frontline setting, we're displacing a 40-year-old standard of care. We're 6 months into the launch and have a good understanding of the market dynamics.

First, we saw rapid adoption among physicians who appreciated the benefit of the ADCETRIS+ AVD regimen. We believe this contributed to the greater-than-50% growth in year-over-year sales and was particularly noticeable in Q2. Now we're entering the second phase of the launch which is focused on broader use. This involves continuing to connect with the physician community and patients, talking about the benefit that ADCETRIS can provide, publishing our data and supporting integration of ADCETRIS in the treatment pathways. Our guidance for the fourth quarter reflects this stage of the launch.

The commercial team is focused on 3 key priorities: First, our field team is working to ensure that physicians are familiar with the E1 data, particularly those in the community settings where we estimate the majority of frontline HL patients are diagnosed and treated.

We recently started promoting the North American subset data, which were presented at ASCO in June and is expected to be published in the near future.

These data are compelling to many physicians and provide additional evidence that dosing ADCETRIS+ AVD with prophylactic growth factor support can provide patients with superior efficacy outcomes without sacrificing safety in newly diagnosed Stage III and IV HL patients. Market research and advisory boards continue to indicate a strong desire to use a bleomycin-free regimen in the frontline setting.

Second, we've increased our efforts around patient engagement and continue to see an uptick in traffic to our website. The average age of diagnosis for HL is approximately 40 years. These patients and their caregivers seek out information online. We want to ensure that newly diagnosed patients are familiar with the advances in HL treatment and they ask physicians about ADCETRIS.

And lastly, we want to ensure that ADCETRIS+ AVD in the frontline setting is appropriately included in pathways and guidelines. This is important because some physician groups and academic centers utilize guidelines and pathways to apply consistent patient care. The commercial team, along with our medical affairs colleagues, continue to educate physicians on our data.

We remain confident that ADCETRIS+AVD will replace the 40 -year-old standard of care in advanced HL patients, and we look forward to keeping you updated our progress.

Looking ahead, launch preparations are underway for the potential approval of ADCETRIS in CD30-expressing frontline PTCL based on the strong results from our E2 trial. Market research confirms there is a high unmet need in frontline PTCL and where the current standard of care treatment, CHOP chemotherapy, is suboptimal. We estimate an addressable patient population of approximately 4,000 newly diagnosed CD30-expressing PTCL patients in the U.S. annually. We believe that if approved ADCETRIS plus CHP chemotherapy will represent a significant benefit to these patients and a substantial commercial opportunity.

ADCETRIS provides benefit to patients across many lines of therapy and indications. Our vision is to build ADCETRIS into a blockbuster brand. Our continued launch execution in the frontline HL setting and potential approval in the frontline PTCL setting will be the major drivers of achieving our vision.

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

Thanks, Darren, and good afternoon, everyone.

Today I'll summarize some of our recent clinical development activities as well as highlight a few important events on the horizon.

First, with ADCETRIS, as Clay mentioned, we reported positive results from the Phase III ECHELON-2 trial in frontline PTCL. PTCL comprises of a number of T-cell non-Hodgkin lymphomas, including systemic ALCL, PTCL not otherwise specified and other less-common subtypes. The E2 trial, which enrolled 452 patients, compared ADCETRIS plus CHP to a standard CHOP chemotherapy regimen. The ADCETRIS-containing arm produced a statistically significant improvement in the primary endpoint of PFS with a hazard ratio of 0.71, representing a 29% reduction in the risk of progression event. Importantly, we also observed a statistically significant overall survival benefit with ADCETRIS plus CHP. The hazard ratio for this outcome was 0.66, which equates to a 43 -- 34% reduction in the risk of death.

E2 is the first randomized Phase III trial to show an OS improvement in frontline PTCL. All other key secondary endpoints were statistically significant in favor of the ADCETRIS plus CHP arm. These included PFS in patients with systemic ALCL as well as complete remission rates and overall response rates in the entire population.

The safety profile of ADCETRIS plus CHP was comparable to CHOP and consistent with the established safety profile of ADCETRIS in combination with chemotherapy. We view these data as potentially practice-changing. As Clay mentioned, we're working diligently to get the E2 data under FDA review as quickly as possible.

ECHELON-2 data is one of more than 30 ADCETRIS-containing abstracts that we expect will be presented at ASH in December. The presentations will include data from both company- and investigator-initiated clinical trials in a variety of CD30-expressing tumor type and settings, and we look forward to a strong showing for ADCETRIS in San Diego.

ADCETRIS' clinical data are also being presented this upcoming weekend in Germany during several sessions at the International Symposium on Hodgkin Lymphoma meeting. Notable abstracts include the positive 5-year PFS outcomes for high-risk patients treated with ADCETRIS following autologous transplant as well as promising data from the combination of ADCETRIS and nivolumab in both frontline and relapsed Hodgkin Lymphoma.

Lastly, with ADCETRIS, we are initiating a Phase IV trial this year to assess the use of G-CSF primary prophylaxis for Phase III or IV Hodgkin lymphoma patients treated with ADCETRIS+ AVD. The trial will generate clinically important safety and efficacy data, expanding on our findings from the E1 trial in which the subset of patients who received G-CSF primary prophylaxis achieved improved outcomes with a better safety profile.

I will now move on to enfortumab vedotin or EV. As Clay indicated, our highest priority with EV is the ongoing pivotal trial in locally advanced or metastatic urothelial cancer. I'd like to comment on our other EV development activities.

First, the Phase III randomized trial called EV-301 in patients with metastatic urothelial cancer, who've previously been treated with a platinum-containing regimen and either a PD-1 or PD-L1 inhibitor, is ongoing. This is an important trial because it's intended to support global regulatory submissions for EV as well as serve as the confirmatory trial to EV-201 in the United States.

The first-line treatment landscape for metastatic urothelial cancer is evolving rapidly. We believe that EV has a role in this setting and so we plan to expand our ongoing first-line EV-103 trial to evaluate EV in multiple combinations beyond pembrolizumab. An example of this combination approach is to evaluate EV together with a platinum edge in cisplatin or carboplatin, which are part of the current standard of care. Data from this expanded trial exploring combinations more broadly, together with results from frontline trials of other companies incorporating PD-1, PD-L1 agents, will inform our first-line registration strategy going forward.

Now I'll turn to tisotumab vedotin, or TV, which we're developing with Genmab. TV targets tissue factor which is expressed in a wide array of tumors. We are currently enrolling a pivotal trial of TV in cervical cancer that is designed to support a regulatory submission on the FDA's accelerated approval pathway. We're also enrolling a Phase II basket trial, evaluating TV in other solid tumors where tissue factors can twist. These include: colorectal, pancreatic, non-small cell lung cancer, and head and neck cancer. And we also plan to initiate a trial focused on ovarian cancer.

Next, I'd like to briefly highlight ladiratuzumab vedotin, or LV, which is an ADC-targeting LIV-1 and is being evaluated in several ongoing trials for triple-negative breast cancer. We've previously reported encouraging single-agent activity in patients with metastatic TNBC who were heavily pre-treated. And we are continuing to explore LV as monotherapy in patients who failed one or more lines of therapy, but we're also evaluating LV in the neoadjuvant breast cancer setting as part of the I-SPY 2 trial.

From a combination perspective, we are evaluating LV together with pembrolizumab and, in addition, LV is being combined with atezolizumab as part of the MORPHEUS trial.

We look forward to keeping you updated on the LV program and its potential to address the unmet medical need in triple-negative breast cancer.

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

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

Today, I'll summarize our financial results for the third quarter and year-to-date as well as provide some updates for our financial outlook for the year.

Total revenues in the third quarter were $169 million and were $480 million for the year-to-date in 2018. This included ADCETRIS net sales in the U.S. and Canada of $127 million in the third quarter and $345 million for the first 9 months of the year. Growth in 2018 reflects the recent label expansions in CTCL and front-line Hodgkin Lymphoma.

As Clay mentioned, we are guiding for fourth quarter ADCETRIS net sales in the U.S. and Canada of $128 million to $133 million.

Royalty revenues in the third quarter increased to $23 million compared to $17 million in the third quarter of 2017.

For the first 9 months of 2018, royalty revenues were $59 million compared to $46 million for the same period last year.

Based on strong sales by Takeda, we are increasing our expectations for 2018 royalty revenues to a range of $78 million to $82 million.

Collaboration revenues were $20 million in the third quarter, which includes amounts earned under our ADCETRIS collaboration with Takeda and our ADC deals. This included the earned portion of a $10 million milestone from Takeda, triggered by the approval of ADCETRIS in Japan for front-line Hodgkin Lymphoma. As a result, we are increasing our expectations for 2018 collaboration revenues to a range of $80 million to $90 million.

R&D expenses were $140 million in the third quarter of 2018 and $416 million for the year-to-date. The increases over 2017 reflect higher investment across our portfolio. Based on our year-to-date results, we are narrowing our expectations for R&D expenses to a range of $555 million to $575 million.

SG&A expenses were $57 million in the third quarter and $182 million in the first 9 months of this year. Expenses in 2018 reflect the acquisition of Cascadian in the first quarter and costs to support the commercial launch of ADCETRIS in front-line Hodgkin Lymphoma.

Given our continuing investments during 2018 to support our portfolio, we are slightly increasing our guidance for SG&A expenses for the year to be in the range of $240 million to $250 million.

We ended the third quarter with $486 million in cash and investments. This is in addition to approximately $160 million in common stock holdings in Immunomedics. These shares are mark-to-market, which causes variability in our financial results and is not core to our operations. Of note, this contributed to an investment net loss for the quarter of $22 million and a gain for the year of $67 million.

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

Thanks, Todd.

I'll close with a short summary of key milestones expected in the next several months. They include: first, in frontline PTCL submitting the supplemental BLA to FDA in November and reporting data from the E2 trial at ASH; second, reporting top line data from EV pivotal trial, EV-201, for urothelial cancer in the first quarter of 2019; third, completing enrollment of 480 patients in the tucatinib pivotal trial HER2CLIMB and HER2-positive metastatic breast cancer in early 2019; and lastly, advancing the pivotal trial of TV in cervical cancer.

By continuing to grow the ADCETRIS brand, which is approaching $0.5 billion in U.S. revenues in 2018, and advancing our late-stage pipeline, we have the potential to realize our vision of transforming Seattle Genetics into a multi-product, global oncology company.

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

(Operator Instructions) Our first question will come from Michael Schmidt with Guggenheim Partners.

I had a couple. Maybe one, first, on ADCETRIS, Clay. Could you just comment a little bit more on the sales dynamics in Hodgkin lymphoma? Where has uptake been strongest so far of ADCETRIS in the first-line setting? And could you help us understand what percent market share you have in the stage III, stage IV patient population at this point? And then I have a quick follow up.

Sure. Thanks for the questions. So overall, Michael, as we look at ADCETRIS, this brand is doing very well. And like I said in prepared remarks, approaching $0.5 billion in U.S. and starting to get closer to $1 billion globally. And it's a great product. It's an important product. Doctors really depend on it. Now from year-to-date standpoint, we're up 50%. And from a E1 regimen or front-line Hodgkin lymphoma regimen, we had a rapid uptake into the market. Clearly, there are quarter-to-quarter variabilities in Hodgkin lymphoma diagnoses, but we continue to grow the market share. We got the early adopters, now the hard work begins. And Darren, do you want to make any comments about the hard work that we're doing to get out there?

Sure, Michael. Thanks for the question. Yes, you ask about the rapid adoption, and we really see 2 -- kind of 2 camps that really took to the regimen quickly. It was those that -- physicians that had a bleomycin preliminary toxicity issue with one of their patients. And we knew that going in, the market research and all our discussions that docs are looking for a bleomycin-free frontline regimen. The second were just physicians that just took to the data. This is the disease that has curative intent and ADCETRIS+ AVD in the ECHELON-1 trial showed that benefit. So those are the physicians that quickly pivoted to the product. Now as Clay mentioned now, now we can kind of pivot to -- changing a 40-year standard of care takes some time. And let me remind you, majority of these patients are diagnosed in the community where these physicians see 3 to 4 patients a year. So our sales force of roughly 90 representatives continue to educate physicians, highlight our data, particularly the North American data, which highlights a really nice treatment effect in the North American experience. So we're super optimistic moving forward. There's a lot of hard work to do. You did ask about share. It's a little early for us to kind of determine where that share is, but as we get farther away from shore, we'll update you on our progress there.

Great, thanks. And then just quick one on HER2CLIMB. You mentioned the protocol change or the enrollment change. And I was just wondering if the primary PFS analysis, is that trigger based on the first 480 patients? Or will that now be done on the larger trial size?

Yes, the PFS is still triggered off of the 480. And that's scheduled for early 2019 as we have mentioned on the call. So still at 480.

Our next question will come from Kennen McKay with RBC Capital Markets.

Maybe one for Darren on the commercial trajectory of ADCETRIS. It seems like, excluding the price increase, sales' been kind of flat quarter-over-quarter. I was wondering if you can maybe just give us a little bit more understanding of the dynamic that's going on here between Q2 and Q3, especially given the sense of inventory, not really factoring it into the question here. Also, wondering if you can help us understand what duration is working like in Hodgkin's, if this is sort of coming out in the clinic to the 4 to 6 cycles that we saw in ECHELON-1? And then a final question, just hoping for a little bit of color on, Clay, your comment referring to seasonality of Hodgkin's diagnosis, hoping you could maybe elaborate on that. Or wondering perhaps if -- when ADCETRIS did launch into front-line Hodgkin's, maybe there were some warehouse patients that were getting seen in Q1, too.

Yes, Darren, why don't you start, and I'll hop in afterwards?

Yes. So Kennen, thanks for the questions. I got the dynamics duration. So yes, as I mentioned earlier, I think we saw really rapid uptake in the first half of the year but most notably in the second quarter. And those were physicians that really -- as I noted, really took to the therapy, and which is typical in some launches. And you did note, we -- ADCETRIS is not a therapy that there is any stocking. As you know, it's a just-in-time delivery of ADCETRIS from Seattle Genetics. Physicians or clinics order it and they receive it the next day. So the dynamic was really just out-of-the-gate. Physicians have latched onto it. And now, we kind of pivot to that entrenched area of a 40-year standard of care in which our 90 representatives continue to educate physicians around. We're really optimistic about the North American data. All our market research that we do indicate this is compelling data, particularly, for those physicians that have not adopted ADCETRIS+ AVD in the frontline setting. So we're excited to get out there and continue to educate them around that data set. Regarding duration, it is much like shared too early. We're just several months into the launch, and so we really need to understand what that duration is. And at the appropriate time, we'll update you on what that duration of therapy is. But I will say that unlike our previous labels in relapse refractory and ATHERA, this is a curative intent, and docs do want to cure these patients in the frontline setting. And with prophylactic growth factor, all our indications are docs want to get as much therapy into patients as possible.

So I'd add that when we first came out with this regimen, we did get some crossover to patients that were already on AVD -- ABVD for a cycle or 2 and then crossed over into ADCETRIS AVD (sic) [ADCETRIS+ AVD]. And I think that partially added to the big berth that we had. We had 2 great quarters in a row. And so that settles down because you're not getting the crossover as well. So we did see some of that. And Darren answered the question on duration intent. We think it's great because of the curative intent. We think duration's going to be strong. And this is something -- it really is a 40-year regimen that doctors are using, and it just takes time to get there. Doctors don't see -- this is not lung cancer. So some of the doctors -- there's thousands of hemog doctors, and a lot of them out in the community will see 3 or 4 Hodgkin's lymphoma patients in a year. And so this just has to get into their mindset because they are used to using ABVD. And ABVD is, and has been, a chemotherapy success story. It's been a good thing, but bleomycin's quite toxic. And if you look at our North American data, we're increasing the long-term, disease-free survival rate by 10% without bleomycin. So our data are very strong. And as we're out there and canvas doctors and talk to doctors, they see our data. I think that they are starting to use it, and even doctors that are set on their ways will start to take it up and use it. So we feel good about the future.

Got it. Maybe just one additional follow up, if I could. Just hoping for a little bit more color on the changes to the HER2CLIMB study. I was wondering sort of specifically what you were initially seeing in sort of the event rates that led to this position? If you can just help us understand that a little bit more, if it's related to PFS or OS events simulating.

Sure. It really wasn't related to events. Let me just step back for a second. We acquired Cascadian. It was a very strong acquisition. The integration went incredibly well. We really like tucatinib for a lot of reasons -- strong interaction with HER2; relatively none, if any, interaction with EGFR -- so we could get rid of the toxicities that are connected with this type of drug. And so we were able to come in, we were able to review the trial, and the trial's great. We really like the trial. And the 480 patients to go to PFS, that's not changing at all. But keep in mind that up to ½ of the patients can have brain mass, okay? And we're very interested in OS. So we just -- to us, it's really important to make sure that we have an opportunity to continue treating patients. And due to that, the enrollment is so fast, okay? I mean, this has been really -- this is exciting to doctors, and we hear from them all the time. It takes barely more time, a few extra months, and we'll have the enrollment done to 600. And it'll increase the sample size, increase our statistical power for something like an OS, which -- and potentially an OS, even getting an earlier OS data time by having more patients. So this is -- to us, this made total sense. We spoke with regulators, and regulators were totally fine with it. And so to us, this made sense. And Roger, do you have any additional color?

No, I think, Clay, you're exactly right. The strength of the trial, it's already a well-designed trial, so it’s primary end points. This move to increase the sample size with 2 secondary end points just increases the value and the potential for producing significant outcomes for those 2 events.

And I'll mention one more thing is that we're now stating -- because we were stating that 480 patients will be hit in middle of the year something, and now, we're saying early 2019. The enrollment has done so well, we're shortening the time frame to getting that 480 patients. So the data on the overall data is going to come in earlier than initially thought.

Our next question will come from Andrew Berens with Leerink Partners.

I was wondering if you'd give us some color maybe on the unique prescriber dynamics that is contributing to what appears to be a slowdown quarter-over-quarter. And then what could be done to reaffirm acceleration of the growth going forward?

Sure. Well, we've made similar comments already. We think that this is this 40-year regimen that doctors have been using with a fairly high cure rate. We came in, we have even a higher long-term disease-free survival. I hesitate to say cure because it's usually a 5-year follow-up to call it a defined cure, and we'll be tracking to that, for sure. So it most likely represents an enhanced cure rate. We do have to wait a little longer to use that word. But it is something where our data are strong, okay? There's no doubt about it that this can benefit patients. And without bleomycin for the first time in decades of doctors trying, we were able to do that. And so, a bunch of doctors went on really quick and put it on there, and then there's other doctors that just -- it's not that they're against this. It's -- they don't see that many Hodgkin's lymphoma patients. They're used to using the same thing, and there's -- this needs to get into the practices and in their pathways and just become a regular thing for them. And certainly, getting out the E2 data and, hopefully, approval at some point, will really help because, once again, PTCL is also not a -- it's not lung cancer. But these are similar doctors, if not the same doctors, that treat these diseases. And the thing we want the doctors to think about is as they think about ADCETRIS and we get E2 approval in the future, they think ADCETRIS, frontline. And it goes together, ADCETRIS front-line Hodgkin, ADCETRIS frontline PTCL. And getting that out there will help the mindset of these docs that are used to decades-old regimens. Certainly, decades-old regimen in ABVD, and for E2, it's CHOP, which is also decades-old. The difference there being that with E2 and CHOP, CHOP is nowhere near as effective as ABVD is. So that's something, I think, doctors will see really fast because they know they're not getting a high cure rate like they were with ABVD. And so I think having both of them out there will really impact both and get the mindset more into ADCETRIS and frontline and connecting those 2. Darren, do you have any additional comments?

Yes, Andy. I think on just the accelerating it, to your question. Clay outlined it exactly right. But when I look at our execution metrics and when we think about physicians and patients, all our metrics are looking extremely well, our share of voice, our time line detail, our intent to prescribe, the different sales force metrics we look at. When you look at the digital, knowing that patients and caregivers are so -- an important part of this therapy, our traffic book-to-book, HCP and patients are increasing, downloads are increasing. And then our market research around the North American data, which really shows that significant impact that some were looking for in the double digits, all that market research telling us that this is compelling to physicians to get them to adopt ADCETRIS+ AVD in the frontline setting. So those are the things that we're excited about moving into the fourth quarter and early next year. And also as Clay pointed out, with the potential of E2, we really see a frontline ADCETRIS approach in both front-line Hodgkin's Stage III-IV patients and frontline PTCL.

Okay. Is there any other payers? Is there any pushback from the payers on reimbursement? Are they restricting it to III and IV?

Our label is in Stage III and IV, so certainly that's our label. We don't promote off-label. We have not heard of payer pushback at all. So that's not -- that hasn't been an issue. I think our labels at the payers, Andy, both in monotherapy and ADCETRIS+ AVD reflect no payer issues across any of those labels, the 5 that we currently have.

Okay. And then just one last one, please. Just any thoughts on HHS proposals? The drug pricing changes, how that could effect ADCETRIS.

We have -- I don't want to comment on specific HHS proposals or anything like that. We have, as you know, taken price increases and kept them. They're very modest, and made sure that we never put a healthcare professional underwater, as they term it. So we've kept them really modest. And we will never comment on whether we will or not take price increases in future, but if we do, we will keep them, like we've always done, which is modest.

Okay. But there's also a proposal to remove the ASP-based pricing. Is that potentially going to have an impact on ADCETRIS in the community?

Well, we're not -- I'll just -- I'll take it, Andy. We don't -- there's no discounting contracting currently with ADCETRIS, Andy. So I think that will impact those that have contracts and what have you. But it's something we'll continue to evaluate. All these different changes and potential pricing policy, something we will continue to consider and evaluate.

Our next question comes from Salveen Richter with Goldman Sachs.

This is [Mary Ann Brightman] for Salveen. I have a quick one. I just wanted to ask about the 4Q guidance. Do you guys expect some kind of seasonality effect going forward? And another question that I had was do you think the PTCL is going to have similar type of launch dynamic that you will have basically like early adopters and then it's going to be the sort of paradigm-shifting phenomenon that you've seen before?

Yes, thanks for the questions. We mentioned in the prepared remarks seasonality. Our share -- we've done work on this, and it's hard to completely be 100% sure. But our share is good, and we liked our share. And it seemed like in the quarter there was a little bit less front-line Hodgkin lymphoma diagnosed. And it's hard to fully or 100% know that because we don't have every single patient's worth of detail, but we said the word seasonality for that reason. And if we're still having a good share but there's less Hodgkin lymphoma diagnosed in frontline, that could be something we're looking at. And we just wanted to put that out there because it's something that we have looked at and considered because the number of frontline patients was a little low in the quarter. And so that's just something we put out there. Second of all, in PTCL, you asked about early adopters, and well, we see the same. I think that -- while we don't know for sure, so I don't want to commit to something, this is a little different because doctors know that PTCL patients are treated less well, and there's a bigger unmet medical need for the E2 regimen. CHOP does not provide for, in the mid-70s, of a cure rate like ABVD does. We're in the mid-80s when you look at our North American data, we're very excited with that, to have that long of a disease-free survival rate, multi-year disease-free survival rate, we're excited with. But with PTCL, historically, you're more like 50%. It's not in the mid-70s. So there's a lot of patients that are not treated very well. And even the patients that respond, a lot of them ended up relapsing with PTCL. So they're not just a 50% cure rate, that's an immediate CR rate. So I think it's going to be different there. Darren, do you want to add any color to that?

Yes, I think you're right, Clay. And while it's hard to predict, if you look at our deployment of our sales force, there's a lot of overlap between the treating physicians between Hodgkin and frontline PTCL, both in the community setting and the academic setting. I do think that overall survival is in it with ADCETRIS. And CHP is a tremendous benefit that I think physicians will really latch on to. And whether we'll see some of the dynamic of some patients, physicians making the particular switch mid-cycle, remains to be seen. But I think once the -- we're approved and we're out there promoting it, I think docs will be excited to provide this as a treatment option for their patients.

(Operator Instructions) Our next question will come from Tazeen Ahmad with Bank of America.

Clay, I just wanted to get your thoughts about a study that Merck is doing. It's called the KEYNOTE-204 study. They're looking at using PD-1 plus ADCETRIS versus PD-1 alone. And I realize this is not your study, but in general, what are your thoughts about combo therapies with ADCETRIS? And depending on the outcome of the KEYNOTE study, how do you think that could impact ADCETRIS sales?

We are very aware of all the studies in Hodgkin lymphoma, whether they use ADCETRIS or not, first of all, so we track on those. And you asked a general question, which I think is actually the best way to address this. The general question is, what do I think and what do we think at Seattle Genetics about combinations with ADCETRIS. Well, first of all, both E1 and E2 are combinations. So we -- and those are at frontline. And so we see that ADCETRIS combines very well with the standard old-school chemotherapy. We know that. It's a fact. We're now approved with E1, we have great data -- groundbreaking data with E2, we're planning to submit that. And I may add, really hustling. We didn't make that in our prepared remarks. But getting that submission done in November is -- I mean that's working morning, noon, night and weekends. And because the data's so groundbreaking, we are cranking fast. And our regulatory group and clinical group and medical writing group, we are working hard to get this to patients because, quite frankly, it's the right thing to do for patients. Yes, it's good for the company, but it's right thing to get this regimen out to patients pretty darn fast. Now as far as combinations with biologics, like PD-1s, absolutely, we're excited about that. And we've previously presented data showing a really dramatic impact of combining PD-1, in this case it was nivolumab. But likely, most of the PD-1s, if not all, can be used in combination, and we had data that was really spectacular. We presented it at ASH, and that's the kind of data -- we talked -- we mentioned on the trial that we have a lot of data from trials. We gave you an example of ADCETRIS plus bendamustine with over a 90% ORR and over a 70% CR rate. I mean, very compelling data in a pretty big population of patients. This wasn't like 5 or 10 patients, this is substantive populations. And we have, I think, it's over 80 patients worth of data with ADCETRIS plus PD-1 inhibitor showing very strong activity. And so we mentioned on the call something about how we've been putting together all our data, and that is something of subject that perhaps we could consider talking to regulators about. And to me, when you look ultimately at how Hodgkin lymphoma is treated, this will be treated with an ADCETRIS regimen AVD up-front, then an ADCETRIS regimen in second line for any patient that goes through. Past there, and whether it's an ADCETRIS PD-1 or ADCETRIS bendamustine or something.

And then you go to a third line. We have a single-agent ADCETRIS with a very strong activity. That was actually our first approval in Hodgkin lymphoma. And also, the checkpoints are they, which is good. I mean, that's an option. If you failed multiple different things, it's great that the checkpoints were approved largely in fourth-line after ADCETRIS.

But I think that using ADCETRIS in combination regimens in a couple of different lines will make it so that there's so few patients left that aren't well treated and aren't put into complete remission that I think we're going to be changing -- and we are already starting to change the life history of Hodgkin lymphoma. And we're focused mainly on Stage III and IV here in the Hodgkin lymphoma front-line. I may add that there are -- there's a lot of work going on in using ADCETRIS regimens in earlier stage, in Stage I and II, and not just in Stage III and IV. And you'll see some of that presented at conferences like the ASH conference. There was actually 1 presentation done last year at ASH about data which was spectacular but didn't have the duration yet because it was too early to see the duration.

But you'll see -- because there's quite a few studies going on using ADCETRIS with earlier stage, with earlier patients, and not just ADCETRIS AVD but ADCETRIS with less letters. So even less chemo. So you have ADCETRIS, and I think that -- with different chemos. And I'll point you to ASH to start to take a look at that because we're pretty excited about trying to eliminate letters in earlier-stage patients, especially because a lot of them are kids. They're young people. They're 23 years old. And the less chemotherapy letters they get, the better. And so we're pretty excited about that.

Okay. Thanks for all that color, Clay. And then maybe just one follow up to one thing you said about use in Stage I and II. Because ABVD traditionally has a very high cure rate in that patient population, what kind of improvement would you think would make doctors feel like it's clinically meaningful?

Clearly, you are correct. In Stage I and II, ABVD has a pretty good outcome, even better than Stage III and IV. But I will point you to ASH. And it's hard for me -- I can't yet talk about specific data. But if you can start getting a significantly less-toxic approach and you could get a very high CR rate and try to get even approaching a 100% CR rate, get every patient into CR and use less chemotherapy, that's a pretty good deal. And so that's what we're trying to do. And I can't give you all the data now, I apologize, but ASH is not that far in the distance.

Our next question will come from Cory Kasimov with JPMorgan.

This is Shawn on for Cory. Just curious, in the current standard practice, how common is CD30 testing done for PTCL patients? And do you anticipate the need for testing to be a hurdle in terms of adoption? And then given that ADCETRIS is already on treatment guidelines for PTCL, do you guys have a sense of what sort of sales are already being generated for this indication, and how that might eventually affect the speed of the brand once officially approved?

Okay. I heard the first and the third question. And the middle one I'm going to ask someone to quote. So the first one, maybe I'll turn the second one over. Your question, Darren?

I thought I heard testing and then treatment. So I think -- the testing for PTCL, and quite frankly, most lymphomas, there is a CD30 test run. And so for PTCL, in particular, we do things, depending on what the FDA label indicates, we do anticipate, though, that physicians will test for CD30. We have engaged with pathologists, quite frankly, since approval, around educating around CD30. And now, that there was a treatment for ADCETRIS.

And so, we'll continue those initiatives. And where we are able to continue to educate pathologists, because there's now a treatment, an indication for PTCL, also physicians, and make sure that the tests, the diagnosis, the report back to the physician all indicate what the diagnosis is and should ADCETRIS be part of the patient's therapy.

Yes, it was -- and I might add on the testing. This is very commonly done. This is standard at clinical centers across the globe that CD30 is one of the few just key tests that are done to look at potential lymphomas and determine if they're Hodgkin, if they're non-Hodgkin, if they are T-cell, B-cell, other things.

The other thing is we -- this happened. We were looking at this in cutaneous T-cell lymphoma. So it's just a guidance to think about. And so we obviously screen patients in cutaneous T-cell lymphoma, whereas in Hodgkin lymphoma, it's on everybody. In cutaneous T-cell lymphoma, it's on a high percentage, but not everybody, and we screen them. And our label says CD30 expressing, which allows doctors to use their own centers' CD30 screening in deciding whether they have it or not. So I don't know what's going to be in E2 label. And it may be the same but it may be not, but that's what it says in CTCL, CD30 expressing. The second question...

PTCL, I think you said existing guideline, and do we think we're seeing some use now. We don't bring down the use, but I think some physicians over the past -- but I think for the -- this frontline setting for peripheral T-cell lymphoma will be -- when we get the label, we'll all be really promoting, too.

Yes. I would just say on the sales now -- I think you asked about are there sales now in PTCL. And we don't think there are. You see, when we put out the E1 top line data, we didn't see sales until -- the off-label says until our data was presented at ASH. And so I think that's really the time were we may see some because doctors don't like to respond -- I mean, the top line data is more of a -- it's material, it goes out to investors in Wall Street, but doctors don't really look at the top line data too much. They like to see the full data set. And so that's where -- I think that your question could come into play after ASH. But right now, we don't think so.

Our next question comes from Geoff Meacham with Barclays.

Clay, I joined the call late, so sorry if this has been asked. But on the E1 impact, what do you think is a tipping point in the community setting? I guess, I'm thinking about the lessons that you've learned and new prescribers that are higher volume. Could you implement that more broadly? And then I will follow up on E2.

We are out there -- and you know, we did get quite a few questions early on, as you can imagine. We are out there in force talking to docs, talking about our North American data. We have great data, there's no doubt. And we feel that we are getting docs to convert to this from their 40-year regimen of ABVD that they're just so used to. And you're out in the community, and a lot of the docs see a few Hodgkin's lymphoma patients a year, and it's not uncommon at all.

And bringing ADCETRIS and frontline together into their mindset. And like I said, that will be when you have E2 approval at some point based on our groundbreaking data. The more we can bring ADCETRIS in the frontline and the more doctors can think ADCETRIS connect with frontline, it will help because I think we're not facing something where we have sketchy data at all. Our data is very strong. It's really just a matter of getting out there, getting into the mindset and getting docs to think about ADCETRIS in frontline. And yes, we have the early adopters.

It's really the hard work now we're doing on these other docs that just -- they're busy. These docs are busy. They're treating patients with different diseases. They don't get up in the morning and think about ADCETRIS. They think about their patients and doing what's right for their patients. And we just got to get out there and get the North American data out there, talk to them. And I feel -- we feel very good about the future. It's just -- it's a little bit of the hard work beginning now.

Okay. And then you characterized, prior to the E1 rollout, just the differences between the academia and the community setting. Maybe just help us with this same view, updated view for PTCL. It seems like, obviously, the ECHELON-2 pitch will be easier either way in the back of OS and unmet need, but I just want to get a better context for the practice setting.

Sure. I can start this and maybe Darren has some color for it. But PTCL is a little bit different. T-cell lymphoma is slightly harder to diagnose than Hodgkin lymphoma. Hodgkin lymphoma has the Reed-Sternberg cells, they're these big ugly cells, every doctor can see them really quickly. And over the years, some T-cell lymphoma has been diagnosed initially as B-cell lymphoma, and then they realized, wait a minute, this is different. And -- but having a specific drug for frontline T-cell lymphoma will certainly cause doctors to take a close look at this. There's nothing like having a drug to treat a disease that changes practice.

And so what I think is going to happen is, we're going to see a little bit more in the academic setting just because of sometimes the community says, "Hey, can you help us, tell us what this is? Because we're not sure it's B-cell lymphoma." And so sometimes they get help from academics. So I think as opposed to Hodgkin, we'll see a little bit more there. But on the same token, the academic docs, they really know that this is a bigger unmet medical need. So I think it's not the identical dynamics. I hope that helps. And Darren, do you have any more color?

Yes, Geoff. I think Clay hit the nail on the head. Tougher diagnosis, typically treated historically in the academic setting. When we think about execution around our sales force and getting the messages out upon approval, when we expanded after the E1 results, we had E2 in mind. So we will have overlap on our call points with our physicians. And we're excited.

I mean, this is a great opportunity for us to get this information to those physicians. And ultimately, I do think there'll be comfort, now that you have the E1 results and the ECHELON-2 results, docs in the community feeling confident they can diagnose the frontline PTCL patient. They've got a great regimen in ADCETRIS plus CHP, so you could see some gravitation back to the community, both for diagnosis and treatment versus historical norms.

Our next question comes from Andy Hsieh with William Blair & Company.

I have one for Darren. I think you talked about adding about 150 new accounts during first quarter. And so in terms of the dynamics this quarter, for the growth, are you seeing it mostly from return customers? Are the growth generated by new accounts? I was just wondering if you can break that down for us.

Yes, we continue to see new accounts added, Andy, over time, predominantly in the community. And we see the split now, if you look at treatments, it's about 60% community, 40% academic. So we continue to make inroads as we've talked about during the call. And again, we're starting to, as we get the North American data out, get to every specific or potential community physician out there and find patients.

And just a follow-up on that, am I correct in assuming academic doctors are usually high volume? Whereas a community, it's basically -- the strategy there is to really detail across a large number of physicians because they're low volume. Is that a correct way to think about Hodgkin lymphoma?

Well, I think if you think about diagnosis, about 70% of all frontline Stage III, IV are diagnosed in the community. So unlike other relapse, where most of them, when we launched 7 years ago, were in the academic center. Yes, I mean, our focus is not only the academics, which we've now focused on for many years, but in the community. And that's where we need to continue to promote the North American data. And again, just a reminder, this is -- there's 3 or 4 patients, typically, that community oncologists see per year. So we need to be in there, continue to educate them around the data. And then when a patient comes in, they're ready to treat.

Got it. And just one quick question on EV. In terms of the frontline, this planned trial EV in combination with KEYTRUDA, are you looking at the PD-L1 positive population in UC?

So first of all, thank you very much for the EV question. As a company, we -- while we get mainly ADCETRIS questions, we're positioned with both EV and tucatinib data next year. I mean, this is an exciting time for us. The trial's being finished, and really becoming a multi-drug company. So I appreciate your question on EV. Roger, would you like to comment on the frontline trials?

Sure. So thanks for the question. So understanding that the landscape around PD-1, PD-L1 has been impacted somewhat further by a biomarker based on stuff that's been reported around competitor data. We are taking the approach that in combination, we basically take all comers. We obviously need to account for the biomarker, so there will be measurement. But the focus is on all-comer approach rather than on a PD-L1 selected.

I see. All right. Maybe last question on TV, if I can. I think the plan is to expand into ovarian cancer. So Clay, would you mind reminding me the expression level among ovarian cancer patients? I think I saw a paper says about 96%. So I don't know if that's just one single paper. I don't know if that's the consensus across the field. And do you foresee you would need biomarker testing in a new indication for TV?

TV -- and I appreciate the question. TV is in a registration trial to hope to get registration in cervical cancer, and that's our first one. We've also opened up what we call a basket trial. And we're going to go further into ovarian cancer. So you are correct. So we're actually looking, not just in ovarian. It's actually quite a few solid tumors that have tissue factor expression. And without locking on a specific number, tissue factor is expressed very, very high density in many solid tumors. 96%, I think, might be a little high, but it is quite high. So you're not that far off in ovarian cancer, but I wouldn't be quoted at saying 96%. And histology is kind of a blunt tool, so it doesn't -- one person's histology may say 90%. The other person might say 96%. I would say it's got very high density would be what I would say after 30 years of studying antibody binding into cancer cells. It's very high density in ovarian cancer. And we're really excited about looking at ovarian cancer, but also a few other solid tumors as part of our basket trial, as we're calling it.

Just to add one comment from me is TV is being evaluated independent of any biomarker. It's an all-comer approach.

At this time, I would like to turn the call back over to Peggy Pinkston for closing remarks.

Okay, thank you, operator.

That's everything for today. Appreciate you joining us. Have a good evening.