Seagen Inc (SGEN) 2019 Q3 法說會逐字稿

Good day, and welcome to the Seattle Genetics Third Quarter 2019 Financial Results Conference Call. Today's call 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 2019 Conference Call. With me today are Clay Siegall, President and Chief Executive Officer; Robin Taylor, Chief Commercial Officer; Todd Simpson, Chief Financial Officer; and Roger Dansey, Chief Medical Officer.

Accompanying today's conference call are supporting slides, which are available on our website in the Investors section, Events and Presentations page. Following our prepared remarks today, we'll open the line for questions. (Operator Instructions)

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 2019 financial outlook, including anticipated 2019 ADCETRIS sales and future revenues, costs and expenses; and the company's anticipated timing to achieve potential future clinical and regulatory milestones, including data readouts, regulatory submissions and approvals. 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 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 periodic reports filed with the Securities and Exchange Commission, including the company's quarterly report on Form 10-Q for the quarter ended June 30, 2019.

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

Thanks, Peg, and good afternoon, everyone.

Seattle Genetics has reached a transformational point in its history. We are poised to bring multiple targeted therapies to cancer patients in need. Our progress is evidenced by significant milestones across our oncology portfolio, including several in only the past few months.

First, ADCETRIS is a leading lymphoma brand that continues to grow with record revenues of $462 million year-to-date, up 34% in the first 9 months of 2018. Under our collaboration with Takeda, ADCETRIS is on pace to exceed $1 billion in global sales in 2019. In addition, ADCETRIS remains the focus of a substantial clinical development program. At ASH in December, 10 abstracts will feature ADCETRIS in Hodgkin and T-cell lymphomas, including the 4-year follow-up from the ECHELON-1 trial in front-line Hodgkin lymphoma.

Next, in our late-stage pipeline is enfortumab vedotin, or EV, which we're developing in collaboration with Astellas. During the quarter, we submitted the BLA for EV in previously treated metastatic urothelial cancer patients, and it was filed by the FDA with priority review with an action date of March 15, 2020. If approved, EV would be our second marketed product and expand our commercial portfolio to solid tumors. Our EV U.S. salesforce is in place, and we are looking forward to bringing this drug to patients in need. In parallel, we and Astellas are advancing a robust clinical development program for EV across the spectrum of urothelial cancer, including a planned Phase III trial in first-line metastatic patients. Roger will provide more detail about the impressive data presented at the European Society for Medical Oncology Conference and our development plans for EV.

Our next late-stage clinical program is tucatinib. Last week, we reported exciting results from our HER2CLIMB pivotal trial of tucatinib in metastatic HER2-positive breast cancer, including patients with brain metastasis. Trial was a success and achieved its primary and 2 key secondary endpoints. Full results will be presented at the San Antonio Breast Cancer Symposium in December. The data further support tucatinib as a potential best-in-class HER2 tyrosine kinase inhibitor. Our team is already preparing the NDA, which we plan to submit to the FDA in the first quarter of 2020. This would put tucatinib in line to become our third marketed product. The HER2CLIMB data also support our continued investment in the tucatinib clinical development program in earlier lines of HER2-positive breast cancer and in other solid tumors such as colon cancer.

Tisotumab vedotin, or TV, is a late-stage program we are developing in collaboration with Genmab. Our initial focus is in recurrent or metastatic cervical cancer. We expect to report top-line data from the TV pivotal trial called innovaTV 204 in the first half of 2020. Lastly, investing in our early-stage pipeline is a key part of our strategy for future growth. We are advancing multiple programs in ongoing clinical trials including ladiratuzumab vedotin or LV. We plan to report initial data at SABCS from an ongoing clinical trial of LV plus pembrolizumab in triple-negative breast cancer patients. We will continue to advance innovative new product candidates into clinical trials, including ADCs and other targeted therapies with several INDs planned in 2020.

At this point, I'll turn the call over to Robin to discuss our commercial activities. Then Todd will comment on our financial results and 2019 guidance. After that, Roger will discuss our clinical development activities. Robin?

Thanks, Clay.

ADCETRIS net sales in the U.S. and Canada were $167.6 million in the third quarter, an increase of 32% compared to the same quarter in 2018 and an increase of 5% over the second quarter of 2019. Continuing growth in Q3 reflected an increase in the overall share of front-line PTCL patients treated with ADCETRIS and sustained share in front-line Hodgkin lymphoma. The PTCL growth was highest among newly diagnosed ALCL patients with a significant majority receiving ADCETRIS.

Our sales organization is focused on continuing to promote ADCETRIS under its broad label that now includes 6 indications. They're also emphasizing the 3-year PFS data from the ECHELON-1 trial in order to continue to shift adoption for advanced stage Hodgkin lymphoma patients. The data showed that with extended follow-up, the PFS benefit was maintained with ADCETRIS+ AVD. We're narrowing our 2019 ADCETRIS sales guidance to $625 million to $640 million.

Now I would like to transition to enfortumab vedotin. We are encouraged by the positive reaction from investigators and key opinion leaders to the EV-201 data that was presented at ASCO. There is significant unmet need in metastatic urothelial cancer post platinum chemotherapy and PD-1 or PD-L1 therapy, and we look forward to providing a new option for patients. We are actively preparing for the potential approval and commercial launch of EV. The EV sales team is fully on board and in the final phase of training to ensure that we are ready to launch upon FDA approval. Our sales organization was hired from 18 different companies in addition to Seattle Genetics and has an average of 14 years of oncology experience. Our team is also actively engaging with key payers to provide them with information that will help them plan and budget for future coverage and/or reimbursement decisions related to EV. We are working in close collaboration with our partner, Astellas, to ensure the joint commercial team is launch-ready.

Moving on to tucatinib. The commercial team is excited by the results from HER2CLIMB. We have been preparing launch plans in anticipation of the data that we announced last week. Hiring of the U.S. sales leadership team has already been initiated with a focus on deep expertise in the breast cancer space. I'm confident that we will have a highly experienced tucatinib salesforce in place in advance of approval.

In summary, ADCETRIS is the mainstay of our business, and we continue to focus on expanding our newer indications of front-line Hodgkin lymphoma and PTCL. We look forward to potential approvals and launches of EV and tucatinib and to making a difference in the lives of cancer patients. Now I'll turn over the call to Todd.

Great. Thanks, Robin, 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 and provide a few updates to our financial outlook for the year.

Total revenues were $213 million in the third quarter of 2019 and $627 million for the year-to-date. This included record ADCETRIS net sales in the U.S. and Canada of $168 million in the third quarter and $462 million for the year-to-date. Royalty revenues in the third quarter of this year increased to $27 million compared to $23 million in the third quarter of 2018. For the first 9 months of 2019, royalty revenues were $66 million compared to $59 million for the same period last year. Royalty revenues primarily reflected ADCETRIS sales by Takeda and, to a lesser extent, sales of Polivy under our collaboration with Roche. Collaboration revenues were $18 million in the third quarter and $99 million for the first 9 months of 2019. This included the earned portion of $43 million of milestones achieved earlier this year, most notably triggered by Takeda's approvals of ADCETRIS in front-line Hodgkin lymphoma and the recent approval of Polivy.

R&D expenses were $196 million in the third quarter of 2019 and $518 million for the year-to-date. Growth over 2018 reflects higher investment across our pipeline, primarily on our late-stage programs: tucatinib, EV and TV as well as the upfront cost of a preclinical asset that we acquired in the third quarter. SG&A expenses were $96 million in the third quarter of 2019 and $259 million in the first 9 months of the year. These are both increases over 2018 and reflect commercial efforts to support ADCETRIS in front-line Hodgkin lymphoma and PTCL, launch preparation activities for EV and costs related to supporting our other late-stage pipeline programs. We ended the third quarter with $870 million in cash and investments, which includes net proceeds of $549 million from our July common stock offering. In addition, we hold approximately $102 million in Immunomedics' common stock. These shares are mark-to-market and contributed to a small investment loss for the quarter and year-to-date this year but created some variability in results in 2018.

Lastly, I want to highlight 4 updates to our financial outlook. On revenues, we are narrowing our ADCETRIS net sales guidance to a range of $625 million to $640 million. In addition, based on strong sales by Takeda, we are increasing our expectations for royalty revenues to a range of $90 million to $95 million. On expenses, we are updating our R&D expense guidance to a range of $690 million to $715 million. This reflects the technology acquisition that I referred to earlier as well as development activities for EV and tucatinib. And lastly, following the positive HER2CLIMB results last week, we expect to initiate several launch preparation activities this year for tucatinib. As a result, we are increasing our SG&A expense guidance to a range of $355 million to $370 million. We plan to provide our 2020 financial guidance on our next quarter call.

Now I'll turn the call over to Roger.

Thanks, Tom, and good afternoon, everyone.

The past few months have been remarkably productive. This afternoon, I will recap key outcomes and activities in our late-stage programs and highlight our development plans going forward to maximize the potential of these programs for patients in need. I'll begin with enfortumab vedotin.

Positive data from the pivotal EV-201 trial in metastatic urothelial cancer patients who received prior platinum chemotherapy and PD-1 or PD-L1 treatment were presented at ASCO and published in the Journal of Clinical Oncology. The data supported our biologics license application that was submitted to the FDA in July and was accepted for filing by FDA in September with a PDUFA date of March 15, 2020. We and our partners at Astellas are actively engaged with the FDA in support of the application. As a reminder, EV previously received breakthrough therapy designation from the FDA in this patient population.

Beyond our initial registration pathway, our development plans are evaluating EV in the first-line metastatic setting as well as in earlier stages of disease. This is supported by initial results from the Phase I EV-103 trial presented at ESMO in September, where we reported data from 45 metastatic urothelial cancer patients who were previously untreated and were ineligible for cisplatin-based chemotherapy. Cisplatin-ineligible patients typically receive a carboplatin regimen, which is associated with a response rate of approximately 36%. The study met outcomes for safety. In addition, among those patients who received the combination of EV and pembrolizumab, the objective response rate was 71%, including a 13% complete response rate. A total of 93% of patients had reduction in tumor volume. The combination of EV of pembrolizumab showed a manageable safety and tolerability profile. Importantly, we observed responses regardless of PD-L1 expression. Treatment-related adverse event of clinical interest that were grade 3 or greater were rash, hypoglycemia and peripheral neuropathy. These were expected events, and the rates were similar to those observed with enfortumab vedotin monotherapy. 11% of patients had treatment-related, immune-mediated adverse events of clinic interest greater than or equal to grade 3 that require the use of systemic steroids. This was consistent with the safety profile observed with pembrolizumab monotherapy, which does not appear to worsen with the addition of EV. Based on these data, we are proposing to conduct a front-line randomized Phase III trial. We will provide additional specifics about our Phase III plans in the coming months.

EV plus pembrolizumab represents a second encouraging data set that has been generated from the combination of a vedotin-based ADC and a checkpoint inhibitor. We have previously shown promising data from the combination of ADCETRIS and nivolumab in several lymphoma settings. We believe in the potential of combining our vedotin-based ADCs with immune checkpoint inhibitors, and we are evaluating similar combinations across our ADC pipeline.

The EV-103 trial is ongoing in first-line metastatic urothelial cancer patients to evaluate the combination of EV and platinum chemotherapy as well as the triplet of EV, pembrolizumab and chemotherapy. In addition, we recently expanded the trial to evaluate EV monotherapy and the combination of EV and pembrolizumab in patients with muscle-invasive urothelial cancer, who are cisplatin-ineligible. Approximately 20% of urothelial cancer patients are diagnosed with muscle-invasive disease, which has not yet spread outside the bladder. There is a significant unmet need for new therapies for these patients.

Lastly, the activity of EV in urothelial cancer suggests it may have application in other Nectin-4 expressing malignancies. To that end, we and Astellas planned to start a single finding trial in other solid tumors in the near future.

I'll move on now to tucatinib, our oral tyrosine kinase inhibitor that targets HER2. Last week, we reported positive top-line results from the randomized, double-blind pivotal trial called HER2CLIMB. The trial was conducted in 612 heavily pretreated HER2-positive metastatic breast cancer patients, including 47% who are known to have brain metastases at study entry. Patients received either tucatinib in combination with trastuzumab and capecitabine or trastuzumab and capecitabine alone. We reported a statistically significant and clinically meaningful outcome on the primary and 2 key secondary endpoints. The data showed that the tucatinib regimen reduced the risk of disease progressional death by approximately half and by a greater amount in the patients with brain metastases. Most importantly, tucatinib also reduced the risk of death by 1/3 in the overall population. Tucatinib in combination with trastuzumab and capecitabine was generally well tolerated with a manageable safety profile. Full results from HER2CLIMB are scheduled for an oral presentation at SABCS on December 11, 2019. And we expect to submit a new drug application to the FDA in the first quarter of 2020.

Next, I'll turn to ADCETRIS, which we are evaluating in several new trials for potential registration or to informed clinical practice. As previously stated, we are enrolling patients who have been [retreated] with ADCETRIS in Hodgkin and T-cell lymphoma who progressed after prior response, including those who received ADCETRIS in the front-line setting. We are also conducting a trial of ADCETRIS in front-line Hodgkin lymphoma and PTCL patients who are unfit for combination chemotherapy.

In addition to these studies, we recently expanded an ongoing Phase II trial to evaluate ADCETRIS in a novel combination of nivolumab, adriamycin and dacarbazine in newly diagnosed advanced Hodgkin lymphoma patients. This regimen excludes vinblastine, which is part of the approved ADCETRIS+ AVD regimen and adds nivolumab. Vinblastine is known to cause neuropathy. And ADCETRIS in combination with nivolumab has produced promising data in several clinical trials. Combining the 2 most active agents in Hodgkin lymphoma, ADCETRIS and the PD-1 inhibitor in a front-line regimen, has the potential to improve efficacy and reduce toxicity. The trial reflects our long-term strategy to improve outcomes for Hodgkin lymphoma patients with ADCETRIS-based regimens. Another ADCETRIS opportunity we are exploring is its use in the treatment of diffuse large B-cell lymphoma. We'll keep you posted as our plans progress.

We also have a number of important presentations at ASH and look forward to continuing to expand the ADCETRIS data set in hematologic malignancies.

Now I'll turn the call back over to Clay.

Thanks, Roger.

Before we open the line for your questions, I want to recap our key upcoming activities across our oncology portfolio. They include: first, continue to establish ADCETRIS as the standard of care in front-line Hodgkin lymphoma and front-line PTCL and initiating additional clinical trials; second, working with FDA on our EV submission in collaboration with Astellas towards the March 2020 PDUFA date initiating a Phase III trial in front-line urothelial cancer and expanding the EV development program with new trials; third, reporting tucatinib HER2CLIMB data at SABCS, submitting an NDA to the FDA in the first quarter of 2020 and advancing a randomized trial in combination with T-DM1 and reporting top-line results from the TV pivotal trial in cervical cancer in the first half of next year. We aim to continue our positive momentum through 2019 and into 2020 as we strive to bring important new drugs to cancer patients.

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 Michael Schmidt with Guggenheim.

So I actually had a pipeline question on ladiratuzumab. As you mentioned, there's, rightfully so, I think a lot of excitement around combining your ADCs with PD-1 inhibitors. And you did mention the upcoming presentation of the KEYTRUDA combination study at SABCS. I was just wondering if you could help us a little bit more with what investor expectation should be with respect to this update from LV plus pembro that's come later this year.

Michael, thank you for the question. So we are very interested in the LIV-1 ADC. It's an interesting molecule. It's certainly active. We've shown that and presented that it has single-agent activity. And we are continuing to evaluate it as a monotherapy and also in combination with pembro. We are not yet ready to go forward and announce registration or Phase III trials, but we are continuing to develop it and trying to maximize dose schedule, monotherapy, combination with pembro. And we're very excited about that.

Clearly, SABCS will be, from a Seattle Genetics standpoint, a big show on tucatinib because we have a lot to discuss there. But LIV-1 is also important to us. And additionally, I may point out that the basket trials, a trial in a variety of different tumor types that have LIV-1 expression has recently opened. So that's something we're working on as well.

Great. And maybe a follow-up. So you mentioned the upcoming trial results for the TV study in cervical cancer from the innovaTV 204 trial. Can you just remind us of sort of expectations for what the clinical barriers here in terms of efficacy to -- for approvability?

There's a lot there, and maybe I'll give you a few comments, but Roger can also follow up. And if you look at relapsed cervical cancer. It's a grim prognosis. No one survives this. This is bad. And despite GARDASI and vaccines, not everyone gets vaccine across the globe and in the U.S. And so there's still, unfortunately, a need for therapies for relapsed cervical cancer.

And if you look at perhaps the most recent approval in cervical cancer, it was pembro in PD-1 high expressers with a 14, that's 1-4, percent response rate, but they were durable responses. And if you look at chemotherapy that has been used in a lot of publications, there are -- I would say the range is probably somewhere between 8% and maybe 16%, 17% response rate, sometimes with durations that are tiny, measured in 2 months of duration, whereas with a checkpoint, you can get 1 year or so of duration, which is likely why it got approval even with these de minimis response rate because it had duration. So I think those maybe could help you give you some landmarks of what's out there. And clearly, we want to do well by patients and have as best a response we can have with a single agent, looking at this in future in combination.

Roger, do you have any color you want to add beyond that?

Clay, I agree with your comments that the bar is set by a historical precedent, and we need to wait for the TV results to see how they match up.

There's lots to talk about, obviously, but congrats on all the pipeline progress in the quarter. I'll hop back in the queue.

Our next question comes from Kennen MacKay with RBC Capital Markets.

Congrats on the quarter and the narrowed and slightly raised guidance. Maybe a quick commercial question. First, I'd hope for a little bit more color on the growth of ADCETRIS in front-line PTCLs and the higher growth in CTCLs, where it seems like 2 factors are at play. All of those patients are CD30-positive. And I think the NCCN guidelines there may be a little bit more generous versus other PTCLs. I was wondering, of those 2 drivers, which had been the bigger impediment to use outside of CTCL, with a sort of lack of broad CD30 testing there or just lack of supportive data. And really what can be done about that to increase utility outside of CTCLs? And then I have one quick follow-up.

Okay. So there has been a lot of work done on looking at CD30 expression in both CTCL and in PTCL. If you -- and if you asked, "Scientifically, are there patients with PTCL and CTCL that are absolutely negative for CD30?" I could not, with a clear conscience, say that there are patients that are truly negative. What I could tell you is there are some patients that have low scores on histology when looking at a single nodule. But if you look at other nodules, they could be high. Keep in mind, CD30 is an activation antigen. And if you take some tissues that are low or in background with histology and you do other types of techniques to look at expression, you can see CD30 expression there. So to me, it's not totally a -- is our CTCL and PTCL CD30-positive or negative? It's more of a -- what the rate -- what the expression level is and are -- some really in the background of histology, which is kind of a blood tool, although readily used across different cancer centers. So it's an easy tool to use.

Now having said that, you're asking about what could we do about that, how can we grow? And there's been trials done and evaluated, for instance, in CTCL that were presented not that long ago showing that you have CD30-positive and the CD30, I will call, histology negative. And then the doctors treated both populations and had really good responses in both. It was a little bit higher in the CD30-positive than the CD30 histology negative, but they certainly weren't CD30 negative. And so I think that there are a lot of things that we could do as we get out there, it's -- as this -- a product is in the field longer and study this.

And Roger, you know a lot about the expression of this. And is that something that you want to comment on and...

Sure. Yes -- no, I think -- and Clay's made the point that there is a dynamic nature to this expression, and there is a sampling variability. And we have data, not just in CTCL, but in other diseases as well. With CD30 expression, one would expect it to mark for responses where we have apparent CD30 negativity where we see response. From a testing perspective, obviously, pathologists are an important part of this, and getting the pathologist to understand the importance now of CD30 testing and PTCL because it is a therapeutic that can make a difference. It's something that we are obviously focused on and interested in trying to improve adoption of scoring and the appropriate reporting of pathology.

Great. And then I have one quick pipeline follow-up. I'm up here in Boston at the AACR-NCI-EORTC Triple Conference, and some of your data on the next-generation PEG glucuronide linkers and tubulysin payloads was presented up here, maybe enabling higher payload delivery per ADC. Can you maybe help us understand the utility of these technologies? And I think this is getting used on one of your next-generation ADCs, SGN228A, which is in Phase I. If I am right on that, could you maybe help us understand when we might see some of that initial data and what to look for in that data? Congrats again.

Thanks, Kennen. So thank you for the introduction to talk about stuff that's part of our growing technology and our leadership in ADCs. So we are really excited about our newest ADC and clinical trials that we call 228A. It targets CD228, or what's referred to as p97. And this is expressed on a variety of solid tumors. And we have also not only just used it as target, but we have used a new confirmation in an ADC that utilizes PEG groups, utilizes an 8-load. You may be aware that with ADCETRIS and with LV, we utilize approximately 4 drugs per antibody molecule. And with our newest technology with 228, we're using 8 drugs per antibody molecule, but it has a completely different linker and a completely different stabilization agent. And we've been working on this. And it's in clinic now. And it's an exciting prospect for us.

One of the -- one of the commitments that we've made is after we became the industry leader in ADC is to stay there, and that's to continue investing in our technology and continue to make drugs that are more potent but also safer and try to work on our linkage systems to make them more specific for the tumor. And so this is one example where we are very hopeful with our technology, and we are investing in new ADCs. But as you'll see going forward, we have a couple of new technologies to build on what we already have is in a leadership position. And I think that the future will be a good one for ADCs, not only at Seattle Genetics, but in other companies, as other companies are making advances and really helping patients.

Our next question comes from Salveen Richter with Goldman Sachs.

Could you just comment on the next steps for tucatinib in colorectal cancer and perhaps plans to look at other indications such as gastric, where the frequency of HER2 overexpression is much higher?

Thank you very much for the question.

Roger, can you talk a little bit about maybe your data and what we're doing next and then also touch on other diseases?

Right. So thanks for the question. And obviously, the HER2CLIMB results, which are really, in our view, remarkable, does point to the potential best-in-class nature of tucatinib. And so we are interested in essentially creating a program around tucatinib, which will include expanding into other areas of breast cancer. And Clay has already mentioned the T-DM1 trial, which is in the earlier stage of metastatic disease. We have a neoadjuvant effort through I-SPY 2. And we are looking at other areas as well. With regard to HER2 expressing tumors that are outside of breast cancer, we did have very exciting data, a small data set but very exciting at ESMO was the combination of trastuzumab and tucatinib with a response rate that's north of 50% and looked pretty durable. So we're excited about taking that on, so much so that, that was an investigator-initiated trial, which we've taken over in our -- essentially, only IND. And the trial is now a Seattle Genetics corporate-sponsored trial. And we plan to continue to evaluate third-line colorectal cancer HER2-positive in a broader patient population, utilizing the MOUNTAINEER trial. And that, obviously -- if that data is reproduced, or which you think it will be, that's an area of potential -- seeking potential registration outcomes.

And in earlier lines of colorectal cancer, even though the frequency is in a sort of 2% to 5% range, nevertheless, it's an important unmet need, and it's a large addressable population. And we're working on thinking about what we could do earlier.

With regard to gastric, exactly as you say, this is another opportunity. And we already have thought through internally what a development plan could look like. We're not ready to share that information at this point, but we are definitely interested in gastric and potentially other HER2-expressing tumors as well.

And a follow-up, if I may. At this point, how much is HL a driver of ADCETRIS revenue growth versus PTCL?

I'll turn it over to Rob in a moment, but the general answer is we really don't split them up, and both of them are very important to us.

Robin, do you want to give a little color?

Sure. HL is certainly one of the key revenue growth areas for ADCETRIS. And I think there is certainly room to grow with Hodgkin lymphoma. We've seen good uptake, both PTCL and Hodgkin lymphoma, but Hodgkin lymphoma is really facing a much more entrenched usage of chemotherapy. The 3-year PFS data that we presented has really helped us get traction in terms of physicians understanding the benefit of ADCETRIS, and we will have 4-year follow-up data at ASH. I think as the data matures with ECHELON-1, what one can see is that there is a -- and we've seen that continued benefit from the 3-year PFS data the more we can show that there is an interim benefit. I think the more that we are going to be able to convert physicians to understanding the benefit of ADCETRIS.

In terms of the relative contribution, as Clay said, we don't split those up, but I believe that Hodgkin lymphoma is continuing to be an important driver for us. We've seen, obviously, a rapid uptake with PTCL as well. And I think that's been very encouraging.

Our next question will come from Gena Wang with Barclays.

The first one, also regarding the commercial question. So wondering how the first-line PTCL and the Hodgkin lymphoma, the growth trajectory or growth rate in this quarter compared to the last quarter?

So we don't report the specific growth of the disease types. As a whole, we've had a lot of growth year-over-year. And quarter-over-quarter, we grew a little -- about 5%. And so that is a -- it's a strong growth rate. It's within what we have for guidance. And we're excited about that. And we expect that ADCETRIS, over time, year-to-year, will continue to grow as a brand as we make more progress there. But the specifics of PTCL, for instance, as you asked, is not something we present. What I will say is that with PTCL, we had OS from our first data set. So it is a less challenging discussion with doctors when you go out with OS data. Where with Hodgkin lymphoma, it was contemplated to be -- to take a number of years to get there because you need a certain amount of events to hit statistical value. So we are not there, and it is important for us to follow the protocol as it's said and as it's written and try to get to those events. But in the meantime, the gold standard is 5 years, and docs look at that with Hodgkin lymphoma.

Our initial data, which we published showed 2 years worth of data. And some doctors -- and it was great data. And some doctors converted it, some didn't. And then last year, we put out a 3-years data, and we had a nice bump in our revenues and more docs took it on. And the data got actually better. It wasn't just continuation of 2 to 3 years, it looked better.

And now this year, we're going to show our -- at ASH coming up in a couple of months, we're going to show 4-year data. And then next year, presumably at ASH, but it's way too early to speculate, we'll show the 5-year gold standard data. And I think that, that will go a long way to addressing any questions without even having OS data. So we're really excited to continue to age the data and go forward.

Great. And then just a quick follow-up. A quick question regarding the EV-103. So you did mention that you plan to start randomize the Phase III trial in first-line. Just wondering, any additional color you can provide in giving Roche's IMvigor130 data reported at ESMO? And will we be thinking about triple it versus double it? Or it will be EV-103 plus pembro versus pembro alone?

So we have not yet spelled out the exact trial, and that's something -- as soon as we start the trial, we will spell it out. That's been our history, that it's not appropriate to state the exact trial until it starts. So stay tuned, we will be doing that.

But Roger, perhaps you can give some color on your thoughts on IMvigor and the kind of approaches we could take to go toward approval and the importance of it.

Sure. Thanks, Clay. So as you can see, the EV-103 trial offers you a road map as to how we're thinking about what possible combinations we can use. And as Clay said, we haven't disclosed those, but you can get a sense of the data generation that we will need to support the Phase III front-line trial.

With regard to IMvigor as a positive trial, the OS didn't quite make it. Obviously, from an efficacy perspective, it's -- although it's hard to cross compare, we are encouraged by our EV pembro data, where there's been a response rate of 70%, which is an unusual outcome in this disease. And again, cross-trial comparisons are -- have limits, for sure. But the response rates that were shown with the -- with itolizumab together with chemotherapy, would suggest that at this point anyway, what our plans to proceed into a front-line trial would suggest that we have a good shot of potentially improving the outcomes further.

Our next question comes from Andrew Berens with SVB Leerink.

I guess this one's primarily for Roger. One of the buzzes that came out of the EV presentation in Barcelona was potential synergies between vedotin and checkpoint. I think it's one of the things a lot of investors are also thinking about in regards to how to value the platform. Do you guys have any additional color for us regarding what could be driving potential synergies? And is there anything about the vedotin payload or the linker that differentiates it in regard to other ADC approaches?

Sure. Roger?

Sure. Thanks for the question. And so it's -- the holy grail of drug development is to be able to put 2 drugs together and have a better outcome than in the individual drugs alone. And certainly, that response rate is high. Proof of synergy is a very different thing, which requires a high level of scientific rigor.

And what I can say is that from a mechanistic perspective, if you think about what an ADC is, it's essentially a targeted therapy. So it's delivering a payload to a group of tumor cells, inducing in those tumor cells things like immunogenic cell death, replicative stress, such that the tumor microenvironment may become favorable for an inflammatory response and may in fact be amenable then to an immune response that would be assisted by taking the brakes off an immune response by giving a PD-1 or a PD-1 inhibitor. And in the sense of -- excuse me. Chemotherapy may be much more -- much more permissive in terms of what other cells could potentially damage. One could speculate that, that limited delivery of a cytotoxic payload, just the tumor cells may keep the microenvironment more intact. That's one possibility.

With regard to the actual data, in terms of what does -- could 71% represent a -- represent synergy? What is interesting is if you look at the data, you can see that there's a response regardless of PD-L1 expression, which is encouraging. We don't have EV TV monotherapy data at this point to sort of make the comparison. So it's very hard from a pure numbers perspective to say, "This is what you'd expect with pembro, and this is what you could expect from EV." But regardless of whether it's synergy or not, the clinical data are pretty compelling, and it's certainly compelling us to move forward with the development program.

Okay. Is there anything about vedotin specifically or your linker technology that could make it hard for another ADC to have similar effects?

Andy, you're asking a really good question. And there's a lot of work going on in our research effort that I do not -- our research group, I should say, that do not -- are not ready for full discussion. And we're -- what we're doing is -- in general, is we're evaluating all the different types of payloads and their impact on immunogenic cell death, and I could tell you that they're not all the same. And vedotins work really well there. And I don't want to say more than that at this point. And at some point in the future, we'll put out our research data at an appropriate conference, like an AACR type of conference. But we're really excited with our choice of vedotin and how they work well with immuno-oncology agents like PD-1s.

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

Congratulations on the quarter. So it's encouraging to see that Seattle is really hoping to expand the front-line treatment paradigm for Hodgkin lymphoma and also MTCL. So just curious, I mean, these Phase III trials usually take anywhere from 3 to 5 years to run. Anything you guys learned from the ECHELON programs in terms of potential surrogate endpoint to kind of shorten these trials?

So it's a good question. I think especially in the Hodgkin lymphoma space, there's the stage 1 and 2 that we do not yet have approval in, for example. And despite that there's a lot of good data that's been presented, but albeit they're relatively small trials and they're not approval trials. But the data's strong. And I think that when you look at work that's going on, whether it's in Europe with consortiums or cooperative groups in the U.S. or corporate studies, I think that there's a building momentum for using ADCETRIS in a lot of lines of Hodgkin lymphoma. But we have to continue really powering through trials and try to look at some novel endpoints so that they don't take very long. And I think that, that is something that is up for discussion with regulators. I can't give you any details on that.

Roger, is there anything else you want to say based on what we can...

Yes. I think Clay is right, there are -- it's not just corporate trials that drive these -- what can be fairly long front-line trials. There are cooperative groups and so on, which are important entities in [initial] trial execution.

We are interested -- what we talked about today was a single finding study to see if we could in a single-arm trial, show what an ADCETRIS, nivo, adriamycin, dacarbazine combination could look like in frontline advanced Hodgkin lymphoma. And we think if that data is compelling enough, that could then be the genesis for yet more work, either by ourselves or by others to see -- because the ultimate goal is to cure as many people as we can. And that's, I think, what our focus is on in terms of developing new treatments for Hodgkin lymphoma, new combinations.

And a follow-up, if I can. So in terms of DLBCL, Clay, I think in 2015 ASCO, when the company decided to forego the front-line opportunity, I'm just wondering what changed there. I think you mentioned about just that the markets were pretty crowded. And given failures in the front-line setting, one with REVLIMID, one with IMBRUVICA, were those kind of the genesis behind the rationale to look at potentially front-line DLBCL again?

So first of all, we are in NCCN with DLBCL, and so we hear back from doctors who utilize it. And that's an important thing to try to understand what's going on in the world. We figured that out over the last couple of years and have been able to talk to docs and been able to understand the benefit that ADCETRIS has in DLBCL. The landscape has changed and not necessarily with big victories, as you say. And there are other specifics that we have in mind, but we have not announced a specific trial yet. And -- but it's coming, and we're excited with it, and it's something that we need to obviously work through regulators and with the team here at Seattle Genetics, and we're trying to go forward and see if we can get another label in DLBCL. So stay tuned on that.

Our next question will come from Shanshan Xu with Berenberg Capital Markets.

A few quick ones from me. So this year, at ASH, I believe you will have the full year update for ECHELON-1 on the PFS front. Can you please update with us, when should we expect that the OS update for ECHELON-1?

Yes. Like I said earlier in the call, OS has a preset target number for events. And at that point is when we open up the trial. And we have not hit that. It is -- has always been contemplated to be quite a number of years. So we're just not there. And it would be inappropriate for me to try to tell you when I think it's going to be since it's a hard prediction.

In the meantime, we are getting PFS data. And our PFS data is aging from 2 years to 3 years to 4 years presentation in a couple of months at ASH. And we're excited to do that. And then next year, hitting that gold standard of 5 years of PFS. And as we get closer to the 5-year PFS data -- time point, doctors ask about the OS less because if you're at 5-year PFS and your lines are pretty flat in the Kaplan-Meier plots, that signifies really what the doctors need to know. So while we are going and planning on getting OS, I think that 5-year PFS is going to be very significant as well.

No problem. The next one is that given the strength of data from HER2CLIMB and the fact that you already initiated HER2CLIMB-02 for tucatinib plus T-DM1, we actually look forward to including this market opportunity in our model. So how should we think about the size of the indicated patient population for tucatinib and T-DM1 combination, considering the dynamic in the treatment arena for HER2-positive breast cancer patients?

Right. Well, we haven't really come out yet at this point and talked about the size of the population. I mean it's a little premature for us. We just came out with our data to start talking about what we think size of population is and -- which leads right into a marketplace discussion, which leads into a pricing discussion. We have done a lot of work on this. We have been doing a lot of work. We're intending for HER2CLIMB to be not just a U.S. product but a global product. I mean we have a randomized study and a great data set. We're really looking forward to presenting that data set at San Antonio. And so I think that the market opportunity is substantive. And you'll be hearing more from us on that in the future.

Our next question will come from Silvan Tuerkcan with Oppenheimer.

Congrats on all the progress this quarter. It's very promising that you're thinking about moving into muscle invasive bladder cancer with EV. What types of data have you seen before to inform the utility of EV in the setting?

Thanks for the question. I will turn it over to Roger to give you his thoughts on muscle invasive bladder cancer, which is a really big opportunity and an unmet medical need opportunity. But we have not -- we have recently opened a cohort of patients, so we're just now treating our first patients in muscle invasive. So if you're asking what is our clinical data, we're assembling our first clinical data. If you're asking about preclinical about why we are looking at this, we have looked at expression of Nectin-4 and the premetastatic state and certainly, it's expressed strongly there as well. And there's been a bunch of preclinical work that had been done to show that we think that this could be very effective at not only muscle-invasive but even earlier stage than that nonmuscle invasive. So in all stages of bladder cancer, which is a very substantial size market with about 80,000 incidents in just the U.S. each year for those 3 types of cancers: the metastatic, the muscle invasive and nonmuscle invasive. So a lot of preclinical work, a substantial amount of clinical work in metastatic, both the single agent and combination. And now we're treating patients in muscle invasive.

Roger, is there any other details?

Yes, I think -- so EV is obviously active in metastatic disease. And so one could -- it's not a difficult step to take to expect that it may have meaningful activity in Nectin-4 expressing nonmetastatic disease, and so I think that's where we are. We're obviously as close as we need to generate the data, so we can see exactly what the effect of EV monotherapy is and also look at the combination. And as you know, the landscape for muscle invasive bladder cancer, because there is a meaningful unmet need, is busy right now. There are lots of trials that are running. And so understanding what [a rich path forward] could look like, we already have evidence or we have [work] examples ahead of us. And so if we are able to take EV into a randomized trial, essentially, the population splits into cis-ineligible and cis-eligible, and the reason why it's cis-eligible versus ineligible because cisplatin is the only drug that's shown was a cisplatin combination -- it's the only combination that's shown to actually have benefit in the muscle invasive space. And so you can see clinical trial designs compartmentalize those 2 populations. And we would be interested, obviously, in both.

We have generated data with EV pembro in the cis-ineligible metastatic population, so we do have that first piece of information. And just -- stay tuned. We're working on moving EV forward into these earlier lines of bladder cancer.

Great. And a quick follow-up, if I may. I'm also encouraged that you already expanded tucatinib. What made you initiate tucatinib plus Kadcyla? And was there anything promising that you've already seen in the HER2CLIMB data set? Or is it just the commercial [patients]?

Please keep in mind that there was a study that had been done, an early study that was single-arm, not randomized, but it combined tucatinib and Kadcyla. And the data had been presented at a conference, and they were very strong. So we do have the early data. And to us, together with the early data and the outstanding HER2CLIMB data that you'll see in San Antonio, it makes sense to go earlier in line and invest in it. And this time, it's a randomized study. And so we don't need to do another single-arm study. That's been done. And the safety and efficacy or the risk-benefit, as some docs call it, looked pretty darn good. But it was a single-arm study. So we are investing in a randomized study that is up and running.

Our last question in the queue comes from Tazeen Ahmad with Bank of America.

Maybe, Todd, a couple on the financials. So as you guys diversify out away from ADCETRIS and a lot of the key studies for ADCETRIS have read out, you are putting more money now into the rest of the pipeline, whether it be EV or tucatinib or TV. Can you give us a sense about the weighting of expenses for modeling purposes for EV versus the rest of the program on a go-forward basis? Should we assume that EV is the bulk of expenses just based on what you said? Or do you think that it will be more equal if spread across all of your pipeline products?

Yes. So great question. I don't know that I can give you specifics on exactly how it spreads. But historically, ADCETRIS has been the predominant driver of our expenses. We've now got 6 labels run a number of very large clinical trials. And while we're continuing to do additional work, some of which you heard on the call today, it's becoming a -- probably a lower overall percentage of our investment in R&D. What is now really starting to come forward are investments in programs like EV where, as you heard today, we've got a very expansive development program for that compound as well as tucatinib. I think the HER2CLIMB data, to us, turns us into a program, not a clinical trial. You've heard a little bit about our work that's already starting in combination with Kadcyla in lines of therapy before the HER2CLIMB setting. And then certainly, we're looking at things like colorectal cancer where the data that we presented at ESMO were quite encouraging.

So I think maybe to get back to your question, I think you'll see a growing share of expense hitting programs like enfortumab and tucatinib. ADCETRIS will continue to be substantial but probably becoming a smaller contributor to the overall pie. And then we'll obviously look to see what else comes out of the pipeline. We've got TV in a pivotal study and a very broad portfolio of earlier-stage assets that we've just talked a little bit about today.

Our next question comes from Chad Messer with Needham & Co.

Great. Congrats on the recent progress. First, real quick, is there any more you can say about the preclinical asset that Todd referred to in prepared remarks, maybe even just a rough idea what the spend on that was?

Look, well, I can tell you, not from a financial standpoint, that we do a lot of different deals. And we bring in technology, we bring in preclinical assets. This is -- this has happened like almost every year. We do small, different deals, and some of them work out really well, and some of them just in our research front.

And Todd, you could talk a little about why it was in -- why you mentioned it.

Yes, sure. So not that it was a huge deal, but it was the principal driver of why we increase our R&D guidance just a bit. So I won't -- I can't give the numbers out, but that was the main contributor.

And as Clay mentioned, it's a really interesting preclinical asset that we think could become a clinical asset relatively soon. So that's what got us excited about it.

Great. Yes, that's very helpful. And then just for a follow-up, let me -- a couple of questions here but they're all very related. If you can indulge me, I wanted to go back to EV. Clay, you mentioned how terrible relapsed cervical cancer is and that not everybody gets vaccinated, so it's still a problem. What is your view of the kind of opportunity in relapsed cervical cancer but also for TV? I know you're looking at a whole bunch of other cancers that express tissue factor. So your thoughts on the opportunity for a tissue factor targeting therapy more broadly. And then tissue factor itself, can you just remind me, is that -- sort of is variably expressed across tumor types, say, like a CD30 is? Or is it a little bit more uniform?

Sure. So first of all, on TV, we are expanded past just cervical, for sure. We have a trial that's listed on clinicaltrials.gov that's in ovarian cancer. And we have a basket study we're working on in other types of cancers. So stay tuned for us to report in the future when we have enough substantive data at appropriate peer-reviewed conferences like we always do. The data outside of cervical that we're working on, so there's a lot of interest in it.

And you asked about the expression of TF, tissue factor. And that's something that's expressed broadly on solid tumors at very high density. It's not really a heme target. So I wouldn't expect us to go and do a lot of lymphoma, leukemia, myeloma type work with it. Rather, it's more on the solid tumors that you would expect, the big, solid tumors. And the expression on cervical and things like ovarian are very high. So really good targets and important diseases that need additional therapies and have unmet need for a lot of patients. So we're really excited about our partnership with Genmab, working on TV. And we continue to look forward to presenting more and more data.

We now have no further questions in the queue.

Okay. Thank you, operator, and thanks, everybody, for joining us today. Have a good night.

Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect, and please enjoy the rest of your evening.