Seattle Genetics, Inc. SGEN reported a loss of 15 cents per share, wider than the Zacks Consensus Estimate of a loss of 11 cents but narrower than the year-ago loss of 17 cents.
Revenues came in at $111.2 million, up 35.3% year over year, primarily due to strong sales of Adcetris. Revenues, however, missed the Zacks Consensus Estimate of $115 million.
Quarter in Detail
Seattle Genetics’ top line comprises product revenues, collaboration and license agreement revenues, and royalties. Adcetris, the only marketed product at Seattle Genetics, generated revenues of $58.6 million, up 19.8% year over year.
Collaboration and license agreement revenues tanked 9.2% to $20.2 million. Collaboration revenues include revenues earned from the company’s collaboration with Takeda Pharmaceutical Company Ltd. TKPYY for Adcetris as well as other ADC collaborations.
Royalty revenues surged 192.6% to $32.3 million, driven by royalties from Takeda for international sales of Adcetris. Royalty revenues also included a one-time sales milestone worth $20 million from Takeda for surpassing $200 million in Adcetris sales in 2015.
Research and development (R&D) expenses were $92.9 million, up 46.5% year over year. Selling, general and administrative (SG&A) expenses declined 7.4% to $29.7 million.
2016 Outlook
Seattle Genetics reiterated its revenue guidance. The company continues to expect Adcetris sales of $255–$275 million and royalty revenues of $60–$65 million.
Pipeline Update
Seattle Genetics continues to progress with the candidates in its pipeline. The company expects to report data from a phase III study (ALCANZA) on Adcetris for relapsed CD30-expressing cutaneous T-cell lymphoma in the third quarter of 2016.
Moreover, the company plans to initiate a phase III study on vadastuximab talirine to evaluate 33A in combination with hypomethylating agents in older patients with acute myeloid leukemia by the third quarter of 2016.
Our Take
Seattle Genetics’ first-quarter 2016 results were disappointing with the company reporting wider-than-expected loss and missing bottom-line estimates. We are, however, pleased with the robust sales of Adcetris in the U.S. and Canada. However, the company’s dependence on Adcetris for growth remains a concern.
We expect investor focus to remain on Adcetris' performance and pipeline updates.
Seattle Genetics carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector are Aegerion Pharmaceuticals, Inc. AEGR and Emergent BioSolutions, Inc. EBS, both sporting a Zacks Rank #1 (Strong Buy).
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