Seattle Genetics Inc., SGEN reported a loss of 18 cents per share for the second quarter of 2018, narrower than the Zacks Consensus Estimate of 34 cents and the year-ago quarter’s loss of 39 cents.
Revenues came in at $170.2 million, up 57.3% year over year, primarily driven by strong sales and a continuous label expansion of Adcetris (brentuximab vedotin). Revenues also beat the Zacks Consensus Estimate of $143 million.
Shares of Seattle Genetics have surged 33.2% so far this year against the industry’s decline of 1.5%.
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Quarter in Detail
Seattle Genetics’ top line comprises product revenues, collaboration and license agreement revenues and royalties.
The company’s only marketed product, Adcetris, generated net sales of $122.4 million in the United States and Canada, up 65% year over year. The improved sales of the drug were owing to continued label expansions with increase in patient population.
Collaboration and license agreement revenues rose 26.4% to almost $27.2 million, mainly driven by strong demand for Adcetris in the ex U.S. market. Collaboration revenues include $17.0 million as milestone payments achieved under the company's ADC collaborations.
Royalty revenues soared 66%year over year to $20.6 million owing to high demand and sales of Adcetris outside the United States and Canada by Takeda.
Research and development (R&D) expenses were $122.9 million, up 7.4% year over year, primarily attributable to higher investment across the late-stage and earlier stage pipeline programs of the company.
Selling, general and administrative (SG&A) expenses increased 43.2% to $58.3 million, mainly due to costs related to the acquisition of Cascadian Therapeutics and the launch of Adcetris in frontline Hodgkin lymphoma (HL).
2018 Outlook
Propelled by the label expansion of Adcetris in frontline Stage III or IV classical Hodgkin lymphoma, the company increased its revenue expectation for 2018. Currently, Seattle Genetics expects third-quarter sales for Adcetris in the range of $130-$135 million compared with its previous guidance of $105-$110 million.
In March, based on positive results from the phase III ECHELON-1 study, the FDA approved Adcetris in combination with chemotherapy for the treatment of stage III or IV classical Hodgkin lymphoma (cHL) in patients with no previous treatment history.
The company raised its collaborative revenue guidance to $65-$75 million compared with its past projection of $55-$65 million. The increase was due to milestone achievements and other events, occurred in the first half of 2018.
Pipeline Update
The company expects to report data from the ECHELON-2 trial, which is evaluating Adcetris plus CHP compared with the standard of care of CHOP chemotherapy in newly diagnosed peripheral T-cell lymphomas (PTCL), by earliest in the fourth quarter of 2018. The drug is not currently approved for use in frontline PTCL.
The company with its partner Astellas initiated the EV-301 program for patients with advanced urothelial cancer, who previously received both a checkpoint inhibitor (PD-1/PD-L1) and a platinum-based chemotherapy. The company continues to evaluate EV in combination with Merck’s MRK Keytruda (pembrolizumab) in first-line setting.
Both also completed the cohort enrollment in EV-201 study for the same indication. The companies expect to report top-line data from this cohort in the first half of 2019.
Seattle Genetics currently carries a Zacks Rank #2 (Buy). Two other top-ranked stocks in the healthcare sector are Vanda Pharmaceuticals Inc. VNDA and Illumina, Inc. ILMN, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vanda Pharmaceuticals’ earnings estimates have been revised 11.1% upward for 2018 and 3.9% for 2019 over the past 60 days. The stock has surged 36.2% so far this year.
Illumina’s earnings estimates have been moved 0.2% north for 2018 and 0.4% for 2019 over the past 60 days. The stock has soared 42.6% so far this year.
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