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Classified in: Health, Science and technology, Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Seagen Reports Third Quarter 2020 Financial Results


Seagen Inc. (Nasdaq:SGEN) today reported financial results for the third quarter and nine months ended September 30, 2020. The Company also highlighted ADCETRIS® (brentuximab vedotin), PADCEV® (enfortumab vedotin-ejfv) and TUKYSA® (tucatinib) commercial and development accomplishments, as well as progress with its lead pipeline programs to treat cancer.

"Our third quarter and year-to-date strong financial performance was driven by product sales across our diverse portfolio of three marketed products as well as the positive financial impact of our recent collaborations with Merck on ladiratuzumab vedotin and TUKYSA," said Clay Siegall, Ph.D., President and Chief Executive Officer of Seagen. "We plan to report clinical and preclinical data across our programs at several medical meetings during the remainder of 2020. In addition, we are pursuing multiple regulatory submissions, including our TUKYSA MAA that is under review by the EMA, a planned tisotumab vedotin BLA in the U.S. and global marketing applications for PADCEV. With our significant financial resources, robust drug development pipeline, expanding footprint in Europe and strategic oncology collaborations, we are well-positioned to continue building Seagen to address the unmet medical needs of cancer patients around the globe."

COMMERCIAL PRODUCTS HIGHLIGHTS

ADCETRIS

PADCEV

TUKYSA

PIPELINE HIGHLIGHTS

For additional information on Seagen's pipeline, visit www.seagen.com/science/pipeline.

OTHER CORPORATE HIGHLIGHTS

THIRD QUARTER AND NINE-MONTHS 2020 FINANCIAL RESULTS

Revenues: Total revenues for the third quarter and nine months ended September 30, 2020 increased to $1.1 billion and $1.6 billion, respectively, compared to $213.3 million and $626.9 million for the same periods in 2019. Growth over 2019 was driven by the addition of PADCEV and TUKYSA to the Company's commercial portfolio and impact of the Company's recent collaborations with Merck. Revenues are composed of the following three components:

 

Three months ended September 30,

 

Nine months ended September 30,

(dollars in millions)

2020

 

2019

% Change

 

2020

 

2019

% Change

Total Net Product Sales

$

267.5

 

 

$

167.6

 

60

%

 

$

706.5

 

 

$

461.6

 

53

%

ADCETRIS

163.3

 

 

167.6

 

(3

)%

 

494.9

 

 

461.6

 

7

%

PADCEV

61.8

 

 

?

N/A

 

 

153.5

 

 

?

N/A

 

TUKYSA

42.4

 

 

?

N/A

 

 

58.1

 

 

?

N/A

 

Research and Development (R&D) Expenses: R&D expenses for the third quarter and year-to-date in 2020 were $217.7 million and $610.9 million, respectively, compared to $196.1 million and $518.3 million for the same periods in 2019. The increases in 2020 primarily reflect continued investment in the Company's pipeline.

Selling, General and Administrative (SG&A) Expenses: SG&A expenses for the third quarter and year-to-date in 2020 were $127.6 million and $375.5 million, respectively, compared to $96.1 million and $258.7 million for the same periods in 2019. The increases were primarily attributed to increased field sales personnel in the U.S. for Seagen's recently commercialized products, PADCEV and TUKYSA, as well as higher infrastructure costs to support the Company's continued growth and international expansion.

Cost of Sales: Cost of sales for the third quarter and year-to-date in 2020 were $78.3 million and $156.0 million, respectively, compared to $10.8 million and $32.0 million for the same periods in 2019. The increases in 2020 were primarily due to the gross profit share with Astellas based on PADCEV sales, which were $29.1 million and $72.6 million in the third quarter and year-to-date, respectively. Cost of sales also increased in 2020 due a payment owed to a third-party technology licensor related to the TUKYSA license agreement with Merck, amortization of acquired in-process technology costs that began with the approval of TUKYSA in April 2020, and third party royalties owed for ADCETRIS, PADCEV and TUKYSA net product sales.

Non-cash, share-based compensation cost for the first nine months of 2020 was $107.5 million, compared to $79.7 million for the same period in 2019.

Net Income (Loss): Net income for the third quarter of 2020 was $636.2 million, or $3.50 per diluted share, compared to net loss of $91.9 million, or $0.55 per diluted share, for the third quarter of 2019. Net income for the nine months ended September 30, 2020 was $446.6 million, or $2.47 per diluted share, compared to net loss of $184.5 million, or $1.13 per diluted share, for the same period in 2019. Net income for the periods in 2020 is the result of the upfront license payments received from Merck. This includes an income tax provision of $3.2 million in the third quarter of 2020. Seagen utilized federal net operating loss carryforwards as allowed, however the Company incurred income taxes in some states that did not have deferred tax assets available.

Cash and Investments: As of September 30, 2020, Seagen had $1.7 billion in cash and investments. The $1.0 billion equity investment by Merck, which closed in October 2020, will be reflected in the Company's December 31, 2020 cash and investments.

2020 FINANCIAL OUTLOOK

Seagen's 2020 financial guidance is shown below, which includes the impact of the Company's collaborations with Merck.

 

Current

Previous

Revenues

ADCETRIS net product sales

$650 million to $660 million

$675 million to $700 million

PADCEV net product sales

$215 million to $235 million

Unchanged

Royalty revenues

$125 million to $130 million

$105 million to $115 million

Collaboration and license agreement revenues

$1.03 billion to $1.04 billion

$30 million to $50 million

Operating expenses and other costs

R&D expenses

$820 million to $870 million

Unchanged

SG&A expenses

$475 million to $525 million

Unchanged

Cost of Sales

$205 million to $225 million

$185 million to $205 million

Non-cash costs1 (primarily attributable to

share-based compensation)

$180 million to $200 million

Unchanged

  1. Non-cash costs include share-based compensation, depreciation and amortization of intangible assets.

Conference Call Details

Seagen management will host a conference call and webcast with supporting slides to discuss its third quarter 2020 and year-to-date financial results and provide an update on business activities. The event will be held today at 1:30 p.m. Pacific Time (PT); 4:30 p.m. Eastern Time (ET). The live event and supporting slides will be simultaneously webcast and available for replay from the Seagen website at www.seagen.com, under the Investors section. Investors may also participate in the conference call by calling 844-763-8274 (domestic) or 412-717-9224 (international). The conference ID is 10148256. A webcast replay will be archived on the Company's website www.seagen.com, under the Investors section.

About Seagen

Seagen Inc. is a global biotechnology company that discovers, develops and commercializes transformative cancer medicines to make a meaningful difference in people's lives. Seagen is headquartered in the Seattle, Washington area, and has locations in California, Canada, Switzerland and the European Union. For more information on our marketed products and robust pipeline, visit www.seagen.com and follow @SeagenGlobal on Twitter.

Forward-Looking Statements

Certain of the statements made in this press release are forward looking, such as those, among others, relating to the Company's 2020 outlook, including anticipated 2020 revenues, costs and expenses; the Company's potential to achieve the noted development and regulatory milestones in 2020 and in future periods; the Company's pipeline; anticipated activities related to the Company's planned and ongoing clinical trials; the potential for the Company's clinical trials to support further development, regulatory submissions and potential marketing approvals in the U.S. and in other countries; the opportunities for, and the therapeutic and commercial potential of ADCETRIS, PADCEV, TUKYSA, tisotumab vedotin and ladiratuzumab vedotin and the Company's other product candidates and those of its licensees and collaborators; the potential to submit a BLA for accelerated approval of tisotumab vedotin; the potential for data from the EV-301 and EV-201 cohort 2 clinical trials to support additional regulatory approvals of PADCEV; the potential for the approval of TUKYSA by the EMA; the Company's global expansion; potential future milestone payments and royalties under the Company's collaborations; as well as other statements that are not historical fact. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include without limitation: the risks that the Company's ADCETRIS, PADCEV and TUKYSA net sales, revenues, expenses, costs, and other financial guidance may not be as expected; risks and uncertainties associated with maintaining or increasing sales of ADCETRIS, PADCEV and TUKYSA due to competition, unexpected adverse events, regulatory action, reimbursement, market adoption by physicians, impacts associated with COVID-19 or other factors; the risk that the Company or its collaborators may be delayed or unsuccessful in planned clinical trial initiations, enrollment in and conduct of clinical trials, obtaining data from clinical trials, planned regulatory submissions, and regulatory approvals in the U.S. and in other countries in each case for a variety of reasons including the difficulty and uncertainty of pharmaceutical product development, negative or disappointing clinical trial results, unexpected adverse events or regulatory actions and the inherent uncertainty associated with the regulatory approval process; the possibility that the Company may encounter challenges in commercializing its therapeutic agents outside of the United States, including with respect to reimbursement, compliance, operational or other matters; risks relating to the Company's collaboration agreements and its ability to achieve progress dependent milestones thereunder; and risks related to the duration and severity of the COVID-19 pandemic and resulting global economic, financial and healthcare system disruptions. More information about the risks and uncertainties faced by Seagen is contained under the caption "Risk Factors" included in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2020 filed with the Securities and Exchange Commission (SEC), and the Company's subsequent periodic and current reports filed with the SEC. Seagen disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise except as required by applicable law.

Seagen Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2020

 

2019

 

2020

 

2019

Revenues:

 

 

 

 

 

 

 

Net product sales

$

267,494

 

 

$

167,582

 

 

$

706,473

 

 

$

461,563

 

Royalty revenues

35,924

 

 

27,261

 

 

87,520

 

 

66,218

 

Collaboration and license agreement revenues

758,313

 

 

18,420

 

 

780,250

 

 

99,128

 

Total revenues

1,061,731

 

 

213,263

 

 

1,574,243

 

 

626,909

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of sales

78,296

 

 

10,827

 

 

155,962

 

 

32,024

 

Research and development

217,670

 

 

196,119

 

 

610,945

 

 

518,313

 

Selling, general and administrative

127,579

 

 

96,101

 

 

375,470

 

 

258,703

 

Total costs and expenses

423,545

 

 

303,047

 

 

1,142,377

 

 

809,040

 

Income (loss) from operations

638,186

 

 

(89,784)

 

 

431,866

 

 

(182,131)

 

Investment and other income (loss), net

1,223

 

 

(2,129)

 

 

17,951

 

 

(2,349)

 

Income (loss) before income taxes

639,409

 

 

(91,913)

 

 

449,817

 

 

(184,480)

 

Provision for income taxes

(3,242)

 

 

?

 

 

(3,242)

 

 

?

 

Net income (loss)

$

636,167

 

 

$

(91,913)

 

 

$

446,575

 

 

$

(184,480)

 

Net income (loss) per share - basic

$

3.65

 

 

$

(0.55)

 

 

$

2.58

 

 

$

(1.13)

 

Net income (loss) per share - diluted

$

3.50

 

 

$

(0.55)

 

 

$

2.47

 

 

$

(1.13)

 

Shares used in computation of per share amounts - basic

174,460

 

 

168,109

 

 

173,409

 

 

163,428

 

Shares used in computation of per share amounts - diluted

181,877

 

 

168,109

 

 

180,939

 

 

163,428

 

Seagen Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands)

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

Cash, cash equivalents and investments

$

1,718,375

 

 

$

868,338

 

Other assets

1,286,586

 

 

1,337,528

 

Total assets

$

3,004,961

 

 

$

2,205,866

 

Liabilities and Stockholders' Equity

 

 

 

Accounts payable and accrued liabilities

$

342,688

 

 

$

259,357

 

Deferred revenue

250,450

 

 

?

 

Long-term liabilities

153,793

 

 

70,222

 

Stockholders' equity

2,258,030

 

 

1,876,287

 

Total liabilities and stockholders' equity

$

3,004,961

 

 

$

2,205,866

 

 


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