Seagen : Earnings Document

Corrected Transcript

27-Oct-2022

Seagen Inc. (SGEN)

Q3 2022 Earnings Call

	Total Pages: 19
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Seagen Inc. (SGEN)	Corrected Transcript
Q3 2022 Earnings Call	27-Oct-2022

CORPORATE PARTICIPANTS

Douglas Maffei	Todd E. Simpson
Vice President, Investor Relations, Seagen Inc.	Chief Financial Officer, Seagen Inc.
Roger D. Dansey	Charles Romp
Interim Chief Executive Officer & Chief Medical Officer, Seagen Inc.	Executive Vice President-Commercial U.S., Seagen Inc.

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OTHER PARTICIPANTS

Michael Schmidt	Jay Olson
Analyst, Guggenheim Securities LLC	Analyst, Oppenheimer & Co., Inc.
Andrew Berens	Gregory Renza
Analyst, SVB Securities LLC	Analyst, RBC Capital Markets LLC
Tommie Reerink	Andy T. Hsieh
Analyst, Goldman Sachs & Co. LLC	Analyst, William Blair & Co. LLC

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MANAGEMENT DISCUSSION SECTION

Operator: Good day and welcome to the Seagen Third Quarter 2022 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded. I would now like to turn the conference over to Doug Maffei, Vice President-Investor Relations. Please go ahead.

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Douglas Maffei

Vice President, Investor Relations, Seagen Inc.

Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to Seagen's third quarter 2022 financial results conference call. This afternoon, we issued a press release with our results. The press release and supporting slides are available on our website in the Investors section, Events and Presentations page. Speakers on today's call will be Roger Dansey, Interim Chief Executive Officer and Chief Medical Officer; Todd Simpson, Chief Financial Officer; and Chip Romp, Executive Vice President-Commercial US.

Following our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour and ask that you limit yourself to one question to give everyone an opportunity to participate in Q&A during our call today.

Today's conference call will include forward-looking statements regarding future or anticipated events and results, including the company's 2022 financial outlook, anticipated product sales, revenues, costs and expenses, potential clinical and regulatory milestones, including data readouts and regulatory submissions, potential marketing approvals, and commercial performance.

Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference including the difficulty in forecasting sales, revenues, costs

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Seagen Inc. (SGEN)	Corrected Transcript
Q3 2022 Earnings Call	27-Oct-2022

and expenses, impacts related to the COVID-19 pandemic, and the uncertainty associated with the pharmaceutical development and regulatory approval process. More information about the risks and uncertainties faced by Seagen is contained under the caption Risk Factors included in the company quarterly report on Form 10-Q for the quarter ended June 30, 2022 filed with the Securities and Exchange Commission and the company's subsequent reports filed with the SEC.

Now, I'll turn the call over to Roger.

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Roger D. Dansey

Interim Chief Executive Officer & Chief Medical Officer, Seagen Inc.

Thank you, Doug. Good afternoon, everyone, and welcome to our third quarter call. This was a quarter where we delivered strong financial results with total quarterly revenue of $510 million, representing growth of 20% compared to the same quarter last year and reflecting robust sales across our approved portfolio. We also made substantial progress on multiple fronts, including clinical, regulatory, research and corporate development. We presented clinical data for PADCEV and TUKYSA, and we submitted supplemental regulatory applications to the FDA for PADCEV, TUKYSA and ADCETRIS. We opened a new IND in our early-stage pipeline, with a product candidate that targets immune cells in the tumor microenvironment, and we extended the geographic footprint for TIVDAK with a new commercialization partnership in China and other parts of Asia.

Turning to our overall strategy, we are an ADC company at our core, as demonstrated by three of our four commercial products and five of our last six INDs. And moving forward, we will remain laser-focused in this area. Nevertheless, as with TUKYSA, we continue to acquire complementary assets that target tumors through mechanisms different from ADCs. In that vein, we recently licensed an innovative bispecific technology from LAVA, which addresses a target not readily amenable to an ADC construct and fits in well with the overall focus on targeted drug development.

Beginning today with PADCEV, our first-in-class ADC for metastatic urothelial cancer, together with Astellas and Merck, we presented data from Cohort K of the EV-103 trial at the ESMO meeting in September. As a reminder, this is a study primarily evaluating PADCEV in combination with KEYTRUDA in frontline cisplatin-ineligible patients with unresectable, locally advanced or metastatic urothelial cancer. This combination demonstrated a confirmed overall response rate per independent radiographic review of 64.5% with a median duration of response not reached. The combination had a manageable and tolerable safety profile.

The PADCEV monotherapy arm showed a confirmed overall response rate of 45.2%, with a median duration of response of 13.2 months, demonstrating its contribution to the combination. Frontline patients who are not eligible to receive cisplatin have a high unmet medical need, and we are encouraged by these data. We have submitted a supplemental BLA to the FDA to support a potential accelerated approval in the United States in mid-2023.

Further development for PADCEV continues, including our EV-302 global Phase 3 trial in combination with KEYTRUDA in a broader population of patients, regardless of cisplatin eligibility. We expect enrollment to complete before year-end and our intention is to use EV-302 as a confirmatory study in the United States and to support submissions around the world. Beyond the frontline metastatic setting, additional studies evaluating PADCEV in muscle-invasive and non-muscle-invasive bladder cancer are ongoing. Together with Astellas, we are also considering PADCEV's potential in other Nectin-4-expressing solid tumors, and look forward to sharing data next year.

Moving to TUKYSA, we recently filed a supplemental NDA for patients with previously treated HER2-positive metastatic colorectal cancer. The combination of TUKYSA and trastuzumab resulted in a confirmed overall

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Seagen Inc. (SGEN)	Corrected Transcript
Q3 2022 Earnings Call	27-Oct-2022

response rate of 38%, with a median duration of response of 12.4 months. Based upon the strength of these data, we have been granted Breakthrough Therapy Designation, as well as Priority Review, by the FDA, with a PDUFA action date of January 19, 2023. As a reminder, our Phase 3 trial has been initiated in frontline HER2-positive metastatic colorectal cancer, with the goal of serving as a confirmatory trial in the United States and supporting global submissions.

We continue to explore TUKYSA further in breast cancer with our partner, Merck. This includes HER2CLIMB-02, our Phase 3 study of TUKYSA in combination with KADCYLA, which completed enrollment in June. We anticipate reporting top line data in the first or second quarter of next year. Despite the evolving treatment landscape, KADCYLA remains an important treatment option for patients with HER2-positive metastatic breast cancer. If successful, the combination of TUKYSA plus KADCYLA has the potential to strengthen TUKYSA's position in the second-line setting, particularly in patients with brain metastases, and could provide an alternative important option in the third-line setting for those patients who would otherwise have received KADCYLA monotherapy.

Next to highlight are three key updates for ADCETRIS, which is the foundation of care in CD30-expressing lymphoma and is being commercialized outside of the United States and Canada by our partner, Takeda.

First, data from the pediatric trial has been filed with FDA with a target action date of November 16, 2022. ADCETRIS plus chemotherapy demonstrated superior event-free survival in the treatment of pediatric patients with previously untreated, high-risk classical Hodgkin lymphoma when compared to a chemotherapy regimen that included bleomycin.

Second, the statistically significant and clinically meaningful improvement in overall survival demonstrated in ECHELON-1 for ADCETRIS in combination with AVD in patients with advanced Hodgkin lymphoma, was recently published in the New England Journal of Medicine. We have submitted these data to the FDA for possible inclusion in the label. Last and important to note, the NCCN guidelines have now been updated based on the overall survival data to designate a plus A+AVD as a preferred treatment option for adult stage 3/4 Hodgkin lymphoma patients.

Now, transitioning to TIVDAK, our fourth approved product and first-in-classtissue-factor-directed ADC, which we co-developed and co-commercialized with our partner, Genmab. We recently announced a regional strategic collaboration and license agreement with Zai Lab that gives them exclusive rights to develop and commercialize TIVDAK in Mainland China, Hong Kong, Macau, and Taiwan. We partnered with Zai Lab given their expertise and track record of developing and commercializing innovative medicines in the region.

The collaboration will support regional patient enrollment for innovaTV 301, our Phase 3 study of TIVDAK in patients with recurrent or metastatic cervical cancer. This global study is enrolling well and is intended to serve as the confirmatory trial in the United States and to enable global regulatory applications, including in Asia. Additional clinical development for TIVDAK continues in front-line cervical cancer and other solid tumors, including head and neck cancer. We look forward to data readouts in the coming year which will inform our next steps in these two cancers.

Disitamab vedotin, or DV, is a late-stage novel HER2-directed ADC that utilizes our vedotin-based technology. Our clinical development program is evaluating monotherapy and combination approaches in a variety of cancers. We recently began enrolling patients into the pivotal Phase 2 monotherapy trial in second-line,HER2-expressing metastatic urothelial cancer. We plan to initiate an additional pivotal study in bladder cancer over the next several months, while continuing to explore development in other HER2-expressing solid tumors.

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Seagen Inc. (SGEN)	Corrected Transcript
Q3 2022 Earnings Call	27-Oct-2022

Turning to our earlier-stage pipeline, we are advancing multiple drug candidates in Phase 1 clinical trials in a range of solid tumors and hematologic malignancies. Next month, at the Annual Society for Immunotherapy of Cancer Conference, we look forward to disclosing initial Phase 1 data for SGN-B6A, a vedotin ADC-targeting integrin beta-6. This is an antigen which is highly expressed in a variety of solid tumors including non-small cell lung, head and neck, and esophageal cancer. In addition, we will be presenting pre-clinical data on SGN-BB228,

1. novel bispecific molecule which provides a potent co-stimulatory bridge between tumor-specificT-cells and CD228-expressing tumor cells. We look forward to initiating a Phase 1 trial for SGN-BB228 in the coming months.

In September, we announced an exclusive worldwide license to develop and commercialize LAVA-1223, a bispecific T-cell engager targeting gamma delta T-cells in the presence of EGFR-expressing solid tumors. We find the science compelling and look forward to advancing LAVA-1223 into the clinic in the near term.

Next, I'll turn the call over to Todd who will discuss our financial results and provide updated guidance. Then Chuck will provide an update on our commercial performance before we turn to Q&A. Todd?

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Todd E. Simpson

Chief Financial Officer, Seagen Inc.

Thank you, Roger, and thanks to everyone for joining us on the call. Our financial results continued to reflect significant advancements made across the business. Today, I'll briefly summarize our financial results and then discuss several updates to our outlook for the full year. To begin, all components of revenue showed increases in the quarter and for the year-to-date over 2021. This reflects strong commercial execution across our approved products, continued performance by our partners, as well as new collaborations.

With that, total revenues were $510 million in the third quarter of 2022 and $1.4 billion for the year-to-date, representing year-over-year growth of 20% and 25%, respectively. Net product sales increased to $428 million in the third quarter of 2022 and $1.2 billion for the year-to-date, representing year-over-year growth of 17% and 22%, respectively.

Royalty revenues were $44 million in the third quarter of 2022 and $111 million for the year-to-date. Royalty revenues for the third quarter increased by 7% over the prior year driven by strong commercial performance by our partners, most notably Takeda, with the sales of ADCETRIS, partially offset by foreign currency headwinds associated with the strong US dollar. Collaboration revenues were $38 million in the third quarter of 2022 and $80 million for the year-to-date. These reflect royalties on sales of PADCEV by Astellas in its territory, as well as other collaboration activities including an upfront license fee of $30 million from our new deal with Zai Lab signed in the quarter.

Costs of sales were $108 million in the third quarter of 2022 and $302 million for the year-to-date. This included cost of product sales and royalties for each of our four brands, profiteer amounts owed to our collaboration partners, Astellas and Genmab, as well as non-cash amortization of acquired technology costs for TUKYSA. R&D expenses were $385 million in the third quarter of 2022 and $987 million for the year-to-date. These reflect continued investment to expand the potential of our approved products and to advance our product pipeline.

Third quarter results also reflected a $50 million upfront fee to LAVA therapeutics. SG&A expenses were $210 million in the third quarter of 2022 and $605 million for the year-to-date. This was driven by ongoing commercialization efforts, legal costs related to Daiichi Sankyo and other corporate activities. Regarding our financial outlook for the full year, we are increasing our guidance for ADCETRIS sales to a range of $805 million to $820 million. We are narrowing our guidance for PADCEV sales to a range of $435 million to $445 million and we are increasing our guidance for TUKYSA sales to a range of $340 million to $350 million. Chip will provide

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