While a lot of ‘biotech buzz’ these days seems to be centered around which company will manufacture the cheapest, most effective Covid-19 tests, or which will deliver a vaccine the quickest, one can’t forget that there are other biotech ventures to explore. As they say, “the show must go on.” Take, for example, Seattle Genetics (SGEN, Market Cap: $29.587B), a Washington based biotechnology company with a primary focus in the development and commercialization of revolutionary antibody-based therapies for the treatment of cancer.
By Juliette Duguid, Biotech Strategist
Seattle Genetics currently has two phase 1 trials in progress. If the trials are successful and therapies are approved to move on to the next step, this could potentially be very promising news for the company and investors alike. On June 18th, 2020, the company announced “…dosing of the first patient in a phase 1 clinical trial evaluating investigational agent SEA-TGT…”. The testing will involve approximately 111 individuals, and will focus on both the safety and anti-tumor efficacy of the agent in “…advanced solid tumors and lymphomas, including non-small cell lung cancer, gastric carcinoma, Hodgkin, and selected non-Hodgkin lymphomas”. The other phase 1 trial is for SGN-B6A, which is an ADC (otherwise known as anti drug conjugate, which refers to a class of biopharmaceutical drugs designed for cancer therapy treatment) that targets integrin beta 6 to deliver the previously clinically validated payload monomethyl auristatin E (MMAE). This study is expected to enroll 235 participants and explore the effects of SGN-B6A on solid tumors such as those found in breast, esophageal, ovarian, bladder, and cervical cancers, among others. The company is hopeful that these therapeutic agents will prove to be both safe and effective, but a number of things could potentially stand in their way, such as trial results that prove to be virtually inconclusive, as well as regulatory actions that may get in the way of further testing.
Adcetris, a drug that stops the growth of cancer cells in the body, was virtually the only product Seattle Genetics was producing last year. Now, that it has introduced other drugs and therapies into the market, profitability have grown considerably–in fact, market shares are reportedly up 14.6% since the company’s last earnings report, outperforming the S&P 500 in the same time frame. Earlier this year, another Seattle Genetics drug became FDA approved–an antibody drug conjugate known as Padcev. According to an American Cancer Society report, Padcev can treat patients with advanced urothelial carcinoma if past experiences with standard chemotherapy and immunotherapy treatments proved to be unsuccessful. The approval of the drug was based on a clinical trial of 125 advanced urothelial carcinoma patients who had already received platinum chemotherapy treatment. This is great news for the company, as Padcev is the first drug meant for this patient group to become FDA approved. Furthermore, in April, shares went up 1% when the FDA approved Tukysa, which is a drug meant for those with HER2-positive breast cancer that has metastasized to areas of the body such as the brain, or that cannot be surgically removed.
Adcetris generated net sales of around $164.1 million, which is up 22% year to year. Padcev, in the first quarter since its release, has generated $34.5 million in revenue. Seattle Genetics has many Anti Drug Conjugate (ADC) license agreements with companies such as AbbVie, Astellas, Bayer, Genentech, GlaxoSmithKline, and Progenics, which lead to collaboration and license agreement revenues of $15.6 million, which was up 65% year over year.
As always, with any biotech company, it’s important to look into the way Seattle Genetics approaches research and development to evaluate how much emphasis they place on creating and improving. According to a statement on the company’s website, they “…conduct rigorous research and development in areas of serious unmet medical need…” , which is a strong indication of the fact that they will continue to be profitable and competitive. Companies that have successfully done what has seldom been accomplished before (i.e., creating drugs and therapies targeted at an often overlooked cohort of the population) have the wherewithal to grow bigger, no matter the setbacks they experience. For Seattle Genetics, this year’s research and development expenses were approximately $195.2 million, up 23.3% year over year. Overall, projections for revenue in 2020 are in the $675 to $700 million dollar range.
The reason why Seattle Genetics is such a good choice for any investor is because the company is targeting a very large population of people–those with cancer, seeking treatment. Take, for example, the lymphoma treatment market, which has a value of $11.7 billion in 2018, and is expected to grow at a compound annual growth rate of 9.5% over the forecast period. The breast cancer drug market has similar projections–in 2017, it was valued at $16.98 billion in the United States and is expected to have a CAGR of 10.7% over the forecast period. In fact, you’ll recall that Seattle Genetics had recently gotten an FDA stamp of approval for a HER2 type breast cancer treatment–turns out, due to growing number of cases, HER2 is regarded as the most lucrative segment of the overall breast cancer market. As grim as it sounds, markets for all types of cancers will continue to provide many effective treatments in lieu of an actual cure–it is economically feasible for them to continue to do so. Biotech companies are motivated to come up with the best medicines so their patients live longer and thus, spend more money on drugs and treatments they need to survive. Seattle Genetics managed to experience a tremendous amount of growth by simply capitalizing on this market –according to Nasdaq’s historical data, the stock closing price on June 24th, 2019 was $70.11, and on June 24th, 2020, the closing price was $164.80, which indicates an increase of 135%. Now, they have several other treatment therapies in the works, and there really is no telling how big they can get in the coming years.