Seagen(US:SGEN)2023-11-01 12:31Financial Performance - Seagen reported a 33% growth in net product sales for Q3 2023 compared to the same period in the prior year[86]. - For the nine months ended September 30, 2023, total revenues increased to $1,772.2 million, a 24% increase from $1,434.3 million in the same period in 2022, primarily driven by a 27% increase in net product sales[146]. - Net product sales for the nine months ended September 30, 2023, reached $1,583.3 million, up 27% from $1,242.9 million in the same period in 2022, with significant contributions from ADCETRIS, PADCEV, TUKYSA, and TIVDAK[149]. - Total costs and expenses for the nine months ended September 30, 2023, increased to $2,408.8 million, a 27% increase from $1,893.2 million in the same period in 2022, primarily due to higher research and development expenses[147]. - Royalty revenues for the nine months ended September 30, 2023, increased to $144.9 million, a 30% increase from $111.2 million in the same period in 2022, driven by higher royalties from sales of Polivy and ADCETRIS[153]. - Collaboration and license agreement revenues decreased to $43.9 million for the nine months ended September 30, 2023, a 45% decrease from $80.2 million in the same period in 2022, primarily due to a prior period upfront license payment[156]. - The company expects growth in net product sales in 2023 compared to 2022 to be primarily supported by sales volume growth and to a lesser degree price favorability[151]. - The company anticipates that gross-to-net deductions will increase in 2023 compared to 2022, driven by anticipated growth in gross product sales[151]. - The company expects to incur additional non-recurring acquisition and transaction fees related to the pending acquisition by Pfizer[144]. - The company may need to raise additional capital to support ongoing research, development, and expansion of operations internationally[143]. - Cash, cash equivalents, and investments as of September 30, 2023, totaled $1,236,986 thousand, down from $1,735,070 thousand at the end of 2022[193]. - The company reported an income tax benefit of $0.6 million for Q3 2023, compared to a provision of $2.3 million in Q3 2022[192]. Research and Development - The phase 3 HER2CLIMB-02 trial of TUKYSA met its primary endpoint of progression-free survival in patients with HER2-positive breast cancer[87]. - Data from the innovaTV 301 trial showed a 30% reduction in risk of death for TIVDAK in recurrent or metastatic cervical cancer patients[88]. - The EV-302 trial demonstrated a 53% reduction in risk of death for PADCEV in previously untreated locally advanced or metastatic urothelial cancer[90]. - Seagen initiated a phase 3 trial for disitamab vedotin in combination with pembrolizumab for HER2-positive urothelial cancer[89]. - ADCETRIS received approval in combination with chemotherapy for previously untreated CD30-positive stage III Hodgkin lymphoma based on updated OS results[90]. - Seagen submitted Investigational New Drug applications for three novel targeted cancer therapies in 2023, with plans for one additional IND submission by year-end[91]. - The company has initiated a phase 3 trial, HER2CLIMB-05, evaluating TUKYSA in combination with trastuzumab and pertuzumab for metastatic HER2-positive breast cancer[120]. - The ongoing phase 2 trial of disitamab vedotin is evaluating its efficacy in HER2-expressing metastatic urothelial cancer, with a phase 3 trial initiated in Q3 2023[128]. - Research and development expenses rose by 17% to $449.0 million for Q3 2023 and by 22% to $1.2 billion for the nine months ended September 30, 2023, due to increased clinical trial costs and employee-related expenses[174]. - Research and development expenses for the nine months ended September 30, 2023, were $1,204.9 million, with an expected increase in 2023 compared to 2022[203]. Product Approvals and Collaborations - The European Commission approved the acquisition of Seagen by Pfizer on October 19, 2023, with completion expected in late 2023 or early 2024[86]. - TUKYSA received FDA approval in April 2020 for advanced HER2-positive breast cancer, supported by data from the HER2CLIMB trial[103]. - In January 2023, TUKYSA received accelerated FDA approval for HER2-positive colorectal cancer based on tumor response rates from the MOUNTAINEER trial[105]. - TIVDAK was granted accelerated FDA approval in September 2021 for recurrent or metastatic cervical cancer, supported by data from the innovaTV 204 trial[107]. - TIVDAK was approved by the FDA in September 2021, with U.S. sales co-promoted by the company and Genmab, sharing 50% of sales representatives and costs[161]. - The company received an upfront payment of $30 million from Zai Lab for TIVDAK commercialization in mainland China, Hong Kong, Macau, and Taiwan, with potential future milestone payments and royalties shared with Genmab[162]. - An exclusive collaboration with Zai Lab for TIVDAK in China included a $30 million upfront fee and potential milestone payments[109]. - Disitamab vedotin received FDA Breakthrough Therapy designation in 2020 and is conditionally approved for treating locally advanced metastatic gastric cancer in China[167]. - The company made a $200 million upfront payment to RemeGen for exclusive license rights to disitamab vedotin, with potential milestone payments up to $2.2 billion based on regulatory and commercialization goals[168]. Sales and Market Performance - PADCEV net sales in the U.S. are recorded by the company, which is responsible for all U.S. distribution activities, with costs and profits shared equally with Astellas Pharma[102]. - TUKYSA sales decreased to $47.7 million in Q3 2023 from $61.1 million in Q3 2022, while PADCEV sales decreased to $16.6 million from $22.9 million in the same period[179]. - The company expects 2023 growth in net product sales to be primarily supported by sales volume growth, with ADCETRIS and PADCEV anticipated to be the largest contributors[137]. - ADCETRIS growth in 2023 is expected to be driven by continued use across its seven indications, particularly in frontline advanced Hodgkin lymphoma[137]. - PADCEV's growth is anticipated to be primarily driven by sales in its frontline la/mUC indication in the U.S., with a deceleration in growth for previously-treated indications[137]. - The confirmed objective response rate for TIVDAK was 17.8%, significantly higher than the 5.2% observed with chemotherapy, with a disease control rate of 75.9% compared to 58.2%[125]. - The EV-302 trial for PADCEV and pembrolizumab showed a median overall survival of 31.5 months compared to 16.1 months for chemotherapy, with a 53% reduction in the risk of death[114]. - The safety profile of TIVDAK in the innovaTV 301 trial was consistent with its known safety profile, with no new safety signals observed[125]. - Total third-party costs for clinical stage programs increased to $155.0 million in Q3 2023 from $149.6 million in Q3 2022, reflecting ongoing clinical trial expenses[179]. - Third-party costs for TIVDAK remained flat for Q3 2023 compared to Q3 2022, while costs for ladiratuzumab vedotin increased due to clinical trial expenses[181]. Costs and Expenses - Cost of sales increased by 53% to $165.3 million for Q3 2023 compared to Q3 2022, and by 52% to $457.8 million for the nine months ended September 30, 2023, driven by higher sales and a $47 million inventory write-off[172]. - Selling, general and administrative expenses for the nine months ended September 30, 2023, were $746.1 million, reflecting a 23% increase from $604.9 million in 2022[187]. - Net cost-sharing reimbursements from collaborators decreased from $77.1 million in the nine months ended September 30, 2022, to $68.3 million in 2023[183]. - The gross profit share to collaborators totaled $103.1 million for Q3 2023, up from $71.0 million in Q3 2022, and $249.0 million for the nine months ended September 30, 2023, compared to $189.4 million in the same period of 2022[172]. Acquisition and Market Risks - The pending acquisition by Pfizer is valued at $229 per share, with associated expenses of $3 million and $40 million for Q3 and the nine months ended September 30, 2023, respectively[200]. - The company decided to deprioritize the LV program and agreed to terminate the collaboration with Merck effective October 14, 2023[164]. - The preparation of financial statements requires estimates, assumptions, and judgments that affect reported amounts[208]. - Critical accounting policies for the nine months ended September 30, 2023, were consistent with those in the Annual Report for the year ended December 31, 2022[208]. - There have been no material changes to market risk disclosures as set forth in the Annual Report for the year ended December 31, 2022[209].