Seattle Genetics [SGEN] Conference call transcript for 2022 q1
2022-04-28 18:51:09
Fiscal: 2022 q1
Operator: Good day, and welcome to the Seagen First Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Mr. Clay Siegall. Please, go ahead, sir.
Peggy Pinkston: Thank you, operator, and good afternoon, everyone. I'm pleased to welcome you to Seagen's first quarter 2022 financial results conference call. This afternoon, we issued a press release with our results, and that 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 Clay Siegall, President and Chief Executive Officer; Todd Simpson, Chief Financial Officer; Chip Romp, Executive Vice President, Commercial U.S.; and Roger Dansey, Chief Medical Officer. Following our prepared remarks, we'll open the line for questions, and we aim to keep this call to one hour and so 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, future developments related to legal matters and potential clinical and regulatory milestones, including data readouts, regulatory submissions and potential marketing and reimbursement approvals. 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 the difficulty in forecasting sales, revenues and expenses, impacts related to the COVID-19 pandemic and the uncertainty associated with legal disputes and 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's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission and the company's subsequent reports filed with the SEC. And now, I'll turn the call over to Clay.
Clay Siegall: Thank you, Peg. Good afternoon, everyone, and welcome to our first quarter call. We are pleased to report total revenues of $426 million for the first quarter. This includes net product sales of $383 million, representing 27% growth over the first quarter of last year. This growth reflects strong product sales across all commercial brands. As we look to deliver continued innovation and develop transformative therapies, we remain focused on two strategic priorities. Our first priority is working to maximize the global potential of our products through commercial performance and robust clinical development programs, designed to support future label expansions, while also leveraging our strategic partnerships. I'll begin with PADCEV, which has become a standard of care in the US for previously treated metastatic urothelial cancer. Earlier this month, we and our partner, Astellas, secured approval in both the EU and UK for PADCEV in previously treated locally advanced or metastatic urothelial cancer. The approvals are based on the EV-301 trial, notably the impressive overall survival benefit. This marks an important milestone for patients in these regions who have previously had limited treatment options offering poor survival rates. We previously secured approvals in the US, Canada, Switzerland, Israel and Japan and continue to progress regulatory submissions across Asia Pacific and the Americas. We and Astellas are engaging with individual country authorities to secure reimbursement for PADCEV, which can take up to two years, depending on the country. PADCEV's robust clinical development program spans monotherapy and combinations with KEYTRUDA in earlier lines of therapy. EV-103 cohort K data, which are anticipated in the second half of this year, along with other data from the EV-103 trial could potentially support accelerated approval in the US for patients with first-line metastatic urothelial cancer next year. We are also evaluating PADCEV in combination with KEYTRUDA in muscle invasive bladder cancer and as monotherapy in non-muscle invasive disease. These represent areas of significant unmet need in large addressable patient populations. TUKYSA has become an important option for the treatment of second and later-line HER2-positive breast cancer patients with and without brain metastasis. Overall survival data and inclusion in key treatment guidelines reflect TUKYSA's exceptional clinical value. TUKYSA delivered strong results this quarter, although we continue to expect competitive challenges in the US this year, which are factored into our annual guidance. We are working to enable additional European launches in 2022, and our strategic collaboration with Merck is expanding TUKYSA's reach outside of Europe and the Americas. TUKYSA's broad development program includes clinical trials in HER2-positive breast cancer, colorectal cancer, gastric cancer and other HER2 amplified or mutant tumors. Data from the Phase 2 MOUNTAINEER trial are expected in the second half of this year and could potentially support accelerated approval in the US next year for patients with HER2-expressing colorectal cancer. Although a relatively modest patient population, it represents a high unmet medical need as existing approved colorectal cancer therapies offer limited efficacy. TIVDAK is a tissue factor targeted ADC approved in the US for recurrent or metastatic cervical cancer patients and represents an important new therapy in a disease with historically poor outcomes. Launched last September in collaboration with Genmab, the strong uptake has been driven by differentiated clinical data, positive reception from the oncologist community and our focus on commercial execution. We have presented promising combination data in earlier lines of cervical cancer, which may represent clinical advancements and much larger market opportunities. Roger will provide further details on TIVDAK's clinical development program, which is designed to maximize its future opportunity in cervical cancer and other solid tumors, while supporting global regulatory applications. ADCETRIS has now been approved in over 75 countries. And ADCETRIS regimens are US standard of care in frontline Hodgkin lymphoma and peripheral T-cell lymphoma. More than a decade after its first launch, we and our partner, Takeda, continue to bring this important medicine to patients around the globe. Groundbreaking overall survival data from the Phase 3 ECHELON-1 trial in newly diagnosed advanced Hodgkin lymphoma further demonstrate the therapeutic value of ADCETRIS and its importance for these patients. In addition, a Phase 3 children's oncology group study demonstrated an improvement in event-free survival for high-risk pediatric patients with Hodgkin lymphoma. Both the ECHELON-1 data and the Phase 3 pediatric data will be presented at ASCO in June and will be submitted to FDA this year. Lastly, we are progressing a comprehensive clinical development program to maximize the potential for ADCETRIS to benefit patients. Our second strategic priority is to advance our deep and diverse pipeline as we look to bring additional drugs to market in the coming years. Disitamab vedotin or DV is a late-stage novel ADC that utilizes our vedotin-based technology. DV is active across a broad range of HER2-expressing solid tumors and demonstrates rapid internalization. Our clinical development program prioritizes monotherapy and combination approaches in breast, bladder, gastric, and other cancers. We recently initiated a pivotal trial in previously treated metastatic urothelial cancer intended to support accelerated approval in the US. Turning to our earlier-stage pipeline. We are advancing several ADCs to both novel and validated targets. We also have four programs that use our proprietary sugar-engineered antibody technology. Overall, we are progressing more than 17 programs and products across our pipeline in a range of solid tumors and hematologic malignancies. Our ADC collaborators are also making important progress with programs that utilize our technology. Roche recently reported that the CHMP recommended European Commission approval for Polivy in combination with other anticancer therapies for frontline effused large B-cell lymphoma. GlaxoSmithKline is commercializing BLENREP for patients with relapsed multiple myeloma and is advancing several clinical trials. And AbbVie was granted breakthrough therapy designation for their cMET ADC, telicituzumab vedotin based on data from the Phase 2 study for non-small cell lung cancer. As we look to the future, our plan is to continue building upon our four commercial products, advancing our deep and diverse pipeline and expanding our geographic footprint. We have over 50 strategic partnerships, including our recent collaboration with Sanofi. Based on our cash position of approximately $2 billion and no debt, we are strongly positioned to utilize cutting-edge innovation to make a positive impact on the lives of people with cancer today and tomorrow. Next, I'll turn the call over to Todd, who will discuss our financial results. Then Chip will provide an update on our commercial performance. After that, Roger will detail our clinical development activities and pipeline. Todd?
Todd Simpson: Thanks, Clay and thanks to everyone for joining us on the call this afternoon. I'll briefly summarize our financial results for the quarter, which are aligned with our expectations and reflects significant progress across the business. Total revenues were $426 million in the first quarter of 2022, representing 28% growth over the first quarter of last year. This included net product sales of $383 million, an increase of 27% over the first quarter of 2021. This was driven by also included $9 million in sales to another company for a combination clinical trial that they are conducting and which was factored into our 2022 guidance. Additionally, first quarter 2022 product sales included contributions from TIVDAK, which was launched in the third quarter of 2021 as our fourth approved drug. Royalty revenues in the first quarter of 2022 increased slightly to $28 million compared to the first quarter of 2021. These royalties are primarily driven by sales of ADCETRIS outside the US and Canada by Takeda, and to a lesser degree, by royalties from sales of Polivy by Roche and Blenrep by GSK. As expected, royalties decreased from the fourth quarter of last year as the royalty rate paid by Takeda on its sales of ADCETRIS resets at the beginning of each year and ranges from the mid-teens to the mid-20s. Collaboration revenues were $15 million in the first quarter of 2022. This included an upfront payment from Sanofi under our new collaboration signed in March, a profit share contribution from Astellas' sales of PADCEV in Japan as well as other collaboration activities. These each create some degree of quarterly variability in our collaboration revenues. Following the recent approval of PADCEV the EU, we expect to begin reporting profit share amounts next year from the sales of PADCEV by Astellas. Cost of sales in the first quarter of 2022 increased to $88 million. This included cost of product sales and royalties for each of our four brands, profit share amounts to our collaboration partners, Astellas and Genmab, as well as non-cash amortization of acquired technology costs for TUKYSA. R&D expenses increased to $298 million in the first quarter of 2022. This reflected continued investment across our deep and diverse pipeline to maximize the potential of our approved products and pipeline programs. SG&A expenses increased to $174 million in the first quarter of 2022. This is driven by our commercialization efforts for ADCETRIS, PADCEV and TUKYSA, the launch of TIVDAK in the US as well as investments to support ongoing country launches of TUKYSA across Europe. We are off to a strong start and pleased with our financial results. With that in mind, we are maintaining our 2022 financial guidance that we provided in February. Now I will pass the call over to Chip, who will provide additional details on our commercial performance and outlook.
Chip Romp: Thank you, Todd. I'm pleased to provide an update on our commercial performance, which set a new quarterly record of $383 million and covers four approved brands. PADCEV first quarter sales were $100 million, a 44% increase over the first quarter of 2021. Excluding the $9 million clinical trial supplier, growth was up 33% over the first quarter of last year. During its first 1.5 years on the market, PADCEV became the US standard of care in the post checkpoint setting. We look forward to a potential label expansion in the US into the frontline setting in starting novel new patients in 2023. We are also excited by PADCEV's recent approval in the EU and UK and look forward to working with our collaborator, Astellas, to bring this important therapy to patients. Moving on to the TUKYSA. First quarter sales were $90 million, a 29% increase over the first quarter of 2021. You will recall that our 2022 outlook for TUKYSA assumes the impact of competitive pressure from a HER2's anticipated US launch in the second-line setting, and inclusion in guidelines and pathways. This remains our expectation despite seeing only modest impact in the first quarter. With our HER2's approval in this setting, we continue to anticipate a shift in how these regimens are sequenced, with increased use of in HER2 and less TUKYSA, delaying patient flow into the third line plus setting, where TUKYSA is mostly used. Our promotional efforts focused on TUKYSA's strong value proposition, especially in those patients with CNS involvement. Sales in Europe continued to grow in the first quarter, and we look forward to gaining reimbursement in additional countries this year. ADCETRIS first quarter sales were $181 million, an 11% increase over the first quarter of 2021. The team is driving awareness of the positive overall survival data from the ECHELON-1 trial. The top line data announced in February, has been well received and we look forward to moving a full dataset after the oral presentation at ASCO. And finally, TIVDAK sales were $11 million for the quarter. While this initial indication is a modest opportunity, we are pleased with the positive reception from physicians and patients for this important new treatment option. Now I'll hand the call over to Roger.
Roger Dansey: Thank you, Chip, and good afternoon, everyone. I'm happy to share a recent clinical development update on our approved medicines and our pipeline. Beginning with PADCEV, we are very pleased with its recent approval in the EU and the UK based on the overall survival advantage in previously treated patients with metastatic urothelial cancer as demonstrated in the EV-301 trial. This study was positive at a prespecified interim analysis, and we plan to present important long-term outcomes at ASCO, based on an additional 13 months of follow-up. In the frontline metastatic setting, we are evaluating the combination of PADCEV and KEYTRUDA in two studies. The first study is EV-103 Cohort K, which enrolled patients who are ineligible for cisplatin therapy. The second is the Phase III EV-302 global trial, which includes both cisplatin eligible and ineligible patients and is on track to complete enrollment this year. As we look to muscle invasive bladder cancer, together with Astellas and Merck, we are advancing two Phase III trials to assess PADCEV in combination with KEYTRUDA as perioperative treatment. One trial is testing usage in cisplatin-eligible patients and the other in cisplatin-ineligible patients. At the recent ASCO GU meeting, we presented promising PADCEV monotherapy data in the neoadjuvant MIBC setting for people who are suspected ineligible. These data are important in understanding the impact of PADCEV as a monotherapy in the context of the ongoing combination trials. Furthermore, we are progressing our efforts in non-muscle invasive bladder cancer. The Phase I EV-104 trial is investigating single-agent PADCEV administered intravesically in BCG nonresponsive patients. At the AACR meeting earlier this month, we presented preclinical data of intravesical PADCEV in models of NMIBC, showing minimal local and no systemic toxicities, along with evidence of antitumor activity. Beyond bladder cancer, we continue to assess PADCEV in a monotherapy basket trial of other Nectin-4 expressing solid tumors. Turning to TUKYSA, we are pleased to announce that we recently enrolled the first patient in HER2 CLIMB-05. This study is evaluating to TUKYSA in the frontline maintenance setting of HER2-positive metastatic breast cancer. Patients are randomized to receive TUKYSA, trastuzumab and pertuzumab or trastuzumab and pertuzumab alone after completion of the taxane component of the combination therapy. Despite the excellent results obtained with the standard of care treatment, THP, patients remain at risk of relapse and death including the risk of relapse in the brain. In GI cancers, we expect to report topline results from the MOUNTAINEER Phase II trial in the second half of this year with the potential for accelerated approval in the United States next year. This study assesses TUKYSA and trastuzumab as treatment for patients with previously treated metastatic HER2-positive colorectal cancer. In first-line CRC, we recently initiated a randomized global Phase 3 trial, MOUNTAINEER-03, comparing TUKYSA, trastuzumab and standard chemotherapy to chemotherapy alone. This trial is intended to serve as a confirmatory trial for HER2-positive CRC. If TUKYSA received accelerated approval in the United States and will also support future global submissions. Additionally, we are studying TUKYSA in combination with trastuzumab in a basket trial for solid tumors with HER2 alterations. Moving on to TIVDAK. TIVDAK has received accelerated approval in the United States for the treatment of patients with recurrent or metastatic cervical cancer, with disease progression on or after chemotherapy. The Phase 3 monotherapy trial in cervical cancer, innovaTV 301 is enrolling well and is intended to serve as the confirmatory trial in the United States and to facilitate global regulatory applications. As we look to move TIVDAK into earlier lines of metastatic or recurrent cervical cancer, we will present frontline combination data with KEYTRUDA from the innovaTV 205 trial in an oral presentation at ASCO this June. The study has also been expanded to further investigate frontline multi-drug combinations, including TIVDAK with carboplatin and KEYTRUDA with or without bevacizumab. Beyond cervical cancer, we continue to study TIVDAK in other malignancies, both as a monotherapy and in combination with KEYTRUDA and/or platinum-containing chemotherapy. The ongoing Phase 2 study innovaTV 207 is evaluating TIVDAK in multiple solid tumors, including patients with squamous cell carcinoma of the head and neck. We recently presented encouraging monotherapy data in these patients, and we have now expanded the trial to explore the combination of TIVDAK chemotherapy and KEYTRUDA in the frontline head and neck cancer setting. I'll turn now to ADCETRIS. We are extremely pleased that two important Phase 3 trials of ADCETRIS in newly diagnosed Hodgkin lymphoma patients were selected for our presentations at ASCO. The first is data from ECHELON-1, which showed that ADCETRIS in combination with AVD significantly improved overall survival compared with AVBD in patients with advanced Hodgkin lymphoma. ADCETRIS was shown to reduce the risk of death by 41%, with a hazard ratio of 0.59 and a p-value of 0. 009. The second presentation will be of data from the Phase 3 Children's Oncology Group study, AHOD1331 in pediatric patients with high-risk Hodgkin lymphoma. The study met its primary endpoint of superior three-year event-free survival with ADCETRIS plus chemotherapy, compared to a chemotherapy regimen that includes bleomycin. We are planning to submit supplemental BLAs for these two trials to the FDA this year. Turning now to disitamab vedotin, or DV. We recently began enrolling patients into the registrational Phase 2 monotherapy trial in second-line HER2-expressing metastatic urothelial cancer. If we obtain positive results from this study, it could potentially support accelerated approval in the United States. We also plan to initiate additional registration studies in bladder cancer and HER2 low breast cancer over the next several months. We are also considering development in other HER2-expressing solid tumors such as gastric cancer. Now, I'd like to briefly mention our early-stage pipeline. We are currently evaluating a growing number of drug candidates in Phase 1 clinical trials across a range of solid tumors and hematologic malignancies. Earlier this month at AACR, we presented promising preclinical data on two of our newest clinical stage ADC programs, SGNB7-H4V and SGN-ALPV. SGN-B7H4V is a vedotin ADC targeting the immune checkpoint B7H4, which is expressed across other tumors, including breast, ovarian and endometrial cancer with limited normal tumor expression. We detailed the robust antitumor activity of the ADC and its immunomodulatory activity through induction of immunogenic cell death. We also disclosed pre-clinical antitumor activity of SGN-ALPV, a novel vedotin ADC targeting the central alkaline phosphatases, which are expressed across solid tumors, including ovarian, endometrial, gastric and non-small cell lung cancer. We recently enrolled the first patients in Phase 1 trials of these two ADCs. I will now hand the call over to Clay.
Clay Siegall: Thank you, Roger. Before we turn to Q&A, I would like to comment on our ongoing legal proceedings with Daiichi Sankyo. A jury recently found that Daiichi Sankyo willfully infringed one of our US patents with Enhertu. We were awarded damages of $41.8 million, representing an 8% royalty on past sales of Enhertu in the United States. With this verdict, we now intend to request that the court a royalty on future US sales of Enhertu through expiry of the patent in November 2024 as well as enhanced damages, attorney fees and costs. We anticipate a decision from the court on the future royalty later this year. In a related matter, the US Patent and Trademark Office granted a request on rehearing and instituted two post-grant review proceedings out against certain claims of the same patent, which we intend to vigorously defend. Separately, we are engaged in an arbitration against Daiichi Sankyo over ownership of certain ADC technology used in Enhertu and several other product candidates. We expect a decision on the arbitration in mid-2022. It's important for us to defend our intellectual property as we continue to drive groundbreaking ADC innovation and develop transformative therapies for patients in need. In closing, we expect to achieve many important milestones in 2022, including important clinical data readouts, global and commercial progress and advances across our pipeline. With that, we'll open for your questions. Operator, please open the line for Q&A.
Operator: Thank you. We will now begin the question-and-answer session. And the first question will come from Cory Kasimov with JPMorgan. Please go ahead.
Cory Kasimov: Great. Thanks guys and good afternoon. I wanted to ask about TUKYSA. So a nice quarter. And just given the prevailing guidance you have here, I think it implies it average of about $75 million, just over $80 million per quarter over the balance of the year after the $90 million in Q1. So I'm just curious, how much you see the guidance at this stage is prudent conservatism until you see how market dynamics start shaking out with Enhertu versus an expectation that Enhertu comes in and quickly takes a lot of share in the non-brain met patients. Thank you.
Clay Siegall: Cory, thanks for the call. We're really proud of TUKYSA, and we have not seen any new approvals as you know on Enhertu yet. Our guidance includes an assumption of an approval later this year, perhaps soon and an impact on the -- especially the non-brain meds, exactly what you said. So, I think you asked, are we wanting to see what happens later this year. I think that exactly right. I think it's a very -- we're being very transparent that we -- and we provided guidance and I don't think it makes sense at this point to change the guidance. We certainly will, if things happen in certain ways. But right now, I think what you said makes a lot of sense. Todd, do you want to make any additional comments about that?
Todd Simpson: Sure. Thanks, Cory, for the question. And I'm happy to. So, Cory, the guide on TUKYSA this year, as you might imagine, is a little bit of a tough one. We were doing great with TUKYSA in the current label, but we know that Enhertu, I think they've got a PDUFA in May. We're already seeing them in guidelines. So, as this drug moves forward, the drug is very active in patients and is a great drug for patients. We think that as in Enhertu reaches the market, gets approved, that it will create a sequencing change in how these drugs are used and may push TUKYSA into a little bit of a later line of therapy. So that assumption was built into our guidance. And we don't feel like our guidance is very good.
Cory Kasimov: Okay. Thank you guys.
Operator: The next question will come from Salveen Richter with Goldman Sachs. Please go ahead.
Salveen Richter: Thanks for taking my question. Heading into the cohort K data, could you just frame expectations on what ORR is clinically meaningful given KEYTRUDA activity in that population?
Clay Siegall: So, thank you for the question, Salveen. Where we are very excited about PADCEV and the opportunity with cohort K and the rest of our trials that we're working, some of them are global trials, as you know. And Roger can try to address this question and see what he can say, but we haven't outlined like a specific, here's a bar, here's what we need to get after. So, I know Roger will do the best to provide color. But understand, we can't be exact. It's really, at the end of the day, it's up to the FDA. And we would be remiss to try to say, here's the FDA's bar since it's really up to them.
Roger Dansey: Exactly. Thanks Clay. Just to add some more commentary, in terms of the patients that we've enrolled, they are cisplatin-ineligible. And so the closest population you can potentially look at is a population treated with carboplatin, a carboplatin-based regimen. And for that regimen, the response rate would be expected to be somewhere in the mid-30s. We have obviously generated data with PADCEV monotherapy in later lines of treatment, somewhere in the sort of 40% to 50% range. KEYTRUDA has a range of responses depending upon PD-L1 status. And we have cohort A, which was an initial assessment of both PADCEV and KEYTRUDA in the sort of frontline cis-ineligible population, which produced a response rate of 73. So you can take all of those numbers, they're all relevant in terms of trying to understand what the landscape will be. But I think Clay is exactly right. We'll obviously be excited to bring forward the data we have. But in the end, it's an FDA review issue as to exactly what the buy is.
Salveen Richter: Thank you.
Operator: The next question will come from Andrew Berens with SVB. Please go ahead.
Andrew Berens: Hi, thanks. Congrats on the strong execution in Q1 guys. Just a question on TUKYSA. I was wondering when we may see some data with other backbone therapies, especially on top of ENHERTU. Is there any reason to think that TUKYSA won't be effective within HER2, or that the toxicities may be overlapping.
Clay Siegall: Andy, thank you for the question. We're really excited with TUKYSA in many regards. We have other data coming out such as in colorectal cancer. And we have quite a few trials going on in different diseases. I think Roger would be appropriate to comment on thoughts in combination whether they are with ENHERTU or other things. Roger?
Roger Dansey: Sure. Absolutely. So Andy, in principle, right, the construct of ENHERTU, which is trastuzumab together with the chemotherapy payload, so inhibition of the pathway plus cytotoxic effects on cells is not that different from the regimen that was used in ENHERTU plan conceptually, which was capecitabine, is the cytotoxic agent, castuzumab together with tucatinib. So as sort of first principles, one could really extrapolate that a combination of TUKYSA together with ENHERTU may have some interesting efficacy. With regard to toxicity, obviously, each drug has its own profile. Tucatinib, as a single agent, is a very well-tolerated agent, and in fact, can be taken for years. And that is an important attribute. We're generating the data right now. So I can't comment on what the profiles will look like. But suffice to say, we are interested in that combination because these are the two most active agents recently on the HER2 landscape. And it's important to understand if there may be potentially medically meaningful winning combination.
Andrew Berens: Okay. Any sense when we might see some of the data?
Roger Dansey: We're enrolling and we're generating data center, we've not given any indication as to what the timing of that would be.
Andrew Berens: Okay. Thank you.
Operator: The next question will come from Michael Schmidt with Guggenheim. Please go ahead.
Michael Schmidt: Hey, guys. Congrats on the quarter. Thanks for taking my question. I had a follow-up on EV-103 cohort K. Thanks for your comments on the response rate. I understand duration is another important endpoint. Perhaps could you help us understand what duration of response is clinically meaningful in this setting? And is there a particular hurdle for that? And then obviously, the study has two arms, and I'm assuming if both arms succeed on response rate, that there will be a comparison of the combination versus started monotherapy? Is that the correct way of thinking about it? Thanks.
Clay Siegall: Hey, Michael, thank you for the question on this. I'm glad you brought up duration. Duration is something that sometimes investors forget to ask about, but so important in making cancer drugs. Because if you have a response rate that looks good, but it's not really durable, it's not that important to cancer patients. And we pride ourselves in looking at duration with all our products and making sure that they're meaningful for patients and make a difference in their life. And so, DOR or Duration-of-Response is also important at FDA and we know that acutely. Roger, can you talk to them a little bit about the endpoint and the arms of the trial?
Roger Dansey: Sure. Yes, a great question. So, from a durability perspective, obviously, one of the hallmarks of something like a PD-1 inhibitor such as pembrolizumab, durability of response is really a hallmark of immunotherapy. And it brings enormous value as . We have generated duration of response in Cohort A and it looks very favorable. It's long, certainly longer than one would expect with chemotherapy, which is probably somewhere in the seven months median durability, something of that order or thereabouts. But from a – we need to basically present the data from Cohort K. We look at that durability. On first principles, every reason to believe that it could be favorable, but we need to see the data. The individual therapy, which is the monotherapy of PADCEV in that trial, there is no specific setup to directly compare. But obviously, these are contemporaneously randomized patients. The main value we see of the PADCEV monotherapy is to more understand and clearly understand the contribution of components. But that dataset will stand by itself as well. And so obviously, when we've had that data out and we can look at it, we can make judgments as to the nature of – or the quality and durability of PADCEV monotherapy.
Michael Schmidt: Okay, great. Thank you.
Operator: The next question will come from Matthew Harrison with Morgan Stanley. Please go ahead.
Unidentified Analyst: Hi. It's Steve asking for Matthew. So, my question is about the DV. So because I see that you are pursuing the HER2 low breast cancer. I want to ask why you do this and what differentiation part that you see compared to Enhertu in this front? Thank you.
Clay Siegall: Well, hi. Thanks for the question on DV. So, one of the things we really like about DV is it doesn't use trastuzumab. Trastuzumab is the name -- the generic name for Herceptin. And that same antibody is in Kadcyla and Enhertu. And so we've studied that. We know the internalization rate of that antibody. And we know that the antibody that's in DV has a very rapid internalization, much more rapid. And so, we think that's an attribute to that antibody drug conjugate. So we're excited for that product. We've seen data that's already exciting in HER2 – in patients that have low HER2. And we also know that DV works in combination with PD-1s, and we've seen data to that. And so, we think that, that's also differentiating because some of the other camptothecin containing ADC, camptothecin-type molecule containing ADCs don't seem to have yet shown that they work well with PD-1s. Perhaps we'll see that in the future. But the data I've seen to date is not as compelling as I've seen the data with our vedotin ADCs in combination with PD-1. So we think that as a single agent, the rapid internalization is differentiating versus trastuzumab or the core antibody for the two ADCs targeted to HER2 on the market. And the second thing is the combination with PD-1 also potentially differentiating. So I think those give us excitement that this is a differentiated product.
Operator: The next question will come from Geoff Meacham with Bank of America. Please go ahead.
Unidentified Analyst : Hi. This is Greg on for Geoff. Thanks for taking our question. So how are you thinking about the PADCEV and TUKYSA ex-US opportunities? Obviously, there are different economics between the two. But do you see any differences in their respective peaks and commercial dynamics relative to what we've seen in the US? And is the peak, ADCETRIS sales relative to US, is that an instructive comparison here?
Clay Siegall: Thanks. These are really good questions. I do want to point out a few things that are critical to trying to address your question. First of all, TUKYSA is something that in Europe, we had our own sales force, and we are prosecuting that and gaining many approvals and trying to country-by-country get reimbursement. PADCEV in Europe, we're working with our partner, Astellas. And it's their territory where they lead the charge. So we leave the charge in Europe with TUKYSA, Astellas leads the charge in PADCEV. We love both drugs. I just wanted to set up the ground rules for different dynamics there. With ADCETRIS, so that those dynamics, we have the US and Canada, we lead the commercial sales force and marketing. And outside the US, it's Takeda. So there's differences with each of these drugs and how it commercialize depending on and what territory and what partner or we do it. And so the opportunities for these drugs are strong. And the reason they're strong around the globe is because these are good drugs. And as you know, cancer drugs don't know borders and boundaries in countries and politics. This is about patients. And it doesn't matter where they are. If they can benefit from our drug, we're very excited about it, and we want to bring our drugs to these patients. So the ex-US opportunity for ADCETRIS is something we have a lot more experience with. You brought that up at the end of your question. And the ex-US opportunity for ADCETRIS has actually done well. Todd could you talk a little bit about how we look at and what the difference are kind of economically speaking?
Todd Simpson: So, yeah, -- so let me, first I would say could you a little bit about yes. So let me first say Clay's right, we booked sales for TUKYSA in Europe, and it's a profit share with the sales for PADCEV in Europe. So a little bit different treatment there, I would say, in general, when you look at drug launches in the US versus drug launches in Europe, there are probably two things that I think are worth noting. Number one is, in the US, you launch a drug, you set a price and starting your off to the rise moves? And then with subsequent labels, you expand patient populations. In Europe, it's different. You get approval and then you need to go country by country to negotiate you can launch with, I call it kind of a provisional price for different names in different countries for it. But in some markets like France and Germany, you can access the market commercially while you're negotiating your price. In other markets throughout Europe, you have to negotiate a price before you're allowed to launch. So, what does that do to our launch trajectory? It tends to spread it out. Europe tends to be a little slower in how it reaches peak than in the US because you don't have these impediments to getting to the market. With Europe, you need to negotiate country-by-country, and that slows things down. Obviously, you want to try to focus your initial efforts in the key markets, which is what we have done. The other, I guess, element that I would point out is typically, European prices are lower than US prices. So, while there may be the same general number of patients in the US and in Europe, the pricing tends to be different. That's number one. And then number two, the rate at which you get to the market is different for Europe. And then also, typically, in Europe as you launch additional labels, your price tends to go down.
Unidentified Analyst: Got it. Super helpful. Thanks a lot.
Operator: The next question will come from Gena Wang with Barclays. Please go ahead.
Gena Wang: Thank you. Just one question regarding the arbitration decision. If positive, should we expect royalty also until November 2024? And also, should we expect the royalty be in a similar range to 8% I mentioned for the past sales from the jury verdict?
Clay Siegall: So Gena, thank you for the question. I'm really glad that you asked this question. It's something that we hope that gets resolved in the not too distant future as there's been already one court ruling on the patent infringement. So, let's address your questions. Let's start with the patent infringement. So, the jury ruled and awarded us 8%, as you had mentioned, for previous sales, which is what the jury was asked to decide upon. That was it. Previous sales and was willful infringement, that was also in there, and that's something that's a public record that you know about. And so that's until basically the time of the court case for the patent infringement. The rest of it and you brought up November of 2024, that's to the underlying patent that was being infringed. So, we have -- we work with the judge in that patent infringement case. And you provide information to the judge and you request that -- and this is legal things and I'm not a lawyer, but you request the judge to provide you with a royalty going forward till the end of the patent life. Now, this is still on the patent infringement, not the arbitration. So, I don't want anyone to get confused. And the judge will decide what the royalty is. I think the 8% that the jury decided on historic is potentially something that you could look at, but it's up to the judge. So, I don't want to begin to say whether the judge will do lower, higher or the same. It's really up to the judge. The second thing -- and the second part of your question is the arbitration. Now, that is based on contractual issues that we had with Daiichi Sankyo based on our almost nine years of working together with them and teaching them all about our ADC technology and how to employ it. And so that is not subject -- we do not believe that is subject to the end of this specific patent. What it would be contractually would be subject to any patent life of those molecules that include our linker. And each molecule by molecule is usually most companies, what they do, we included is will patent any unique molecule. And then you have the underlying technology, if you will. So if they patent a new molecule using our linker system and that new molecule patent life goes through, let's say, 2034, just to pick a date. Then what we're asking the arbitration is for value through that 2034 time for sales. And since they have quite a number of molecules using our technology. And they don't have the same exact patent lives because there are different molecules that were made at different times. There could be a range of outcomes of times that if we win the arbitration, that royalties or some value thereof that I don't want to assume the judge will pick royalties. The judge can do whatever the judge wants to in determining value. And so that could be determined based on many more years than 2024 because it could be the end of the patent life of those specific molecules on a case-by-case basis. Also for those molecules, it would not be based on the US sales, which is the patent that we're talking about. Our contract is global. So for us, it would be based on global sales and that -- those global sales could be over a substantial period of time. That could stretch into 2030s, depending on molecule. Does that -- I hope that provides you with what you need for understanding, Gena.
Gena Wang: Yes. So maybe just a follow-up question. So who would decide the royalty rate? And then would that be like when the arbitrator make a decision -- announced the decision, will we also announce the royalty rate, or will you be negotiating with Daiichi about the individual royalty for each individual assets?
Clay Siegall: So Gena, I want to complement you on the question. So I don't know the answer to that because it's up to the judge. But I want to compliment you on the question because the judge can rule and decide there's a royalty rate. And that's what the judge can do. The judge could decide there's cash or it could be only cash or cash and royalty and a lot of different things, but the arbitrations, I should say, not just judge the arbitration judge, not the patent infringement judge can make a decision on what type of value that this should come to Seagen if he determines that we made our case and it was correct. So that's up to the arbitration judge. The arbitration judge could also rule that the linkage inside of ENHERTU in their other molecules is Seagen’s. And the judge could say, Seagen and Daiichi need to work this out and come to royalty in discussions. So it is not something that is up to us. It's up to the arbitration judge in this case.
Gena Wang: Okay. Thank you.
Operator: The next question will come from Andy Hsieh with William Blair. Please go ahead.
Andy Hsieh: Great. Thanks for taking my question. So related to all the questions about the HER2 franchise, I think fusion is in a very unique position where you have HER2-targeted ADC and a small molecule. So I'm just curious if you could share your thinking on how to take advantage of this strategic attribute. And along the same lines, I think Roger mentioned about the amplified and muted population. So I'm curious if you're open to kind of sharing with us any sort of plans there as well.
Clay Siegall: Andy, thank you for the interesting questions. And, in fact, we're really proud that we have a HER2 franchise with our small molecule and our antibody, targeting the inside of the cell and the HER2 -- through the HER2 tyrosine kinase, is an important mechanism targeting outside of the cell through an ADC, through an antibody that then delivers a potency to be inside of the cell, we think could come at it and really attack the cancer cell and do well by patients. And Roger, perhaps you could talk about your thoughts on combining outside of the cell and inside of the cell targeting and other questions that Andy had on any populations.
Roger Dansey: Sure, Clay. Thanks for the question, Andy. Yes, you're right. I mean, we have two active drugs. DV already has an activity profile that's been generated in China and already has approvals in China. And so, I think, we have not disclosed any specific plans, but it's an obvious place for us to think carefully about where could DV be valuable for TUKYSA. And in the opposite direction, where could TUKYSA potentially be valuable in a disitamab vedotin development program. So we're busy thinking those things through. It's certainly under consideration. I would just reiterate, the DV program, as we've currently designed this, is basically taking and building off of the data that's come out of the RemeGen data from China. So, for example, going after bladder cancer, it's not a sort of an obvious traditional place to go for a HER2 agent, but they have already generated very interesting data. So we think that, that's an important point to take further and see if we can make something of that and turn that into a product. Because it's an open IND, and we've already begun what we have designated as a pivotal trial, potentially looking for accelerated approval in a HER2 population. And then the other piece of DV, which is going and after the HER2 low is also based on data generated from RemeGen. So those two things are sort of put out in the public, are the two obvious places to start, but there is lots of opportunity. And we're excited, exactly as you say. We're excited to have two products in that same area, because there's just so much potential efficiency and sort of, synergy, if you will, at multiple levels for us.
Andy Hsieh: And would you be willing to share any sort of thoughts on the amplified or mutated indications and strategy?
Roger Dansey: I apologize. I got carried away talking about the two together. Yes, we have a basket trial running with TUKYSA. So we're, obviously, very interested in TUKYSA-trastuzumab combination across many different tumor types. Obvious ones that come to mind include things like biliary tract cancer, mutant non-small cell lung cancer and so on. So we're generating that data. And clearly, from a strategic perspective, that type of thinking could be applied to DV as well. Again, we've not disclosed any of that information, but I can just assure you we're thinking through all the possible opportunities, both as individual agents, TUKYSA combined with trastuzumab approach and DV as a single agent and then potentially the two together.
Andy Hsieh: That’s very helpful. Thank you so much.
Operator: The next question will come from Jay Olson with Oppenheimer. Please, go ahead.
Jay Olson: Hey. Congrats on the quarter. And thank you for taking the questions. I just wanted to follow up on DV. Since you initiated the registrational trial of DV in patients with HER2-positive metastatic urothelial cancer. Can you just describe the rationale behind prioritizing that trial over other trials? And then since you have Phase 2 data for DV at ASCO and HER2-negative patients with locally advanced or metastatic urothelial cancer, can you just comment on how those results may read across to the potential for DV and other HER2-negative tumor types? Thank you.
Clay Siegall : Sure, Jay. Thanks. Just very interesting questions. I will remind you that DV is an exciting drug in urothelial cancer. It's got great data. And I believe it has breakthrough designation as well. So it's something that there's a lot of real information and rationale to go forward. Roger, do you want to comment about the other parts of the question and what we're thinking about DV and urothelial cancer?
Roger Dansey : Sure. Yes. So just to reiterate, in bladder -- in urothelial cancer, actually HER2 expression is in a meaningful number of patients. It's biological relevance may be there. It may be an important component potentially. But regardless of that, it's a surface marker. And that's what an ADC needs to internalize. And so basically, as I said earlier, we already have an IND. We have breakthrough therapy designation and we have a trial that we have initiated. So it's an obvious step from our perspective to take DV into urothelial cancer as a unique molecule, because from the point of view of who else is developing therapies in urothelial cancer in the HER2 space, I think we're pretty much alone and that's important. Secondly, of course, the data that has been generated to that is really exciting. And so we think we can bring potentially another product with clinical value to patients with urothelial cancer. With regard to, again, the sort of HER2 breast cancer, it's the same principle. We see that as an important opportunity. Clay outlined all the potential differentiating features of the DV, including the antibody itself, the potential combination with PD-1 inhibitors. We haven't disclosed the details of our development plans. But when we do, hopefully, that will be helpful for you to understand how we're thinking about this. You did mention some data being presented. I'm not entirely clear what you're referring to. But I would just say, in general, again, on sort of first principles, ADCs require receptor expression on the surface that don't necessarily require that receptor to be biologically relevant to the tumor. All it needs to do is internalized. So, just as other molecules have gone after populations with relatively low HER2 expression. So we see DV in the same way.
Jay Olson: Great. Thank you.
Operator: The next question will come from Reni Benjamin with JMP Securities. Please go ahead.
Reni Benjamin : Hey, good afternoon guys. Thanks for taking the questions and congrats on the quarter. Can you provide us maybe some color regarding the ongoing evaluation of the LV and how that might advance going forward? And if you had to pick kind of like the greatest fit at ASCO, maybe a couple that could drive practice changes, maybe one that's a sleep or that you feel shouldn't be overlapped?
Clay Siegall : Sure. So LV is an active drug. And we have this partnered with Merck, and we've seen it active in a lot of regards, single-agent combination studies. We've been trying to find the best dose schedule, patient selection, line of therapy. There's something -- there's an excitement there, but it has taken longer than we had initially thought to get to where we could consider a pivotal trial. We're trying to do our best there. It's a competitive and crowded space. And Roger could perhaps make a comment. But I want to just talk a little bit about ASCO first. I don't know exactly what you're asking on after. So I'll tell you what I'd like to tell you, which is I think with ADCETRIS, we have a pediatric study that's very exciting, and we have our frontline study, our ECHELON-1 six-year survival data. And where we really -- we have a 41% reduction in the risk of death. We're going to show the Kaplan-Meier plot and all the data. This is both in patients with -- pediatric patients with Hodgkin lymphoma and in adults with Stage 3 and 4 Hodgkin lymphoma. The data we have is it's really life altering, if you have those diseases near in those categories because an ADCETRIS regimen work tremendously well. So we're proud of that, and we're going to be proud to show the data and the -- which would detail the impact on potential patients. Roger, do you want to make any comments on LV or on the ADCETRIS data at ASCO?
Roger Dansey: Yeah. No, firstly, on the ADCETRIS, as Clay said, finding an overall survival positive signal in Hodgkin lymphoma is almost unprecedented. There's very little historically that he's been able to do that. So we're super excited by that data. With regards to LV, again, I'll reiterate what Clay said. This is an active agent, both as a monotherapy and in combination with KEYTRUDA. And we presented data in that regard. But again, as Clay said, it's a competitive space. We understand what the profile needs to be in order for us to trigger a pivotal trial, and we continue to work on dosing schedule. So we haven't disclosed any more information. All I can tell you is we're still working hard at that to see if we can create the right profile, the clinical profile from either the monotherapy or the combination to bring forward and test further.
Reni Benjamin: Got it. And I guess just on the ASCO bit, and Clay, your answer is just fine. In terms of the sleeper, I guess, you guys have 23 to 24 abstracts. So is there anything that might overlook that you think it's earlier stage, but might make sense to really kind of focus on because you're feeling quite excited about it.
Clay Siegall: So many things are important in there to look at. So I don't know that I want to just tell you one thing to focus on. I think the -- I'll stand by my comments that the ADCETRIS data is, to me, the most critically exciting.
Reni Benjamin: Excellent. Thank you.
Operator: The next question will come from Ami Fadia with Needham & Company. Please go ahead.
Unidentified Analyst: Hello. Thank you guys. This is Amin on behalf of Ami. Thank you for taking the question. My question is related to TIVDAK and the early market movements. But I wanted to know if you guys are thinking about the daily launch of TIVDAK and how do we see the potential of growth for ForEx?
Clay Siegall: Okay. Well, we haven't really guided to TIVDAK as far as the growth for it yet. So we're not going to do that yet. But as far as the early dynamics, Chip, would you like to comment on the early dynamics in TIVDAK?
Chip Romp: Sure, Clay. So the launch is going very well. The physicians are very excited to have a new treatment alternative for patients, quite frankly, that are in really tough situations. So, we've been really pleased with the current results we have for 1Q and we look forward to continuing to grow the brand throughout the remainder of the year.
Unidentified Analyst: Thank you.
Operator: The next question will come from Zhiqiang Shu with Berenberg. Please go ahead.
Zhiqiang Shu: Thank you very much for taking question. I have two questions on PADCEV. On the Q1 sales side, is there enough to see there's – there was another $9 million coming from optical trials. I guess for the full year 2022, do you expect to see more sales from supplying clinical trials? And then second question on the cohort pay side. We know you said randomized 2-arm randomized trial. What do you expect to see the ORR in the model assets? The reason why I asked that question is, we're seeing 44% in the have already. And if you can replicate the combination 70-plus or in the combination arm, you can see more in the front line on PADCEV. How do you think that – how do you think the influence of the expansion could be?
Clay Siegall: So first of all, Todd, can you address the clinical trial question on – clinical trust supply question. And then maybe, Roger, you're going to Cohort K, and we can't provide all the data that you're looking for, obviously. That will come out with our data. So, we can't give you specifics and tell you what is required and what the line is and everything. But Roger could give you a general comment. Todd, can you talk about the clinical trial supply?
Todd Simpson: Sure. Yes, happy to. As we've said earlier, there was a $9 million clinical supply order in Q1. We try to call those out when they happen. I think if you go back a few quarters, I think it was maybe third quarter of last year, there was a, I think, about a $7 million order. With respect to your question about guidance, that's typically not something that we try to build into our guidance. Although I did comment earlier that this $9 million was included in our guidance because when we gave our guidance that it already shipped. So, while -- will there potentially be more orders? Potentially. But we don't control those. Even if someone said, we might do it, that's not typically something we would include, we would wait to see them actually come in.
Roger Dansey: And then in relation to Co-K in PADCEV, you are right, in a previously treated population, including exposure to platinum agents and PD-1 or PD-1 inhibitors, we have generated response rates in the sort of 40% to 50% range, 50% range with monotherapy. And we have not to date add any data in an untreated population. So I mean I can't speculate on what that number will look like. We all need to generate it, and then we'll understand what PADCEV monotherapy looks like in that space. I would also just reiterate it is randomized, yes, which is important. The -- again, the primary purpose for the monotherapy is to understand the contribution of components for the combination, but that data does stand by itself. And so again, we have the chance to evaluate PADCEV monotherapy in and of itself next to the combination.
Zhiqiang Shu: Very helpful.
Operator: The next question will come from Joe Catanzaro with Piper Sandler. Please go ahead.
Joe Catanzaro: Hi, guys. Thanks so much for squeezing me in. Maybe one quick one for me. So I think, Chip, you spoke about the delay of patient flow into the third line setting with the adoption of inherent. I know it's still early, but just wondering if you have any assumptions around when the new steady state of patients moving into third line therapy is achieved and whether that new normal is something that might be achieved in 2022? Thanks.
Clay Siegall: Chip, go ahead.
Chip Romp: Yes. Thanks, Clay. Yes. So it's a good question. It's difficult to actually kind of forecast that. First, they've got to get approval on the label. And then we've got to see what that looks like to kind of assess the potential market impact. I think it is important to note that changes to the second line -- changes in a second-line regimen can cause delays in new patient starts in the third line, especially if that regimen introduces a longer duration of response.
Joe Catanzaro: Okay. Thanks.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Ms. Peggy Pinkston for any closing remarks. Please go ahead, ma'am.
Peggy Pinkston: Okay. Thank you so much, operator. I appreciate everyone's questions and comments today. Have a great evening.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
