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Seattle Genetics [SGEN] Conference call transcript for 2022 q4

2023-02-15 21:17:10

Fiscal: 2022 q4

Operator: Good day everyone and welcome to the Seagen Fourth Quarter and Full Year 2022 Conference Call. Please also note, today’s event is being recorded. At this time, I’d like to turn the conference call over to Doug Maffei, Vice President, Investor Relations. Sir, please go ahead.

Doug Maffei: Thank you, operator, and good afternoon, everyone. I’m pleased to welcome you to Seagen’s fourth 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 David Epstein, Chief Executive Officer; Chip Romp, Executive Vice President, Commercial U.S.; Todd Simpson, Chief Financial Officer; and Roger Dansey, President of Research and Development. 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 2023 financial outlook, anticipated product 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 include the difficulty in forecasting sales, revenues, costs and expenses 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’s quarterly for the quarter ended September 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 David.

David Epstein: Thank you, Doug, and good afternoon, everyone. Today, we reported total 2022 revenue of nearly $2 billion, reflecting 25% growth over 2021. This included record net product sales of $1.7 billion, driven by meaningful uptick across our entire commercial portfolio. Our sales guidance for ‘23 reflects our optimism in our ability to gain market share in existing indications and grow into newly labeled indications. In a moment, I will take you through the strategy we presented at the JPMorgan Healthcare Conference last month. But first, I’d like to begin by reflecting on an exceptional year for Seagen and noting a few 2022 accomplishments. Beginning with our commercial products, we received regulatory approvals and reimbursement decisions in multiple markets. We now have commercial presence in 17 countries. We delivered robust development progress across our approved brands, including positive results for four pivotal trials that have already resulted in two label expansions and completed enrollment for two potentially registration-enabling studies in our PADCEV and TUKYSA franchises. We advanced a broad recently prioritized pipeline of differentiated assets, including potentially transformative programs like DV, SGN-B6A and SGN-B7H4V, while at the same time, initiating Phase 1 studies for multiple new drug candidates. Seagen also entered into multiple corporate development agreements for new assets that are complementary to our expertise. For example, we secured global rights to an exciting preclinical gamma delta bispecific T-cell engager for EGFR expressing solid tumors and entered into a collaboration with Sanofi for the development of multiple novel ADCs. Looking ahead, we are focused on three strategic pillars: the first is focused on optimizing the full potential of our commercial portfolio of first or best-in-class products, demonstrated clinical and real-world benefits. Here, we are working to enhance our commercial execution and footprint as well. In parallel, we’re executing robust clinical development programs, including 10 potentially registrational studies for our approved products in areas of opportunities spanning multiple tumor types. These new labels could unlock meaningful growth across our approved brands and broaden their reach to significantly more patients in need. ADCETRIS further demonstrated its clinical value in 2022 with important data readouts, a label expansion and three sequential quarters of record sales. ADCETRIS is the U.S. standard of care in frontline Hodgkin lymphoma, has seven U.S. indications following the approval of a pediatric label late last year and is expected to reach blockbuster status in our territories in 2023. Outside of the U.S. and Canada, our partner, Takeda, continues to deliver ADCETRIS in international markets and their product was recently added to the National Reimbursement Drug List in China. I’ll now turn to PADCEV, which we believe has the potential to become our second blockbuster brand. The FDA granted priority review for an application seeking accelerated approval for the combination of PADCEV and KEYTRUDA in first-line metastatic bladder cancer for patients that are cisplatin-ineligible with a target action date of April 21, 2023. Our goal is to advance PADCEV’s utility into earlier stages of bladder cancer. And our robust clinical development program includes both, muscle and non-muscle invasive forms, representing even larger potential patient segments. We continue to evaluate PADCEV beyond bladder cancer and expect to report data from the solid tumor study later this year. We’re also looking to expand PADCEV globally in partnership with Astellas, following its approval in the EU and other countries, including Japan. Moving on to TUKYSA. This brand provides significant benefit for adults with HER2-positive metastatic breast cancer, particularly those with brain metastases. TUKYSA is now approved in 39 countries, and we continue to make progress expanding its use outside of the U.S. with multiple country launches planned in 2023. Last month, TUKYSA received an accelerated approval for patients with previously treated HER2-positive metastatic colorectal cancer, and it was subsequently added to the NCCN guidelines. This is a modest size but important population as these patients typically have poor outcomes following progression on frontline therapy. Our drug development program includes a combination of TUKYSA with ADCs such as Kadcyla, which is used in second-line plus metastatic breast cancer in a trial called HER2CLIMB-02. Our partnership with Merck also extends TUKYSA reach outside of the U.S., Europe and Canada. TIVDAK is our newest commercial product and continues to receive recognition as an important treatment option for cervical cancer. TIVDAK is now a preferred regimen for second line or subsequent recurrent or metastatic cervical cancer per the NCCN guidelines. We and our partner, Genmab, are advancing a Phase 3 trial that could support international marketing authorizations as well as serve as a confirmatory trial in the U.S. with potential top line data expected by year-end 2023. Our second strategic pillar is to prioritize the clinical development of assets that we believe will have the most transformative impact on patients and our business. We recently initiated a portfolio prioritization discipline to critically access data, chance of success, unmet medical need and potential patient opportunity. Based upon this analysis, we have prioritized the most promising assets and programs, optimizing the risk-benefit reward balanced across our entire portfolio. Examples of programs that will receive priority resourcing are DV, B6A and B7H4. These are ADCs with large potential indications and global or near full global rights and economics that flow to Seagen that could help transform our company. Importantly, we remain focused on the combination of vedotin ADCs and anti-PD-1s given the growing body of data demonstrating the clinical synergy through immunogenic cell death. As such, we have 9 trials underway exploring this combination. Our third strategic pillar is to advance innovative next-generation ADC technologies to empower our pipeline for years to come. Several products utilizing our vedotin technology are now approved with many other pipeline assets in development. We believe the ADC market will in time be measured in the tens of billions of dollars. In parallel, our teams are working on multiple waves of new ADC technologies that we believe will come to fruition at varying time points. For example, we’re developing ADCs employing novel auristatin and camptothecin technologies as well as ADCs that incorporate new cytotoxic and immunostimulatory payloads. Further out, we expect ADCs to utilize novel drug conjugate technologies that employ other diverse mechanisms of action. We continue to invest in cutting-edge technology to retain our leadership position and expand the number of approved ADCs in order to reach still more patients. We remain selective and opportunistic in supplementing our pipeline with complementary external assets that could also have exciting potential. With that, I’ll turn the call over to Chip, who will provide an update on our commercial performance. Then Todd will discuss our financial results and 2023 guidance. After that, Roger will detail our clinical development activities and pipeline. Take it away, Chip.

Chip Romp: Thank you, David. The commercial team delivered another strong quarter to close out a very successful year for Seagen. Performance in Q4 underscores strong commercial execution across our portfolio. ADCETRIS fourth quarter sales were a record $238 million, a 35% increase over the fourth quarter of 2021. Year-over-year growth reflects a return to pre-COVID diagnosis rates, favorable gross to nets and share point gains in frontline Hodgkin lymphoma. ADCETRIS is now a category 1 preferred agent in the NCCN guidelines, which has resulted in positive changes in treatment pathways and incremental share gains in the frontline setting. We are pleased with the performance of ADCETRIS, and we continue to see opportunities for incremental share gains in frontline HL in 2023. PADCEV fourth quarter sales were $122 million, a 32% increase over the same quarter of last year. These sales included clinical trial supply orders of $6 million for the quarter. PADCEV remains a U.S. standard of care in the second-line setting. Underlying growth was primarily driven by patient flow into the second-line setting due to continued use of checkpoint inhibitors as frontline maintenance therapy. Meanwhile, our commercial teams are preparing for a potential launch into the frontline metastatic setting in combination with KEYTRUDA in cisplatin-ineligible patients. As a reminder, this is a sizable opportunity with approximately 20,000 total addressable patients in the frontline metastatic setting in the U.S. Around 18,000 of these patients are drug-treated and approximately 50% are ineligible for cisplatin-based chemotherapy. If approved, the PADCEV combination would represent an additional important new treatment option in the frontline setting. Moving on to TUKYSA. Fourth quarter sales were $86 million, down 9% year-over-year. We have established TUKYSA’s market position as a valuable treatment option for patients in the second line plus setting, especially for those with active brain metastases. TUKYSA continues to perform well, despite ongoing competitive headwinds related to an HER2’s increased use in the second-line plus setting. We expect to see stabilization of patient flow into the third line in the second half of this year. TUKYSA’s performance continues to benefit from extended treatment duration of a year or longer in approximately a third of patients, which underscores its efficacy and tolerability. After last month’s FDA accelerated approval, our commercial team has now launched TUKYSA in the second line plus setting in patients with HER2-positive metastatic colorectal cancer. This represents the first approved HER2-directed therapy in this setting. Although a modestly sized market of approximately 100 patients, this population represents a high unmet medical need, as existing approved colorectal cancer therapies typically offer limited response rates. In addition, we estimate approximately half of colorectal cancer patients are currently screened for HER2 expression. A focus of our commercial efforts will be on increasing patient screening rates. Looking beyond the U.S., following successful pricing negotiations, in the fourth quarter, we launched TUKYSA in Italy and Norway and look forward to expanding access in the coming months. Merck is progressing regulatory submissions and reimbursement activities intended to expand TUKYSA’s reach in their territory and have multiple launches planned this year. And finally, TIVDAK sales were $18 million for the fourth quarter, an increase of 7% from the third quarter of 2022. The Seagen and Genmab commercial teams remain focused on ensuring positive treatment experiences and driving further market penetration of this important treatment option. We also look forward to the outcome of the innovaTV 301 global Phase 3 trial later this year, which could result in full FDA approval if it demonstrates an OS benefit and other endpoints, while potentially serving as the basis for global submissions. With that, I’ll pass the call over to Todd who will discuss our financial performance, including our outlook for 2023. Todd?

Todd Simpson: Great. Thanks, Chip, and thanks to everyone for joining us on the call. Our financial results reflect significant progress made across the business in the past year. Today, I’ll summarize our 2022 financial performance and then discuss our 2023 guidance. Total revenues were $528 million in the fourth quarter and $1.96 billion for the full year in 2022, representing year-over-year growth of 23% and 25%, respectively. This included record net product sales of $464 million in the fourth quarter and $1.7 billion for the full year, reflecting year-over-year growth of 26% and 23%, respectively. This growth was driven primarily by ADCETRIS and PADCEV as well as contributions from the launch of TIVDAK. Royalty revenues were $53 million in the fourth quarter and $165 million for the full year in 2022. Full year royalty revenues increased 9% over 2021, driven by strong commercial performance by our partners, notably Takeda with its sales of ADCETRIS and Roche with its sales of Polivy. Collaboration revenues were $11 million in the fourth quarter and $91 million for the full year in 2022. These included royalties on sales of PADCEV by Astellas in its territory as well as other collaboration revenues, including a new collaboration with Zai Lab in the third quarter. Cost of sales was $108 million in the fourth quarter and $410 million for the full year in 2022. These include product cost of sales and royalties for each of our four brands, profit share amounts owed to our collaboration partners, Astellas and Genmab as well as noncash amortization of acquired technology costs for TUKYSA. R&D expenses were $358 million in the fourth quarter and $1.34 billion for the full year in 2022. These reflect continued investment to expand the potential of our approved products and to advance our pipeline programs. SG&A expenses were $216 million in the fourth quarter and $821 million for the full year in 2022. This was driven by ongoing commercialization efforts in the U.S. and Europe as well as other corporate activities to support our growing business. Next, I will turn to our financial outlook. We expect total revenues in 2023 to be in the range of $2.14 billion to $2.24 billion, representing growth of 9% to 14% over 2022. Beginning this year, we are providing product sales guidance at a portfolio level. This reflects the expansion of our commercial portfolio to now four approved products, and increasing number of indications and expanding geographies. We will continue to report quarterly results at a brand level. With that in mind, looking across the portfolio, we are guiding to product sales of $1.925 billion to $2.0 billion, representing an increase of 13% to 17% over 2022. We expect ADCETRIS growth to be driven by continued use across its 7 indications, most notably in frontline Hodgkin lymphoma, and we expect ADCETRIS to reach blockbuster status in our territories this year for the first time. PADCEV is an important and established brand for the Company. Our guidance today does not include contributions from the potential U.S. label expansion for PADCEV which has a PDUFA action date of April 21st. We expect that ADCETRIS and PADCEV, will remain the largest contributors to our sales in 2023. And we look at the second half of 2022, as a good indicator of how each of our brands will perform going into 2023. As a reminder, first quarter sales are typically the lowest of the quarters with growth seen throughout the year. We are excited about the recent label expansion for TUKYSA into metastatic colorectal cancer patients. While the label expansion takes us beyond breast cancer, it represents a relatively modest commercial opportunity. From an overall brand perspective, while we expect contributions from colorectal cancer, we also expect continued headwinds from in HER2 and breast cancer in the near term, and that will impact overall growth in 2023. And finally, while we continue our efforts to drive TIVDAK growth in its current indication, which has become an important treatment option for women with advanced cervical cancer, we continue to look for future growth opportunities for TIVDAK through our basket trial efforts in other tissue factor expressing solid tumors, and Roger will provide a development update later. Next, we expect royalty revenues to be in the range of $170 million to $185 million, primarily reflecting sales of ADCETRIS by Takeda in its territory along with contributions from sales of Polivy by Roche. As a reminder, the Takeda royalty rate tiers reset at the beginning of each year. Finally, we expect collaboration revenues to be in the range of $45 million to $55 million, which includes PADCEV royalties from Astellas as well as amounts earned from our other collaboration partners. R&D expenses are expected to be in the range of $1.425 billion to $1.525 billion. This reflects continued investment in clinical trials to further expand our commercial brands, advance our earlier stage agents and drive our ADC innovation. SG&A expenses are expected to be in the range of $880 million to $930 million, focused on commercial execution to drive growth of our approved products and to support our overall growth strategy. Cost of sales is expected to be in the range of $420 million to $470 million. Growth over 2022 will be driven by increased product sales and higher profit share payments to our collaborators. Noncash expenses are expected to be in the range of $330 million to $375 million, the majority of which is stock-based compensation. Taken together, our financial guidance reflects our strategy to support the growth of our current approved brands and fund the development of a growing pipeline. Now, I’ll turn the call over to Roger for an overview of our research and development projects. Roger?

Roger Dansey: Thank you, Todd, and good afternoon, everyone. I’m happy to share recent clinical development updates for both our approved medicines and our pipeline. I will begin ADCETRIS, which is the foundation of care in CD30-expressing lymphomas. Since our last call, we have achieved a number of important milestones. In September, the NCCN guidelines were updated, elevating the ADCETRIS combination to a category 1 preferred treatment option for adults with previously untreated stage 3 or 4 Hodgkin lymphoma, based on the impressive overall survival data from the ECHELON-1 trial. These data are currently under review by FDA for potential inclusion in the label. In November, ADCETRIS was approved by the FDA for pediatric patients two years and older with previously untreated high-risk classical Hodgkin lymphoma in combination with standard chemotherapy, based on the Children’s Oncology Group study. We continue to evaluate other potential indications for ADCETRIS, including DLBCL and solid tumors, the latter of which we expect to report data in the first half of this year. Moving on to PADCEV. PADCEV has been granted priority review with a PDUFA date of April 21, 2023 for our supplemental BLA based primarily upon data from Cohort K of the EV-103 trial. As a reminder, this cohort study the safety and efficacy of PADCEV in combination with KEYTRUDA in frontline cisplatin-ineligible patients with unresectable, locally advanced or metastatic urothelial cancer. At ESMO, we presented data that showed the combination generated in ORR of 64.5%, median cycles of therapy of 11 months and a median duration of response that has not yet been reached. This week at ASCO GU, analyses evaluating the response of the PADCEV combination across different patient subgroups treated in EV-103 Cohort K will be presented. These data confirm the consistent benefit of PADCEV and KEYTRUDA amongst key patient populations, including those with liver metastases and low levels of PD-L1 expression. Of note, we completed global enrollment of EV-302 in November of 2022 and estimate PFS top line data to be available by year’s end. An extension study in China continues to enroll. This is a global study evaluating PADCEV in combination with KEYTRUDA in both, cis-ineligible and cis-eligible patients, which is a broader frontline population and was enrolled in Cohort K. EV-302 is intended to support submissions around the world, including in Europe and Asia and is the confirmatory trial for a potential U.S. accelerated approval of PADCEV in the EV-103 Cohort K treatment setting. In muscle invasive bladder cancer, which is a stage earlier than metastatic disease, we continue to advance PADCEV with two ongoing global Phase 3 studies evaluating the combination with KEYTRUDA given perioperatively. In non-muscle invasive bladder cancer, which is the earliest disease stage, we are conducting a Phase 1 study, EV-104 with PADCEV given as intravesicular therapy. Initial data may be presented later this year. Beyond urothelial cancer, together with Astellas, we are also considering PADCEV’s potential in other Nectin-4 expressing solid tumors and we’ll be sharing initial data in the first half of this year. Continuing with TUKYSA, we recently received accelerated approval in combination with trastuzumab for the treatment of adult patients with previously treated metastatic colorectal cancer. Importantly, NCCN guidelines have been updated to include TUKYSA as a treatment option for patients with HER2-expressing RAS wild-type metastatic colorectal cancer. Clinical situations outlined in the guidelines include a primary treatment option for patients who’ve received adjuvant FOLFOX or CAPOX within the last 12 months, a first-line treatment option for metastatic disease where patients are ineligible for intensive chemotherapy, and second line and beyond treatment option for patients who progress on any frontline chemotherapy. A Phase 3 trial has been initiated in frontline metastatic colorectal cancer, which is intended to serve as a confirmatory trial in the United States and support global submissions. Moving to breast cancer. HER2CLIMB-02, our Phase 3 study of TUKYSA in combination with Kadcyla in metastatic second-line plus patients completed enrollment in June of 2022, and top line data is anticipated in the first half of this year. Kadcyla is an important treatment option for patients with HER2-positive metastatic breast cancer. And if the trial is successful, the combination of TUKYSA plus Kadcyla could provide an alternative late line option, including for patients with brain metastases. Additionally, for Kadcyla, we plan to present data in the first half of this year from our basket trial in combination with trastuzumab in previously treated metastatic solid tumors with HER2 alterations, with a focus on biliary tract cancers. I’ll turn now to TIVDAK, which is approved 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 trial in cervical cancer innovaTV-301 is close to completing global enrollment with the potential for top line data in the second half of this year. This study is intended to serve as the confirmatory trial in the United States and to support global regulatory applications. Beyond cervical cancer, we continue to study the potential for TIVDAK in other malignancies through an ongoing Phase 2 study, innovaTV-207. Initial data with a modified dosing schedule in head and neck cancer is projected to be presented this year. Continuing with disitamab vedotin or DV, this HER2-directed ADC is being evaluated as monotherapy and in combination with KEYTRUDA for the treatment of metastatic urothelial cancer in HER2-expressing tumors. We plan to initiate a Phase 3 trial in frontline metastatic urothelial cancer in combination with KEYTRUDA later this year. Additionally, development activities are underway to evaluate DV as a monotherapy and in combination with TUKYSA or KEYTRUDA in HER2 low metastatic breast cancer and HER2 expressing gastric cancer. Moving to our early-stage pipeline, starting with SGN-B6A, a wholly owned vedotin ADC targeting integrin beta-6. We reported Phase 1 clinical data in November at SITC. In addition to a manageable and tolerable safety profile at the explored dose regimens, the initial antitumor activity observed in heavily pretreated patients with advanced solid tumors appears encouraging and has triggered expansion cohorts in non-small cell lung cancer, head and neck cancer and esophageal cancer. Focusing on the lung cancer subset, we observed a 33% confirmed objective response rate. Updated clinical data, including initial durability of response will be reported later this year. Turning now to SGN-B7H4V, this is a novel vedotin ADC targeting the immune checkpoint B7H4 with potential opportunities in breast, ovarian and endometrial cancer. We are making progress in the first-in-human trial and anticipate sharing initial clinical data this year. We continue to advance our IND engine with ADCs and other targeted therapies for cancer. In partnership with Sanofi, we are planning a 2023 IND submission for CEACAM5 targeted ADC with preclinical data supporting the submission to be presented at an upcoming medical meeting. Further, we are planning additional IND submissions with ADCs utilizing novel drug linkers and payloads. SGN-BB228, a costimulatory bispecific has recently achieved first patient enrolled in a Phase 1 first-in-human trial initially focused on relapsed or refractory metastatic melanoma. SGN-EGFRd2, a preclinical bispecific targeting gamma delta T-cells and EGFR positive tumor cells is on track for an IND submission in 2023. Over the course of this year, we look forward to achieving multiple important data and regulatory milestones encompassing our approved portfolio and our pipeline assets. Seagen has now emerged as a company with the expertise, capabilities and passion to discover, develop, manufacture and commercialize transformative medicine that impact lives. We operate from a position of strength as we work to build Seagen into a leading global oncology company. We will now turn to Q&A. And to increase the chances that those participating on today’s call have an opportunity to ask questions, we ask that you please limit yourself to one question each. Operator?

Operator: Ladies and gentlemen, at this time, we’ll begin the question-and-answer session. And our first question today comes from Salveen Richter from Goldman Sachs.

Salveen Richter: With the non-muscle invasive bladder cancer data set that’s reading out for PADCEV in the first half, can you help us, one, understand the mechanistic rationale as we think about the drug working in metastatic bladder and the likelihood of working in this tumor type? And then, two, what the bar would be for this to be positive? And then just remind us when the muscle invasive bladder cancer data will be presented?

David Epstein: Hey Salveen, it’s David. Thanks for the great question. As you know, we’re pretty excited about the franchise we’re building in bladder cancer and the strategy with PADCEV is to move increasingly to earlier lines of therapy. We’re going to further build upon that bladder cancer presence by eventually introducing DV also in bladder cancer but directed to HER2-positive patients. I think you’re right to focus on both, the muscle and non-muscle invasive bladder cancer because those markets are so much bigger than where our current approval is. Hey Roger, I think it would be best if you could share some insights on that program.

Roger Dansey: Sure, David. No problem. Thank you. So, Salveen, it’s a great question. And frankly speaking, the profile -- the potential profile of PADCEV given into the bladder could be an excellent one for the following reasons: Firstly, Nectin-4 is expressed stable across all of the disease states. So we have as much Nectin-4 expression in this very early superficial bladder cancer patient population as we would have in metastatic disease. Secondly, when we instill PADCEV in its current formulation into the bladder, we saw this both pre-clinically and of course, we’ll share some data clinically when we are able, but we had no preclinical systemic exposure. So the profile, the tolerability and safety profile of PADCEV may look a little bit more favorable potentially than with systemic administration. Secondly, we showed in an orthotopic bladder cancer model that we could, in fact, by giving PADCEV into the bladder sort of in direct contact with the tumor impact and have an antitumor effect. So, I think we’re optimistic. We’re excited actually about the opportunity. And obviously, we’ll be sharing that information such as we have, later in the year. We are starting in the place where almost everyone does begin, which is with a BCG-unresponsive population. So, these are folks who fail standard therapy. In terms of what could a registration path look like, what could the hurdle look like? I think that has already been defined for that population. And there is some FDA guidance with regard to what type of endpoints, things like complete response rates with CIS type disease. But we’re still in the exploratory phase. But we do see -- we can see a path forward for the BCG-unresponsive and frankly, for a broader population as well as there are other drugs that are being developed in this space.

Operator: Next question comes from Matthew Harrison from Morgan Stanley.

Matthew Harrison: I was just wondering, I know obviously, guidance doesn’t include the potential impact from Cohort K, but I was wondering if you could just provide maybe some broader commentary on how you think about the ramp if you are to receive accelerated approval in that setting? And any factors that you think could influence the trajectory in the second half of this year? Thanks.

David Epstein: Hey Matthew, thanks for mentioning that our guidance does not include Cohort K for 2023. I just want to say the review is going well. And I think once we have the guidance and we see the label, we will be able to update people. And it’s likely to be pretty meaningful in terms of incremental sales during the course of the year. I think I’m going to turn it over to Chip now. If you can give any color on uptake without going into too much specifics, because I think we’re going to hold a lot of that until we see the final label.

Chip Romp: Yes, sure. Thanks, David. So I would add just a couple of comments. We have an established presence in this marketplace. In the second-line setting PADCEV is now the standard of care. So we have good insight into this space and have the capability of continuing to grow the brand into the frontline setting. The market itself is substantially larger than the current label that we have. In fact, it would probably be the largest commercial label that we would have, similar label we would have to date. And if you look at it by the numbers, it’s about 20,000 patients with about 18,000 of those drug treated and about half of those, which are cisplatin-ineligible. And so, this is a real meaningful opportunity for the teams.

Operator: Our next question comes from Jessica Fye from JP Morgan.

Jessica Fye: For PADCEV, can you talk about how much growth you see remaining in the U.S. in the existing approved indications? Recognize that you’re obviously embedding growth for the product this year. But I guess I’m talking about ultimately how close are you to fully penetrating the late line opportunity?

David Epstein: Thanks, Jess. So, the brand will continue to grow in the existing indications, albeit at a slower rate. The big opportunities are going to be moving up into earlier lines of therapy.

Operator: Our next question comes from Jay Olson from Oppenheimer.

Jay Olson: Maybe I’ll shift gears over to HER2-positive breast cancer. Can you just talk about your latest thoughts on the competitive landscape especially with regards to HER2? And also, how do you expect DV to differentiate from HER2 as well? And then also maybe any perspective on TUKYSA in terms of the competitive landscape? Thank you.

David Epstein: Hey Jay, it’s David. So I’ll give some introductory color, then I’m going to ask Roger and Chip to add to that. Clearly, the breast center market is pretty dynamic right now. The introduction of in HER2, which is a very good drug, has shaken things up a bit. People seem to get durable responses on that medicine. And it causes drug developers to think carefully about how they would bring additional or perhaps even still better drugs into that marketplace. In the case of DV, my initial thinking, and Roger will add some more, is that there’s an opportunity to come in behind in HER2, largely because we have a different payload and a very good drug. And as you know, breast cancer patients will go through multiple lines of therapy during the course of their treatment. In the case of TUKYSA, where we’re differentiated as a small molecule with really good data and benefit in patients with brain metastases, our strategy there is to, as you know, combine TUKYSA with other drugs, we have a trial underway which we’ll report out in the not-too-distant future, combining TUKYSA with Kadcyla. Kadcyla, that will then expand, perhaps roughly double the size of the patient population that would be eligible for TUKYSA Kadcyla containing regimen. If you think of TUKYSA as currently a brain mets drug, Kadcyla being used really for visceral mets and now a doctor use a combination to treat that entire set of patients. But that gives you just some color. It’s one of the more difficult markets to forecast at the moment, but we can chat some more about that. Roger, do you want to add anything about it from a clinical standpoint?

Roger Dansey: I would just add, David, I think, again, agreeing with your statements and HER2 is a great drug, it’s making a difference. It’s actually defined a population in breast cancer that is sort of previously not defined, which is a HER2-low population. And we’re excited about DV. And having that defined population ahead of us, we see an opportunity. Once patients have gone to a sort of chemotherapy-based type of therapy, I don’t think we see any difficulty with physicians and patients accepting that they could go from one ADC to another, as you point out, there are different payloads. And we have a different antibody. Ours is not trastuzumab. It’s a proprietary antibody directed against HER2. So, we’re still working on those development plans. And I would also point out that -- and we believe this pretty strongly, one of the hallmarks perhaps of a vedotin-based ADC is in the context of an immunotherapy like a PD-1 inhibitor, we believe we may potentially have a leg up, where that combination, as you can see with our PADCEV KEYTRUDA data really has an impactful outcome. And so, any development plans we think about for DV, we think about the possibility of combining with a PD-1 inhibitor. And as you mentioned, we have tucatinib as well. And so combining those assets also in our plans.

Operator: Our next question comes from Steven Willey from Stifel.

Steven Willey: I guess just on B6A, I know that you’re talking to an update in the first half of this year. I think you’re kind of emphasizing durability of responses that have been observed to date. But should we expect any additional dose expansion data along with that update? And to what extent does the dose that you’ve selected for dose expansion in head and neck inform the dosing schedule that you want to take forward into lung? Thanks.

David Epstein: So, Stephen, let me start, and then I’ll ask Roger to follow up and more specifically answer your question. Let me just say, we have a lot of experience in this company with vedotin ADCs. So, when we see early data across different dosing cohorts in the disease, we have a pretty good read. It’s not full proof, but a pretty good read on where our product is likely to go. And let me just say, B6A is shaping up to become a transformative asset for this company. We’re very excited about it. There will be data cuts later this year, which we’ll be sharing. Roger, any more thoughts?

Roger Dansey: So, it’s a great question. And obviously, I think we’ll hold the details until we get you present. But what I would say in general is that we will land on one dosing schedule regardless of the disease. So the cross information or the flow of information from one expansion cohort to the other is a coordinated event in terms of us trying to land on what we consider to be an optimized dosing schedule. And as David said, we look forward to sharing durability data and there’s potential for further data cuts in the year as well.

Operator: Our next question comes from Geoff Meacham from Bank of America.

Unidentified Analyst: Good afternoon. This is Hao calling in for Geoff Meacham. Thank you for the question. So, I think my question is related to ADCETRIS. So again, a very strong quarter. I think you cited about price, COVID and penetration, the momentum there. Just wanted to get a sense about how does this -- you see in 2023? Do you see that sort of trend to continue in 2023?

David Epstein: Let me just say, in Todd’s commentary, we mentioned that this product will become a blockbuster in our territories, which is the U.S. and Canada. Typically, when brands start to accelerate because of new labels and new guidelines, they maintain that acceleration for a period of time. So, our thinking about ‘23 will be another strong year for the brand.

Operator: Our next question comes from Gregory Renza from RBC Capital Markets.

Gregory Renza: Great. Thank you very much for taking question. And congrats on the quarter and the progress so far. David and team, just maybe a question and a request for your renewed thoughts on really the path to profitability. Just curious as you have prioritized certainly the pipeline programs doubling down on the commercial portfolio, how you think about the investments that you’re committing to and just that ramp there as it relates to looking at these early programs that you believe have a high probability or a better probability of success as it pertains to looking at profitability? Thanks so much.

David Epstein: Yes. So, I’ll start and then Todd will follow up. I mean, the short answer is in the JPMorgan meeting, healthcare conference meeting and in this call, we’re highlighting three global or near globally owned assets, each of which can be a blockbuster. And just to put that into context for you, non-small cell lung cancer for B6A is a market that’s, call it, 6 times the size in terms of epi than the first line PADCEV bladder cancer market. So, we’re talking about really tremendous opportunities for our company. So, the way I think about these things is our first priority is to invest adequately in terms of having the breadth of pivotal trials necessary to capture those huge upsides. Obviously, we’re very thoughtful about how we spend our cash, balance sheet is strong. And when we do get the profitability, I would suspect it’s not going to be eking out minor profits but would be profits that really matter, they would become substantial. Anything you’d want to add, Todd?

Todd Simpson: Maybe just one thing. Thanks, Greg, for the question. If you -- this is first all a question that we’ve gotten for a long time, and it’s a good question, it’s one we steer out. I think our strategy continues to be investing in our portfolio and our platforms to bring more meaningful drugs to patients in need. And I think if you just look at last year’s print, we -- our revenues were up about 25% for the quarter and the year. When you look at the ‘23 guide, even excluding Cohort K, we’re up about 15%, and this brings our total revenues to $2.25 billion just about. So I think that’s an illustration of how successful we think the strategy has been. With that in mind, we’ve got an amazingly broad and deep pipeline to continue investing in. You heard a little bit on the call today about programs like B6A and DV and B7H4. These are drugs that address meaningful solid tumor populations and their assets that for all intents and purposes are wholly owned by Seagen. So, we think those are the types of assets that make a lot of sense for us to invest in and invest in heavily to really continue to drive the growth and the success that we’ve had today.

David Epstein: I think just to add to that in another way, I think what Todd just told you was we could get profitable pretty soon if we wanted to, but we would be cutting off our future, which is much more exciting than where we are today.

Todd Simpson: Agree.

Operator: Our next question comes from Michael Schmidt from Guggenheim Securities.

Yige Guo: This is Yige on for Michael. Thanks for taking our questions. One question on PADCEV. You previously reported medium treatment duration of 11 cycles for PADCEV KEYTRUDA combo in Cohort K. Is that a good modeling assumption for PADCEV duration in first-line cis-ineligible patients in clinical practice post approval, as we are nearing the PDUFA date in April? And how could this number still change with longer follow-up as there were still roughly one-third of the patients still on treatment by the last data cutoff? Thank you.

David Epstein: Yes. So, we are very excited about this upcoming FDA decision with the April PDUFA date. I’m going to ask Chip to try to give you a little bit of thinking about how long we think patients might be on therapy. One thing I would say to you is that they will be on therapy longer in the front-line setting than in the second-line setting in part because these patients are generally healthier, in part because the dose density is probably a little bit less, and all told patients should do better when this drug is combined with KEYTRUDA, given the synergies that we see between vedotin and anti-PD1. Chip, any more thinking you’d want to add?

Chip Romp: Yes. Sure, David. I think it’s just important to note we don’t have a label yet. So certain details on this could change. But our general thinking with regard to the clinical trial experience we have is that we would expect to see a longer duration than what we do in second line. The duration in frontline, we think is going to be somewhere closer to 7 months. As David mentioned, it’s a little bit less of a dose dense regimen on a monthly basis, and the patients are also generally speaking, a little bit fitter. So, we think that’s kind of what we’re looking towards.

Operator: Our next question comes from Andy Hsieh from William Blair.

Andy Hsieh: David, congrats. Great to hear from you. So, I am just curious about the biology and underlying clinical characteristics of first-line cisplatin-ineligible patients versus, let’s say, second or third line as you enroll in the EV-301 or the initial accelerated approval? I’m just curious, is it beyond the realm of possibility to receive a broad label as the FDA review the PADCEV in front-line UC?

David Epstein: So, I’m going to put this one to Roger. Let me just say -- you gave me a nice opening there, complement. Let me just say that I’m really happy to be at Seagen. I’m about three months in right now, I’m even more bullish on the future of this company, and you heard some of that in the call. We have strong in-line growth, B6A is shaping up to be a transformative asset, leading position in bladder cancer. And although we haven’t been asked yet, we have a discovery team that’s getting ready to file this year IND with the campto payload. So, this company is really on the move. Now for your specific question, Roger, what do you think?

Roger Dansey: Hey Andy, thanks. It’s an interesting question. I think our view is essentially, we get -- we hope we get what we ask for. As David said, the review is going well. The population is well defined as cis-ineligible based on characteristics of things like renal dysfunction and hearing loss. And we have, right behind it, EV-302, which we’ve signaled we may -- will have top line data sometime in this year, towards the end of the year perhaps. So I think although it would be fantastic, I think it would be very unlikely. My personal view is if we’re successful, the likely outcome is the label will reflect the population we studied, which is cis-ineligible patients.

Operator: Our next question comes from Joe Catanzaro from Piper Sandler.

Joe Catanzaro: Hey guys. Thanks for taking my question. And congrats on the progress. So Roger, you just mentioned EV-302. With enrollment now complete, I was wondering if you had any visibility into the extent of avelumab maintenance usage in the control arm and how you think about how that may impact the potential performance of the control arm in that study.

David Epstein: Roger?

Roger Dansey: Yes, Sure. Thanks, Joe, for the question. So just to give you a little bit of history, if you recall, avelumab went through its approval process as we were rolling out EV-302. And it is obviously part of the care of patients with frontline disease, provided they have either a response -- complete response, partial response or have disease control, meaningful disease control. And so the population that actually gets avelumab relatively restricted compared to the population that we’re looking at on EV-302. Nonetheless, they will be used. I can’t share with you what that level will be. It is a global trial. So, EV-302 has been conducted around the world. And if physicians on the control arm consider that avelumab should be used, well then that likely will happen. So I can say there is avelumab use, I just can’t give you any more detail as to how much. With regard to the outcome, I mean, obviously, the trial itself will demonstrate in the end what the value in terms of things like overall survival and progression-free survival is with PADCEV and KEYTRUDA. I would remind you, we have done -- although there are single-arm experiments, we have done two experiments through the form of Cohort A and Cohort K in a population of cis-ineligible patients that are generally perhaps not as well as an older than cisplatin-eligible patients. And the survival curves they’ve generated from there give us optimism and confidence that if we repeat that type of outcome in the context of a broad global trial, which includes all of these different populations and a degree of avelumab use, I mean, again, we have -- we’re optimistic. We’re excited about the combination. Until the trial reads out, I can’t tell you what the results will be. But I think we have a good shot of the positive outcome.

Operator: Our next question comes from Andrew Berens from SVB Securities.

Andrew Berens: I know you’re not able to promote first-line for PADCEV until you get a label, but I’m just wondering if you’re already seeing some usage following the presentation of the data set. Some of our doc checks suggest that they’re already using it in the first line already. And then, I just was wondering if you could -- you mentioned developing some novel ADC technologies. Wondering if you could let us peak under the covers and see if you can give us an idea of what you’re looking at?

David Epstein: So, first, I’ll just ask Chip any sense of whether or not PADCEV may be already used in the first-line bladder cancer setting?

Chip Romp: Yes. So that would be organic. We don’t promote to that, obviously. But there’s been a little bit, but not much. It’s minimal right now.

David Epstein: And then you asked for -- to hear a little bit more about our discovery efforts. At JPMorgan, we talked about multiple waves of therapies and technologies. And we were, I would say, purposely superficial so as to not give too much away. I indicated in one of my answers already earlier today that we are filing our first campto-based payload INDs. So, that’s certainly one area will be coming in the very near term. We have a number of other proprietary targets that we think will be particularly suitable for our current vedotin technology. And then, I’ll go a little further and just say we are now working on what we believe could be better linkers as well as payloads that are quite different from anything you’ve seen so far. There’s quite an expertise into our discovery group. Roger, as you know, recently became Head of R&D and we’re working to prioritize where we focus. There’s actually many, many opportunities, and we’re going through the process of now choosing the assets, which we will heavy up on the resources to get them into the clinic.

Andrew Berens: Great. I appreciate it. And congrats again.

Todd Simpson: Thanks, Andy. I think we have time for one-- maybe one more question. Operator?

Operator: Our next question comes from Dane Leone from Raymond James.

Dane Leone: One for me, if you will. With regards to the readout that we could expect of HER2CLIMB-02, it’s interesting, it’s obviously a larger study, well-controlled, signal of the benefit of tucatinib with trastuzumab amazing. And the question that I think a lot of people have is what are the actual expectations statistically that your team put in place to tease out a PFS signal in this study. And is your expectation that that PFS benefit would come primarily from tucatinib’s ability to address brain mets and progression on intracranial disease, or is your team ultimately looking for a bigger PFS hurdle more broadly from the synergy of the two agents?

David Epstein: Hey Roger, do you want to start on that one?

Roger Dansey: Yes. It’s an interesting question. Just to remind you or sort of set the scene for you on HER2CLIMB-02, it has the same essential design elements as HER2CLIMB. And importantly, for this population, obviously, Kadcyla is a well-known drug, it is used in second-line and plus, and as David said, focusing on metastatic disease. But as we did with HER2CLIMB, the eligibility criteria allow patients with brain mets, either controlled or active. And so, we expect to have a meaningful number of patients with brain metastases in HER2CLIMB, obviously, as we did in -- in HER2CLIMB-02 as we did in HER2CLIMB. With regard to assumptions around treatment effect, just to remind you again of the design, this is a simple add-on design. So, this is the addition of tucatinib to Kadcyla. And so, any benefits of tucatinib accrues, I think, will be pretty evident. I can’t share with you specific assumptions. But we are looking for all of the above. You mentioned, are we looking for treatment effects in a broad population? Yes. Are we looking for meaningful treatment effects in a subset of patients with brain metastases? The answer is yes. And I think we see the potential for tucatinib instead of being an all decision for physicians, if a trial is positive and the results are meaningful, physicians will and patients be able to make the decision if Kadcyla is part of the treatment plan to add tucatinib to that combination.

David Epstein: Great. So thanks, Roger. Let me just conclude by saying this is going to be a very exciting year for us, many data and regulatory milestones. I’m thrilled to be here, and I thank you for all the attention you’re paying to our company. With that, we’ll close the call.

Operator: Ladies and gentlemen, with that, we’ll conclude today’s conference call and presentation. We do thank you for joining. You may now disconnect your lines.