CEO Clay Siegall addresses Adcetris guidance shortfalls during his introductory remarks, an unusual step:
- Says sales of Adcetris will be "relatively flat" in 2013, though specific guidance will be shared in the 4Q call early next year. ("Flat" refers to "on-label U.S. sales," Siegall adds later. "We are certainly aware of some off-label use of Adcetris. We certainly do not promote [that].")
- Says he still expects Adcetris to become "a blockbuster drug." Label expansion is the name of the game here.
Later, from Siegall and other executives:
- Why the step downs in sales and guidance? Siegall basically says they are newbies at this sort of thing.
"We are trying to make sure we provide the kind of guidance we will actually fall into," he said. "This is actually the first full year of guidance.... As we said early in the year, we were guiding for flat sales and that's clearly where we're still at.
"Adcetris is really a great drug," he said. "It's helping a lot of patients. It's ultimately going to be a global brand, a billion-dollar [per year] brand, but it's going to take some time to get there.... We want to be as accurate as we can with the guidance."
- Emphasizes and reiterates high hopes for eventual Adcetris use in frontline applications. Reiterates high expectations for "substantial data" to be released in ASH reports next month.
- 180 new accounts for Adcetris during 3Q, but average number of orders per account and average size of each order decreased slightly. Overall awareness of Adcetris and customer satisfaction continues to grow.
- Duration of Adcetris use is shorter than it was during the trials. (This is a major factor in their guidance shortfalls.) Siegall ducks a question related to specific duration, but suggests, as he has in the past, that doctors may be taking patients off Adcetris a little too soon - or patients are taking themselves off it too soon - because it appears to be so effective so quickly.
- Lots of detail on when data is expected from numerous ongoing Adcetris trials. (Makes me sleepy. If interested, go to the recorded call and skip to the 17 -minute mark.)
- Upbeat discussion of SGEN's new and improved ADC technology.
- SGEN has generated more than $200 million in milestone payments and ultimately could reap billions from milestones and royalties.
- New trials for new products during coming months.
Other stuff in there, but I think I have all or most of the highlights here. As always, I recommend that you listen to the replay.
Thank you Red You always do a great job surmising what's important.
I can't figure why anyone would walk away from the CC with a sell? They must have been in a different meeting.
Just the fact that it shows anti-tumor activity in 20-25% of DLBCL should have sent the stock soaring. This expands potential here by 300%. Those patients get r-chop now. With Roche advancing CD22 and CD79 with Rituxn in the DLBCL population should give people a hint that CD30 with R may be achievable before those drugs are approved. Sgen will have a part in all of those.
100mil in milestones just in q4 seems to be overlooked entirely by those looking at the short term sales data. That 100mil makes free cash flow soar. All good news here.
As for guidance. What did people expect. They have to keep guidance in line with the label. To do anything else would be wrong. They missed the 2013 potential for expansion and Canada is coming very soon.
Also to hear multi billion used in reference to peak sales doubles previous estimates.
My estimate which originally was 500mil peak sales 3years ago and 1bill early this year is now 2.5bil. and a 2018 share price of $200.
I been wrong many times.
It couldn't have been any clearer that it is only the on label revenue that will remain flat, but all it takes is some reading of the upcoming ASH abstracts to show that significant label expansion will be a given in the not too distant future, especially with DLBCL and AITL.
What will really make this company soar is another drug in the pipeline. Watch out for SGN-CD33A. Very impressive pre clinical data, especially when compared with the already FDA approved Mylorg for AML. Of course Mylotarg was ultimately withdrawn due to toxicity concerns, but the SGN-CD33A shows much more potent activity at much less dosage levels than with Mylorg.
Another very interesting abstract from ASH is the potential use of Adcetris with epigenetic agents. Apparently these agents are able to deactivate the genes that are responsible for repressing CD 30 expression. This "de-repression" basically results in CD 30 expression and making the cancer amenable to Adcetris.
Long and still very strong. Hey, Rituxin was only a 100M drug the first year of sales. It took 5 years to become a billion dollar drug. Now it's 2.5 B. This doesn't happen over night.
Speaking of Rituxan, there was also a recent pilot study result combining Rit and Dacetuzumab, SGN 40, that showed excellant results in DLBCL. 47% ORR and quite a few CR's. Published in Sept.. Rebirth of SGN 40 for relapsed refractory NHL with Rituxin, and then Adcetris will handle all the CD 30 expressing DLBCLs, approx. 25% of all DLBCL.
Thanks from here also Red. We all knew that there wasn't a huge market for the indication that it was approved for so no real disappointment for me. We just have to wait for new indications. Like you said, it may take a while. I don't have all my eggs in this basket so I'm OK to wait for it to happen.
My pleasure, Brut. And I'm with you - bottom line: It's a company and it's a stock. Sometimes things go as expected for a company, sometimes not. Sometimes the stock goes up, sometimes it goes down. But if the fundamentals of the company and the stock are good, we will prosper in the long run, and I am absolutely convinced that this is the case with SGEN.
Thanks Red for your usual great recap. I did note that some where toward the end Clay actually used the term "multi"billion in referring to Adcetris. Not that this means anything, of course, and maybe it was just a tongue cramp, but he sure was positive about the overall longer term (how long not sure) prospects.
Regarding their sales management, I've said this now since they made the sales executive leadership change earlier in the year ( a couple of CCs ago), but I still feel it listening to this CC - I continue to be uncomfortable with a marketing guy leading their sales efforts (Chris). He presents his info and responds to questions just as I would expect from a marketing person. For me he has yet to demonstrate the drive necessary for sales. Too much analysis, not enough making it happen. On both the market penetration (which at 60% would seem to be pretty good at this stage - but can anyone understand what he and Clay were trying to say in response to the q's related to market penetration growth? It was like "incidence is just what we expected, we have room to increase market penetration above 60%, and sales will remain flat". ??? I don't get it. On duration, Chris just doesn't come across as really juiced on this issue. I understand about what they say is the challenge with duration (and I'm guessing that if the trials were around 10 they are somewhere around 5 or 6 in commercialization), and I understand from their comments that they believe the trial proven duration (and label approved duration) should be followed for the best and most secure health benefit of the patient, but I just don't get that they translate this need to educate the docs into a powerful sales game plan. I don't think I'm alone on this given the number of q's on the subject.