Shares of Seattle Genetics, Inc. (SGEN) fell 11.2% in spite of the company’s better-than-expected first quarter results. Seattle Genetics reported first quarter 2014 net loss per share of 13 cents, narrower than the Zacks Consensus Estimate of a loss of 20 cents and the year-ago loss of 14 cents per share.
Fourth quarter revenues were $68.3 million, compared with $57.3 million in the year-ago quarter. Revenues surpassed the Zacks Consensus Estimate of $64 million.
Net revenues for the first quarter included Adcetris revenues (up 14.1% to $38.7 million), collaboration and license agreement revenues (down 19.6% to $16.9 million) and royalty revenues (up 428.3% to $12.7 million). Seattle Genetics achieved multiple milestones, triggered by progress in global commercial activities, which brought in $20 million under the Adcetris collaboration with Takeda Pharma.
Research and development (R&D) expenses increased 14.2% year over year to $54.5 million due to Adcetris’ development activities and higher investment in other antibody-drug conjugate (ADC) programs. Selling, general and administrative (SG&A) expenses rose 9.7% year over year to $24.0 million.
Seattle Genetics is working on expanding Adcetris’ label. In the reported quarter, the company presented positive interim data from a phase I/II study to evaluate Adcetris in combination with Treanda for Hodgkin lymphoma (HL) patients after first relapse.
Seattle Genetics completed treatment of all patients in a phase III study, AETHERA. The study is evaluating Hodgkin lymphoma patients. Results will be out in the second half of 2014.
2014 Guidance Maintained
Seattle Genetics expects 2014 Adcetris revenues in the range of $155–$165 million.
Seattle Genetics currently carries a Zacks Rank #3 (Hold). If Adcetris sales fail to pick up from first quarter levels in the subsequent quarters, Seattle Genetics might not be able to achieve its yearly sales target for Adcetris. Though the company beat expectations in the reported quarter, investors seemed to be hoping for better Adcetris sales.