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Seattle Genetics Reports Third Quarter 2012 Financial Results



  Seattle Genetics Reports Third Quarter 2012 Financial Results

 -ADCETRIS^® Net Product Sales of $33.7 Million in the Third Quarter of 2012
                   and $102.8 Million Year-to-Date in 2012-

-Multiple ADCETRIS Data Presentations Planned for ASH from Clinical Trials in
                  Broad Range of CD30-Positive Malignancies-

                   -Conference call today at 4:30 p.m. ET-

Business Wire

BOTHELL, Wash. -- November 07, 2012

Seattle Genetics, Inc. (Nasdaq:SGEN) today reported financial results for the
third quarter and nine months ended September 30, 2012. The company also
highlighted ADCETRIS (brentuximab vedotin) commercialization and clinical
development activities, antibody-drug conjugate (ADC) pipeline and
collaborator progress and upcoming milestones.

“Through significant commercial, regulatory and clinical development efforts
we are continuing to bring ADCETRIS to patients, expanding into other
territories under our collaboration with Millennium/Takeda, and advancing the
evaluation of ADCETRIS into earlier lines of therapy and other CD30-positive
malignancies,” said Clay B. Siegall, Ph.D., President and Chief Executive
Officer at Seattle Genetics. “At the upcoming American Society of Hematology
(ASH) annual meeting in December, there will be more than a dozen data
presentations by Seattle Genetics and investigators highlighting the
evaluation of ADCETRIS in numerous lymphoma types. In addition, at ASH we will
introduce our lead preclinical program, SGN-CD33A, which employs our next
generation ADC technology, and we expect multiple data presentations by our
ADC collaborators. The substantial progress with ADCETRIS and our other
pipeline programs, as well as by our collaborators reinforces our ADC
leadership position as we strive to change the way cancer is treated.”

Recent ADCETRIS Highlights

  * Announced that Takeda Pharmaceutical Company Limited and Millennium: The
    Takeda Oncology Company received European Commission conditional marketing
    authorization for ADCETRIS for relapsed or refractory CD30-positive
    Hodgkin lymphoma (HL) and relapsed or refractory systemic anaplastic large
    cell lymphoma (sALCL). The approvals triggered milestone payments to
    Seattle Genetics totaling $25 million.
  * In collaboration with Millennium, initiated a global phase III clinical
    trial of ADCETRIS in combination with chemotherapy for front-line advanced
    HL. The trial is being conducted under a Special Protocol Assessment (SPA)
    agreement with the U.S. Food and Drug Administration (FDA) and scientific
    advice from the European Medicines Agency.
  * Received an SPA agreement from the FDA supporting the design of a planned
    phase III clinical trial in front-line mature T-cell lymphomas.
  * Announced the completion of patient enrollment in a phase III clinical
    trial for post-transplant HL patients. The phase III trial, also known as
    the AETHERA trial, is evaluating ADCETRIS versus placebo for the treatment
    of patients at high risk of residual Hodgkin lymphoma following autologous
    stem cell transplant (ASCT).
  * Initiated a phase II trial in front-line Hodgkin lymphoma patients age 60
    or older. The trial is designed to assess the efficacy and tolerability of
    single-agent ADCETRIS for patients who have received no prior treatment.
  * Supported initiation of an investigator-sponsored trial (IST) designed to
    evaluate ADCETRIS in the treatment of diffuse large B-cell lymphoma. A
    total of 11 ADCETRIS ISTs are ongoing.

ADC Collaborator Progress

  * Expanded our ADC collaboration with Abbott, generating an upfront payment
    to Seattle Genetics of $25 million. In addition, Seattle Genetics may
    receive up to $220 million in potential milestone payments per additional
    target upon achieving predetermined development and commercial objectives,
    as well as mid-to-high single-digit royalties on worldwide net sales of
    any resulting products under the multi-target collaboration.
  * Achieved milestone payments under our ADC collaboration with Genentech, a
    member of the Roche Group, triggered by Genentech’s advancement of two
    ADCs utilizing Seattle Genetics technology into phase II clinical
    development.
  * Achieved a milestone under our ADC collaboration with Abbott triggered by
    Abbott’s initiation of a phase I clinical trial of an ADC utilizing
    Seattle Genetics technology for patients with squamous cell tumors.
  * Achieved a milestone under our ADC collaboration with Progenics triggered
    by Progenics’ initiation of a phase II clinical trial of an ADC targeted
    to PSMA for patients with prostate cancer.

Other Recent Highlights

  * Initiated a phase I trial of SGN-75 in combination with everolimus, an
    mTOR inhibitor, for advanced metastatic renal cell carcinoma.
  * Submitted to the FDA an investigational new drug application for
    SGN-CD19A, a CD19-targeted ADC. Phase I trials are expected to begin by
    early 2013.
  * Named Samuel Yonren, M.D., as Vice President, Drug Safety.

Upcoming Milestones

  * Multiple clinical data presentations on ADCETRIS and ADC collaborator
    programs, as well as preclinical data on SGN-CD33A using the company’s
    next generation ADC technology will be presented at the ASH annual meeting
    being held December 8-11, 2012 in Atlanta, GA.
  * Initiating a phase III clinical trial of ADCETRIS in front-line mature
    T-cell lymphomas, including sALCL, by late 2012 or early 2013.
  * Anticipating a review decision from Health Canada in early 2013 for
    ADCETRIS in relapsed HL and sALCL.
  * Initiating a phase I/II clinical trial of ADCETRIS in combination with
    bendamustine for second-line HL patients by late 2012.
  * Initiating phase I trials of SGN-CD19A, a CD19-targeted ADC, by early
    2013. One trial is planned in acute lymphocytic leukemia and one in B-cell
    non-Hodgkin lymphomas.

Third Quarter and First Nine Months 2012 Financial Results

Total revenues in the third quarter of 2012 were $49.8 million, compared to
$20.7 million in the third quarter of 2011. Total revenues for the nine month
period ended September 30, 2012 were $146.9 million, compared to $45.9 million
in 2011. Revenues in 2012 include ADCETRIS net product sales of $33.7 million
in the third quarter and $102.8 million for the year to date. In addition,
revenues include ADCETRIS royalty revenues of $1.7 million in the third
quarter and $2.9 million for the year to date related to sales of ADCETRIS by
Millennium under its international named patient program. Revenues also
reflect amounts earned under the company’s ADCETRIS and ADC collaborations
totaling $14.5 million in the third quarter of 2012 and $41.1 million for the
year to date.

Total costs and expenses for the third quarter of 2012 were $63.6 million,
compared to $61.6 million for the third quarter of 2011. For the first nine
months of 2012, total costs and expenses were $193.4 million, compared to
$171.6 million in the first nine months of 2011. The planned increases in 2012
costs and expenses were primarily driven by ADCETRIS commercialization
activities, cost of sales and research and development of the company’s other
ADC pipeline programs.

Under the ADCETRIS collaboration with Millennium, development costs incurred
by Seattle Genetics are included in research and development expense. Joint
development costs are co-funded by Millennium on a 50:50 basis. Reimbursement
payments received from Millennium are recognized as revenue over the
development period of the collaboration along with other development payments
received, including the upfront payment and milestone payments. Seattle
Genetics co-funds development activities performed by Millennium under the
collaboration, which reduces the amount of reimbursement payments received
from Millennium.

Non-cash, share-based compensation expense for the first nine months of 2012
was $17.9 million, compared to $14.0 million in the first nine months of 2011.

Net loss for the third quarter of 2012 was $13.7 million, or $0.12 per share,
compared to a net loss of $40.7 million, or $0.35 per share, for the third
quarter of 2011. For the nine months ended September 30, 2012, net loss was
$43.2 million, or $0.37 per share, compared to a net loss of $124.9 million,
or $1.11 per share, for the same period in 2011.

As of September 30, 2012, Seattle Genetics had $313.9 million in cash, cash
equivalents and investments, compared to $330.7 million as of December 31,
2011.

2012 Revenue Outlook

Seattle Genetics now anticipates that revenues from ADCETRIS net product sales
will be in the range of $132 million to $137 million in 2012.

Conference Call Details

Seattle Genetics’ management will host a conference call and webcast to
discuss the financial results and provide an update on business activities.
The event will be held today at 1:30 p.m. Pacific Time (PT); 4:30 p.m. Eastern
Time (ET). The live event will be available from Seattle Genetics’ website at
www.seattlegenetics.com, under the Investors and News section, or by calling
(866) 225-8754 (domestic) or (480) 629-9866 (international). The access code
is 4570300. A replay of the discussion will be available beginning at
approximately 3:30 p.m. PT today from Seattle Genetics’ website or by calling
(800) 406-7325 (domestic) or (303) 590-3030 (international), using access code
4570300. The telephone replay will be available until 4:00 p.m. PT on Friday,
November 9, 2012.

About Seattle Genetics

Seattle Genetics is a biotechnology company focused on the development and
commercialization of monoclonal antibody-based therapies for the treatment of
cancer. The FDA granted accelerated approval of ADCETRIS in August 2011 for
two indications. ADCETRIS is being developed in collaboration with Millennium:
The Takeda Oncology Company. In addition, Seattle Genetics has three other
clinical-stage ADC programs: SGN-75, ASG-5ME and ASG-22ME. Seattle Genetics
has collaborations for its ADC technology with a number of leading
biotechnology and pharmaceutical companies, including Abbott, Agensys (an
affiliate of Astellas), Bayer, Celldex Therapeutics, Daiichi Sankyo,
Genentech, GlaxoSmithKline, Millennium, Pfizer and Progenics, as well as ADC
co-development agreements with Agensys and Genmab. More information can be
found at www.seattlegenetics.com.

Certain of the statements made in this press release are forward looking, such
as those, among others, relating to the company’s expectations for initiation
of future clinical trials, data availability from ongoing clinical trials,
expectations for additional regulatory approvals and expectations for revenue
and expenses for the year 2012. 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 sales of ADCETRIS
may not be as expected or expenses may exceed current projections. We may also
be delayed in our planned trial initiations and regulatory submissions and
approvals for reasons outside of our control. We may also fail to receive
milestone payments under our collaborations. In addition, if we do not meet
our financial guidance or the expectations of analysts or investors, our stock
price may be adversely impacted. More information about the risks and
uncertainties faced by Seattle Genetics is contained in the company’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed
with the Securities and Exchange Commission. Seattle Genetics disclaims any
intention or obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

 
Seattle Genetics, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
 
                                             September 30,   December 31,
                                             2012            2011
Assets
Cash, cash equivalents, and investments      $   313,934     $   330,696
Other assets                                     101,396         94,520
Total assets                                 $   415,330     $   425,216
                                                              
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities     $   42,525      $   53,048
Deferred revenue and long-term liabilities       150,229         153,319
Stockholders' equity                             222,576         218,849
Total liabilities and stockholders' equity   $   415,330     $   425,216
 

 
Seattle Genetics, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
 
                        Three months ended          Nine months ended
                        September 30,               September 30,
                        2012          2011          2012          2011
Revenues
Net product sales       $ 33,658      $ 10,047      $ 102,845     $ 10,047
Collaboration and
license agreement         14,476        10,619        41,119        35,844
revenues
Royalty revenues          1,698         -             2,936         -         
Total revenues            49,832        20,666        146,900       45,891    
Costs and expenses
Cost of sales             2,742         724           8,808         724
Cost of royalty           613           -             1,115         -
revenues
Research and              41,392        41,080        122,634       123,157
development
Selling, general and      18,842        19,795        60,889        47,705    
administrative
Total costs and           63,589        61,599        193,446       171,586   
expenses
Loss from operations      (13,757 )     (40,933 )     (46,546 )     (125,695 )
Investment and other      105           248           3,360         830       
income, net
Net loss                $ (13,652 )   $ (40,685 )   $ (43,186 )   $ (124,865 )
                                                                   
Basic and diluted net   $ (0.12   )   $ (0.35   )   $ (0.37   )   $ (1.11    )
loss per share
                                                                   
Weighted-average
shares used in
computing basic and       118,471       114,727       117,361       112,435
diluted net loss per
share
 

Contact:

Seattle Genetics, Inc.
Investors:
Peggy Pinkston, 425-527-4160
ppinkston@seagen.com
or
Media:
Tricia Larson, 425-527-4180
tlarson@seagen.com
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