Seattle Genetics CEO Says Drug Growth Path Means No Sale
Seattle Genetics Inc. (SGEN) Chief Executive Officer Clay Siegall says he has a model for growth of the biotechnology company’s only drug, cancer treatment Adcetris: Roche Holding AG (ROG)’s $6.7 billion-seller Rituxan.
Adcetris received U.S. clearance in August for use by Hodgkin’s lymphoma patients who failed on other therapies, a smaller market than the front-line treatment the company aims for after added trials are completed in the next few years. Rituxan, approved as an initial treatment for lymphoma in 1997, took a similar path, Siegall said in a telephone interview.
Analysts expect Adcetris to reach $437 million in sales in 2015, the average of three estimates in a Bloomberg survey. The drug’s prospects have boosted the company’s shares 50 percent this year, giving the company a market value of more than $2.9 billion. That potential also makes Seattle Genetics less likely to seek a merger or be acquired now, Siegall said.
“Adcetris is a very important brand, and can become a $1 billion brand in a number of years,” Siegall said. The drugmaker has “great trajectory going forward, so it’s not a time where we feel that it’s right for the company to get sold or flipped.”
Seattle Genetics fell 1.4 percent to $24.99 at the close in New York.
Adcetris combines a cancer-targeting antibody with the cell-killing effects of chemotherapy. The drug, known chemically as brentuximab, is Seattle Genetics’ first product, and was also cleared by regulators to treat patients with a rarer cancer known as systemic anaplastic large cell lymphoma or ALCL, who had also failed previous treatments.
Hodgkin’s lymphoma will be diagnosed in an estimated 9,060 U.S. patients this year and will cause the death of about 1,190 people, according to the National Cancer Institute in Bethesda, Maryland. The disease begins in the white-blood cells and most commonly strikes people from ages 15 to 35 and older than 55.
Roche’s Genentech unit “also initially got approved in one type of low-grade lymphoma, and then got approved in a variety of different aggressive and high grade lymphomas, and even some other non-lymphomas,” Siegall said.
Half of the 14 analysts in a Bloomberg survey recommend purchasing Seattle Genetics shares, with three rating them a sell.
“Despite the limited number of patients, we believe that the drug also has substantial opportunity,” beyond its current regulatory clearance, Mani Mohindru, an analyst with Think Equity LLC in New York, wrote in a note to clients on July 5.
Roche is based in Basel, Switzerland.
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