Seattle Genetics, Inc.
's shares (
) gained 4.8% following the release of second-quarter 2014 results.
Seattle Genetics reported second-quarter loss per share of 14
cents, narrower than the Zacks Consensus Estimate of a loss of 22
cents but wider than the year-ago loss of 6 cents per share.
Seattle Genetics, Inc - Earnings Surprise |
In the reported quarter, revenues declined 7.1% from the
year-ago quarter to $68.3 million. Revenues, however, surpassed the
Zacks Consensus Estimate of $65 million. The year-over-year
decrease in revenues was mainly due to a decline in collaboration
The Quarter in Detail
Total revenue comprised product revenues, collaboration and license
agreement revenues and royalties. Adcetris, the only marketed
product at Seattle Genetics, generated revenues of $44.8 million
(in the U.S. and Canada), up 25.3% year over year. This increase
was due to higher demand in the approved indications (relapsed
Hodgkin lymphoma or relapsed systemic anaplastic large cell
lymphoma) as well as physicians' prescriptions in areas other than
Collaboration and license agreement revenues and royalty revenues
were $16.2 million (down 52.8%) and $7.3 million (up 107.2%),
Research and development (R&D) expenses increased 2.7% year
over year to $53.7 million due to Adcetris' development activities
and higher investment in other antibody-drug conjugate (ADC)
programs. Selling, general and administrative (SG&A) expenses
increased 8.5% year over year to $25.5 million.
Seattle Genetics and partner Takeda Pharmaceutical (
) are working on expanding Adcetris' label. Adcetris is currently
in four phase III studies, including AETHERA (post-transplant
Hodgkin lymphoma), ECHELON-1 (frontline therapy in patients with
advanced classical Hodgkin lymphoma), ECHELON-2 (newly diagnosed
CD30-positive mature T-cell lymphoma) and ALCANZA (CD30-positive
cutaneous T-cell lymphoma). Top line data from the AETHERA study
should be out by Oct 2014. Positive results would allow the company
to go ahead with the filing of a supplemental biologics license
application in the U.S. in the first half of 2015.
Additionally, Seattle Genetics is developing five antibody-drug
conjugates (ADCs) - SGN-CD19A, SGN-CD33A, SGN-LIV1A, ASG-22ME, and
Adcetris Revenue Outlook Raised
Seattle Genetics increased its 2014 revenue guidance for Adcetris
to the range of $160 million-$170 million (previous guidance: $155
million-$165 million). The company also reduced 2014 R&D
expense guidance to the range of $235 million−$250 million.
Seattle Genetics depends on Adcetris significantly for growth.
Although Adcetris performed well in the reported quarter, the
company expects sales to fluctuate on a quarter-over-quarter basis.
Seattle Genetics currently carries a Zacks Rank #2 (Buy). Some
better-ranked stocks in the health care sector are Actelion Ltd. (
) and Enzo Biochem Inc. (
). Both stocks carry a Zacks Rank #1 (Strong Buy).
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