Q3 2021 Seagen Inc Earnings Call
Good afternoon, and welcome to the third quarter 2021 financial results conference call.
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Please note. This event is being recorded I would now like to turn the conference over to Peggy Pinkston, Vice President of Investor Relations. Please go ahead.
Thank you operator, and good afternoon, everyone I'm pleased to welcome you to <unk> quarter 2021 financial results Conference call.
Afternoon, we issued a press release with our results in the press release and supporting slides are available on our website in the investors section events and presentations page.
On today's call will be close to Gal, President and Chief Executive Officer, Todd Simpson, Chief Financial Officer, Chip Romp Executive Vice President commercial U S and Roger Danzy, Chief Medical Officer.
Following our prepared remarks, we'll open the line for questions. We aim to keep this call to one hour and so ask that you limit yourself to one question to get up to give everyone an opportunity to participate in Q&A during our call today.
Today's conference call will include forward looking statements regarding future or anticipated events and results, including the company's 2021 financial outlook anticipated product sales revenues costs and expenses and potential clinical and regulatory milestones, including data readouts regulatory submissions and approvals.
Actual results or developments may differ materially from those projected or implied in these forward looking statements.
So that may cause such a difference include the difficulty in forecasting sales revenues and expenses impacts related to the COVID-19, pandemic and the uncertainty associated with the pharmaceutical development and regulatory approval process.
More information about the risks and uncertainties based by sea. Gen is contained under the caption risk factors included in the company's quarterly report on Form 10-Q for the quarter ended June 30th 2021 filed with the Securities and Exchange Commission and the company's subsequent reports filed with the SEC and now I'll turn the call.
Over to clay.
Thank you peg and good afternoon, everybody and welcome to our third quarter call. We look forward to providing updates today on recent commercial regulatory and clinical achievements.
We reported net product sales of approximately $1 billion for the year to date and $366 million for the third quarter, reflecting growth across our expanded portfolio of approved medicines.
We continue to demonstrate robust financial strength fueled by product sales royalties and multiple strategic collaborations.
Our strong balance sheet allows us to advance and expand our pipeline both internally and through external business development efforts that you will hear more about shortly.
Our first strategic priority is to maximize the global potential of our products through exceptional commercial execution clinical development and strategic partnerships.
We've expanded our commercial portfolio from one product to four in less than two years.
Which is a remarkable achievement by our team.
Last month, FDA granted accelerated approval to to soda map, but don't or Tim Dec of tissue factor targeted antibody drug conjugate, which we are co developing with our partner Genmab.
<unk> is the first and only FDA approved ADC for patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy.
Upon its accelerated approval in September two deck became <unk> fourth commercial product and marks an important milestone for women with recurrent or metastatic cervical cancer.
We are focused on strong commercial execution and early launch feedback has been positive.
We are also conducting a broad clinical development program intended to expand <unk> future potential.
To support global regulatory applications, although the initial indication represents a modest market. We have already presented promising data investigating <unk> in combination with other therapies in earlier lines of cervical cancer, which may represent important clinical advancements and much larger market.
Opportunities.
Yeah.
To Kaiser are best in class her two tyrosine kinase inhibitor has become an important option for the treatment of second and later line her two positive breast cancer patients with and without brain metastasis to Kaiser is approved in 36 countries and then in addition to the U S. We have commercially launched in.
Germany, France, Switzerland, and Austria.
A year and a half after U S approval. We are pleased with two kaisers update uptake health care provider feedback and inclusion in key treatment guidelines.
We continue to engage with European authorities to secure broader reimbursement for Takeda, which could take up to two years, depending on the countries.
Our strategic collaboration with Merck will help further accelerate two kaisers global reach in regions outside of the U S, Canada and Europe.
We believe Takeda has broad potential and her two cancers and to that end. We recently completed enrollment in the phase II mountaineer trial in advanced her two positive metastatic colorectal cancer, which could potentially support registration under F. T H accelerated approval pathway.
Two kaisers broad clinical development program also includes evaluation in her two positive breast cancer gastric cancer and other her two amplified or mutant tumors.
<unk> is a first in class ADC that has quickly become standard of care in previously treated metastatic <unk> cancer.
Earlier this year FDA granted pads at a second indication, making it the first and only FDA approved therapy for patients with locally advanced or metastatic <unk> cancer, who have received immunotherapy and cannot receive cisplatin.
<unk> also received regular U S approval, enabling us to promote to the impressive overall survival data are key benefit.
We have also been able to leverage with ADCETRIS and <unk> <unk>.
Outside of the U S has said recently received approval in Japan, and we and our partner Astellas continue to make progress with global regulatory submissions across Europe Asia Pacific and the Americas.
We are positioned strategically to benefit from changing your appeal, you'll cancer market dynamics, and we are advancing a robust clinical development program.
Notably, we recently completed enrollment in cohort K of the EV 103 trial evaluating <unk> in combination with Keytruda as first line treatment in patients with metastatic <unk> cancer, who are unable to receive cyst platinum based chemotherapy.
The results of this cohort could potentially support registration under F. G H accelerated approval pathway.
Lastly, et cetera, the foundation of care in multiple <unk> expressing lymphomas is commercially available in 76 countries along with our partner Takeda and is a key part of our core business at.
A decade after approval et cetera maintained solid performance with record quarterly sales and will be featured in multiple abstracts at ash in December.
We continue to progress a comprehensive clinical development program to maximize et cetera has potential to benefit patients.
Our second strategy strategic priority is to advance our programs towards securing approvals for new products.
In August we added a late stage asset to our pipeline through an important license agreement with Rem adjourn for <unk> or D V outside of <unk> territory of Asia, Excluding Japan and Singapore.
<unk> is a novel ADC that is active across a broad range of her two expressing solid tumors and is being developed as monotherapy and in combination with PD one inhibitors.
TV has already received conditional approval in China for third line gastric cancer and their national Medical products administration accepted the supplemental biologics license application for second and later lines of metastatic <unk> cancer.
The deal represents a strong strategic fit as it harnesses, our ADC technology expertise development experience and our expanded global infrastructure.
These elements will help to maximize DVS potential value and global reach we believe <unk> is an important and differentiated asset and Roger will go into further detail.
Our third strategic priority is to expand our deep and diverse early stage pipeline through innovation encompassing adcs immuno oncology agents corporate development and strategic partnerships importantly, we are submitting at least two ind's for additional adcs, including those.
<unk> targeting <unk>, four and PD L. One further bolstering our early stage pipeline.
Across our early and late stage pipeline, we are advancing 13 programs in a range of solid tumors and hematologic malignancies, including for novel programs that are expected to enter the clinic next year.
Next I will turn the call over to Todd who will discuss our financial results then chip will provide an update on our commercial performance after that Roger will provide further detail on our clinical development activities and pipeline.
Todd.
Thanks, Clay and thanks to everyone for joining us on the call. This afternoon are financial results reflect significant advances made across the business today I'll summarize our financial results for the third quarter and year to date, and then discuss our outlook for the remainder of 2021.
Total revenues were $424 million in the third quarter and $1 145 billion for the year to date in 2021.
Product sales totaled $366 million in the third quarter, representing 37% growth over the third quarter of last year. This was driven by growth in product sales across our portfolio.
In addition, third quarter results for pads included $7 million in sales to another company for a combination clinical trial, but they are conducting given.
Given the growing interest in the use of our drugs in combination settings. We are pleased to see this and wanted to highlight the impact on pad sales growth this quarter.
Lastly, Tim Dec was launched late in the quarter, bringing our fourth product to our commercial portfolio.
Royalty revenues were $41 million in the third quarter and $105 million for the year to date in 2021.
Growth over 2020 reflected increasing sale of et cetera by Takeda as well as higher royalties on sales of <unk> by Roche and blend wrapped by GSK.
Operation revenues were $17 million in the third quarter and $24 million for the year to date in 2021.
Third quarter revenues reflect the achievement of a regulatory milestone under our ADC collaboration with GSK as well as sale of product supply to one of our collaboration partners.
Cost of sales was $83 million in the third quarter and $225 million for the year to date in 2021. This included product cost of sales and royalties for each of our brands. The pads of gross profit share to Astellas and noncash amortization of acquired technology costs for Takeda.
R&D expenses were $459 million in the third quarter and $924 million for the year to date in 2021.
These are increases over 2020 as third quarter expenses included the $200 million upfront payment due to remedy Jim for the licensing of the <unk> as well as continued investment across our early and late stage pipeline.
SG&A expenses were $180 million in the third quarter and $505 million for the year to date. In 2021. These are increases over 2020, reflecting investments to support ongoing to Kaiser launches across Europe and more recently the launch of <unk> in the U S.
I will now provide several updates to our financial outlook for the remainder of 2021, beginning with product sales. We are increasing our 2021 product sales guidance for all three brands et cetera sales are now expected to be in the range of $700 million to $710 million patents of in the range.
$330 million to $335 million and Takeda in the range of $315 million to $325 million chip will provide more context on market dynamics later.
We are increasing our 2021 guidance for royalty revenues to a range of $140 million to $150 million, primarily reflecting stronger sales of et cetera by Takeda in its territory and.
And lastly, we are increasing our 2021 collaboration revenue guidance to a range of $25 million to $30 million.
Turning now to expenses, we are increasing R&D expense guidance to $1 109 to $1. Two 4 billion, primarily as a result of the $200 million upfront amount due under the Rem adjourn clamber collaboration we are also increasing our cost of sales guidance to a range of 295.
$5 million to $315 million, primarily reflecting higher sales of pads.
And lastly, we are narrowing our SG&A guidance to 675% to $725 million noncash.
Noncash expense guidance remains unchanged.
We ended the quarter with $2 $4 billion in cash and investments. This does not reflect the $200 billion payment to remedy Jim made in the fourth quarter.
Our financial strength allows us to continue investing in our pipeline and business and we're pleased with the progress so far this year.
Now I'll turn the call over to chip for an overview of our commercial performance.
Thank you Todd performance across the commercial portfolio was strong in Q3 et cetera pads to Kaiser all delivered growth in the quarter and we are pleased with the approval and launch of <unk>, our fourth product.
Et cetera, third quarter sales were $185 million, a 13% increase over Q3 2020.
We continue to focus on the landmark five year echelon, one progression free survival data in frontline Hodgkin lymphoma.
Our meaningful data to physicians and patients and solidified the ADCETRIS regimen as the best option for frontline stage, three or four patients.
August marked the 10 year anniversary of the first et cetera approval and I would like to thank the dedicated commercial teams that worked diligently to ensure this important product gets to appropriate patients.
Moving onto pads with third quarter sales were $95 million, a 54% increase over the third quarter of 2020.
Physician adoption of checkpoint inhibitors for post platinum maintenance continues to increase and this has generated more addressable patients for pads.
We're also promoting to the additional indication for patients who are ineligible for cisplatin containing chemotherapy and continue to see incremental uptake.
Transitioning to the <unk> third quarter sales were $87 million, representing 104% increase over the third quarter of 2020.
This marks our fifth consecutive quarter of sequential growth with contributions from the U S and Europe.
In patients with brain Mets Takeda has the most utilized product in second and later lines in the U S.
In Europe, we continue to be pleased with uptake the demonstrated overall survival benefit from her to climb trial, along with favorable clinical guidelines gives us confidence as we seek reimbursement in additional European countries.
Finally, we're excited that Tim Dec is launched and we're pleased with early reaction from oncologists and we look forward to continuing to work closely with our partner Genmab.
We are utilizing our well established support program CE Gen secure to help navigate <unk> requirements.
Tim deck provides an important new medicine for patients in the second and third line setting where previous options have typically offered low objective response rates and poor outcomes.
I look forward to providing more details on Tim Dec as we get further into the launch now I'll turn the call over to Roger.
Thank you chip and good afternoon, everyone I am happy to shed recent clinical development updates for our approved medicines and our pipeline.
I'll begin my remarks, with <unk>, which is approved for the treatment of adult patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy.
<unk> was based upon data from the innovative to a full trial as well as other supportive studies a global phase III trial in cervical cancer innovative 301 is currently enrolling a similar population and is intended to serve as the confirmatory trial in the United States and to support global regulatory applications.
Our next goal is to bring <unk> into earlier lines of metastatic or recurrent cervical cancer and for that purpose. We are conducting the innovative two or five trial in the first and second line setting.
Combination data from innovative to a five were recently presented at ESMO. The combination of <unk> and Carboplatin in the first line setting resulted in the confirmed overall response rate of 55% with a complete response of 12% and the duration of response of eight three months in the second line.
The combination of Tim Dec, and Keytruda resulted in an over or a 38% with a median deal or a 13 eight months. We are encouraged by these data, which will inform a tip tech based combination approach full frontline cervical cancer.
In addition, the recent accelerated approval of Keytruda in the first line CIS and further defines the treatment landscape in which a tip that combination will need to be tested.
Turning now to Takeda.
In the evolving treatment landscape, we continue to progress our broad development program in breast and Gi malignancies, as well as other solid tumors and breast cancer. The phase III trial her to climb O. Two is evaluation to <unk> plus <unk> versus <unk> alone in the <unk>.
First and second line metastatic setting.
As a reminder, this trial is enrolling patients with active brain metastases with similar eligibility to her to climb.
In high risk adjuvant breast cancer enrollment continues in the randomized compass her to our D trial, which is being run by the Alliance Cooperative Group. This study is evaluating <unk> plus <unk> versus <unk> alone.
In Gi cancers, as Clay mentioned, we have completed enrollment in mountain.
Which is assessing to cognizant of symptom is cheatham for patients with advanced <unk> positive colorectal cancer. We anticipate results next year and if the data are compelling mountaineer could potentially support accelerated approval in the United States. Additional studies are evaluating <unk> in combination with oxalic platinum based chemo.
Therapy in first line Gi cancers, as well as in the basket trial for solid tumors alterations.
Finally, we are conducting a study of <unk> in combination within her to pull her two positive breast cancer.
I will turn now to passive wave, we remain focused on moving into earlier lines of <unk> cancer in.
In the first line metastatic setting we have completed enrollment of EV 103, cohort K, which is testing the combination of passive and keytruda as treatment for patients who are ineligible for cisplatin therapy. This trial is intended to support an application for accelerated approval in the United States and we expect to.
Report top line results in 2022, we are also enrolling patients into the phase III EV 302, Global trial, which includes both cisplatin eligible and ineligible patients and is assessing pads plus keytruda compared to platinum containing chemotherapy EV.
<unk> 302 is intended to be a confirmatory trial as well as supporting global marketing applications in.
In muscle invasive bladder cancer, we together with Astellas and Merck are advancing two phase III trials, both of which are testing Pat saving combination with keytruda. The keynote <unk> <unk> three a full trial is enrolling cisplatin eligible patients and the keynote 905 or <unk> 303 trial is.
Enrolling cisplatin ineligible patients. Additionally, we have now opened the EV one a full trial of single agent <unk> in non muscle invasive bladder cancer.
In this study passive is administered intravenously in BCG nonresponsive patients Nixon for is highly expressed in this disease state and preclinical data support this as a potential opportunity for Pat says.
We are also evaluating pets in a basket trial of <unk>, four expressing solid tumors, including lung breast head and neck gastric and esophageal cancer. This study is enrolling and we await initial data to inform our next steps.
Now onto ADCETRIS at the upcoming Ash meeting in December we expect to have several presentations, notably we plan to present data for the first time from an ongoing phase II study assessing ADCETRIS in combination with new volume add Adriamycin dacarbazine as frontline treatment for advanced Hodgkin lymphoma.
We continue to advance our clinical development program, including echelon three phase III trial in relapsed diffuse large b cell lymphoma, which compares a Texas, plus revlimid and rituxan to Revlimid and Rituxan.
Our newest entry into late stage development as a system epidote, which has already received conditional approval as monotherapy in China for gastric cancer, the antibody, which has our highest finishing for her to and blocks signaling also demonstrates enhanced internalization when compared with Trastuzumab. This.
This is an important characteristic for antibody drug conjugates. The ADC also delivers our proprietary production payload the same as in our three commercial adcs.
Initial data in metastatic <unk> cancer was impressive and has already garnered breakthrough therapy designation from the FDA.
Additionally, PD one inhibitor combination data were presented at ESMO. This year demonstrating high response rates and these will also inform our clinical development plans. We are in active discussions with FDA on our <unk> cancer development strategy with regard to breast cancer, our partner Imogen has <unk>.
Or is it initial encouraging monotherapy data in her two logos cancer and we are evaluating the potential for future developments.
Turning now to <unk>, LTE, which is being developed with our partner Merck at ESMO. This year, we presented initial efficacy data with the weekly dosing regimen of Lv in patients with triple negative breast cancer data demonstrated that weekly Lv resulted in a confirmed <unk> of 28% in the <unk>.
Second and third line setting.
We continue to evaluate the optimal dose and schedule of Lv.
Both as monotherapy and in combination with keytruda to optimize efficacy and safety.
Yes.
I'd like to now briefly mentioned in our early stage pipeline. We are advancing seven programs in phase one clinical trials across a range of solid tumors and hematologic malignancies, including the Adcs <unk> <unk> H E B six E and S. T M D.
We expect R&D submissions for at least two more novel ADC programs. This year targeting <unk>, four and PD L. One.
At <unk> in November we will present posters on these programs, which will highlight robust anti tumor activity in preclinical models.
Also have full effector function enhanced antibodies utilizing our <unk> technology, including FCA CD 40, CD 70 Bcf may antigens. Later this year at Ash, we will be disclosing initial results of FCA be CMA in subjects with relapsed or refractory multiple.
Myeloma with regard to <unk> 40, as previously discussed we completed enrollment of a cohort of patients with pancreatic cancer. We expect to report clinical data from this cohort early next year. We have also initiated the basket trial to assess <unk> 40 in other solid tumors, including melanoma.
And non small cell lung cancer in closing, we continue to reach important development milestones and make meaningful progress with our pipeline and we look forward to providing you with further updates on future calls I will hand, the call now back to clay.
Thank you Roger.
She has a resilient core business and solid foundation, which fuels our ability to continue expanding and evolving our capabilities technology and business.
This year, we have achieved multiple important milestones we have a strong portfolio of approved medicines and a proven commercial engine, which allows us to compete in the global marketplace.
We have robust.
Clinical development capabilities, and a deep pipeline of Tomorrow's potential first and best in class therapies.
Strategic partnerships, our international infrastructure and substantial financial power enables our ability to develop and advance and launch exceptional oncology therapies. The.
The future procedure is exciting and we remain passionate and committed to improving the lives of cancer patients worldwide.
Operator, please open the line for Q&A.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Okay.
And our first question will come from Geoff Meacham of Bank of America. Please go ahead.
Hey, guys, it's asking on for Jonathan Thanks for the question, maybe one for claim and one for chip first off quite now that you have for the approved product in the portfolio, maybe talk about how youre thinking about the balance of investing in keeping that early pipeline engine running.
While also moving towards sustained profitability.
And then on the Takeda launch O U S. Maybe just help us understand what the reimbursement pathway. It looks like over the next three to six months, maybe 12 months even.
As you guys secure.
Geographies in the EU. Thank you.
Alright, thanks for the call.
Questions.
First of all.
We do have four products that we've had three products approved in the last two years.
We're very proud of the products, we have that really make a difference in patients' lives.
We continue to invest strongly.
And our late.
Late stage mid stage and early stage products, we just submitted two ind's recently that Roger mentioned.
We will continue to push forward there.
Tend to be profitable.
We're not giving guidance today on when were profitable, but its something thats important to us and.
But it's also important to us to continue to build our pipeline, but working together with our board of directors.
The future and.
As China, where were going and also working with some of our biggest investors who continue to encourage us to make great medicines.
And move on and this is the time to do that we are investing heavily in our pipeline. So that is where it is now but please note we do intend to be profitable we could be profitable now bye.
Basically not working on a pipeline not expanding our products that we don't think is the right way to build a big prop.
Profitable.
Sustaining organization that makes a huge difference in patients' lives. So we're pursuing that as far as tip back.
And reimbursement Chuck do you want to talk a little bit about the initial.
I'm sorry, okay.
I thought he was asking Oh, that's right.
Alright.
Go ahead sure so as far as the X U S goes launches continue with strong uptake in Germany and France.
We're we're working through the <unk> process.
The next countries that are in line or price negation negotiations with several of them Celgene going forward I look forward to extending our footprint of reach for the product.
Okay, great. Thanks, guys.
The next question comes from Cory <unk> of Jpmorgan. Please go ahead.
Great Hey, this is Thomas on for Cory Thanks for taking the question.
Maybe just one on the updated revenue guide here, the new numbers seem to imply a sequential downturn.
Government in Q4 is conservatism on your end or are there other end market dynamics that we should be thinking about it.
Thank you for thank you.
So thanks for the question first of all we are.
We're very pleased with our quarterly and year to date performance. Our net product sales were up 37% year over year in third quarter of 'twenty one so.
That's great we have great products that make a difference in patients' lives.
<unk> have increased not only the tree.
Our three initial products two <unk> to two new for guidance right now while we also increased our other revenue metrics, which is a royalty and partnering so all five of our revenue metrics we increased.
Our focus is on the long game make.
Making a difference in patients' lives.
Expanding our labels maximizing the potential and reach of our trucks.
Going worldwide, we're investing and growing and going into a much bigger footprint globally.
Globally, our patients and we believe that this is going to make the company stronger and.
They're not too distant future.
But it takes some investment to do that.
We're really excited about that.
Yeah.
As far as thinking about the fourth quarter, Todd do you want to give a little color to that.
Got it. So you mentioned are we trying to be conservative we're actually trying to just be as accurate as we can we recognize that COVID-19 continues to create a lot of just uncertainties and yard drug sales fluctuate quarter to quarter. So with that in mind. What we've always tried to do is just do the best job. We can on the annual guidance and we look forward to you.
Giving our 22022 guidance on the next quarterly call, but as Clay mentioned, we're really pleased with how the year has gone.
Second and third quarter in particular were very strong and as a result, we did a modest up guide and our product sales guidance today, and we're really pleased with how we're doing.
Great. Thank you.
Okay.
The next question comes from <unk> Richter of Goldman Sachs. Please go ahead.
Good afternoon. Thanks for taking my questions could you just comment on any granularity on the <unk> launch at this point and then just timeline updates or what we should expect next on the ticket and Lv program.
Sure so.
We are really excited about getting back out in the market and.
It's early but.
Really good feedback chip would you like to talk a little bit about what's it like out there in the field and what the commercial team shortly.
Really pleased with the initial reactions we've had some oncologist, we look forward to continuing to work closely with our partner Genmab.
We're excited about having the option of Tim deck. It represents the first and only FDA approved ADC in the metastatic cervical cancer setting.
And then switching to your second question. So I'll start with them one at a time. So ticket is a product we're really excited about it. It's in clinical trials, we think it's differentiated from the other tickets out there because of our SBA technology.
And that's and trials and Lv is also in a number of trials Roger could you comment a little bit about ticket and where we are and what we're thinking and then and then adobe's sure. Thanks Clay.
So with regards to digits, we understand the environment around us there are lots of other companies working on the ticket program for good reason because the early proof of concept is there. So we understand that that time is of the essence.
We also need to.
Essentially developed to get in the way that we can if we are differentiated clinically you're able to demonstrate that so I can just say, we're working hard on that such a program were not ready for prime time, yet, but we are moving along expeditiously.
With regard to Lv as as you know we have presented multiple data sets now that LTE is an active drug.
Both as a monotherapy and in combination and we're continuing to work hard with our partners Merck to see if we can optimize dosing schedule and then move it into a pivotal trial, but we're not there yet again stay tuned for more data as the program unfolds.
Thank you.
The next question comes from Michael Schmidt of Guggenheim Securities. Please go ahead.
Hi, This is email for Michael Thanks for taking our questions and congratulations on the impressive results of this quarter.
We have a question on to Kaiser.
Now it had been her two reported positive results in the second line breast cancer.
Do you think this will drive the herd to climb owe to steady towards enrolling more patients with brain Mets and what proportion of patients do you expect to have brain Mets in that study.
Perhaps a related question to this.
On the phase II study.
<unk> plus in her to you what are you specifically looking at.
That study and what could be the potential next step. Thank you.
Thanks for the questions two good questions on to Keyser.
Roger.
Ill start with brain Mets.
And that that concern and hard to climb.
Sure.
Yeah, and then the next one.
And her two plus two.
Right sure.
So with regard to to our development program as you know we've demonstrated remarkable chicken to fix.
Patients with brain metastases, such a high unmet need and also as we know.
<unk> metastatic breast cancer does have a high frequency of payments up to 50% of the patients.
Develop brain Mets through that through their disease course.
So it's expected that a program such as search and climb to climb up to where we are allowing patients with active brain Mets to enroll will in fact roll enroll a a decent proportion of patients with brain metastases.
Can share with you any of the information on how to climb O. Two as it is but just in principle, a drug like <unk> will be attractive for patients with brain metastases with regard to in her too Tom.
From a from a sort of development perspective, the two most the most interesting drugs in the her two breast cancer space right now to Kaiser and her too.
From a mechanistic perspective.
Combining an ADC like in her two together with Takeda makes complete sense as you can see in our development program. We've done that we've had that same approach with cats, either so we're looking forward. We're still in the process of enrolling we're looking forward to what those results may produce and of course, if those results are compelling.
We will need to think through what next steps there could be but again, we wouldn't disclose any of that at this point, we're still in the process of data generation.
That's very helpful. Thank you.
The next question comes from Kennan Mackay of RBC capital markets. Please go ahead.
Alright, Thanks for taking my question and congrats on the Q3 performance.
I had another question on the guidance.
Maybe for Todd just on the.
The increased guide for royalty revenues I was wondering if you could help us with sort of where where we should think about that coming from potentially is that is that coming from.
Maybe I'm a label there or whether it's something else and then.
Just maybe going back to the pads up guide after.
Really a quite impressive quarter, 15% quarter over quarter growth just wondering if you could help us understand what.
Dynamics could be quite it could then be expecting a decline in Q4 here or whether there is.
Any seasonality again, just trying to understand those dynamics, thanks, and congrats again on the Q3 performance.
Thanks, Ken So good question, let me start with the royalty upright.
I think I mentioned earlier.
The principal reason for that is related to you know Takeda sale up et cetera.
Stronger than what we had thought a year ago. When we set our guidance. So we're delighted to see that ADCETRIS is doing so well.
<unk> territories.
And then you mentioned, Paul Avi and glamour at those two are starting to contribute to royalties are obviously lower amount.
But takeda royalties, but it's great to see.
The benefit that both these drugs, probably Paul would be in particular.
The way that looks like its moving toward now in the frontline. So we're really happy with that and then on the <unk> Guide.
I mentioned also that we had clinical supply Warner from another company I wanted to call that out in the remarks I made earlier because all it is.
$7 million and not that significant to the overall picture. It Nevertheless was a pretty meaningful driver of growth in Q3, we.
We did see also commercial growth so I wanted to point that out and as we look into Q4.
It's a situation where headset it has rapidly become a standard of care. We've now got both cohort one and the cohort two labels, we're super happy with where we are.
But there is uncertainty and quarterly fluctuations. So we've just tried to do the best we can across.
Across the board actually with all of our guidance, but.
So as well.
Got it thank you for that color Todd appreciate it.
The next question comes from Boris <unk> of Cowen. Please go ahead.
Great.
Question on the Daiichi litigation I was just wondering if you could comment specifically on maybe on the timing of the arbitration, but also a second scenario since there was a lawsuit and a trial.
Starting next April just curious what the dynamic what would happen if you win the arbitration, but then lose the lawsuit on the patent litigation with Pei still Oh, you've royalties adenhart too in that scenario.
So Boris Thanks for a quick question on India.
Daiichi Sankyo single.
Issues, so first of all as per our guidance.
We have said that we believe will be a.
The arbitration.
No.
A retired federal judge and the arbitrage.
We will.
Announced the findings from that up towards the end of the year.
And so that's something we have been public about and Youre right. There is a patent infringement case that we brought powered which is being heard in April so you're correct on both of those.
As far as really one reading on another.
Yes.
No.
Basically something we wouldn't comment on that.
Innerworkings political system and.
We have great legal team, we think we have a great case.
In both regards.
Arbitration, which is.
Based on our contract that we had with <unk>.
Thank you Jo Anne.
On the patent infringement based on issued patent that we have.
On our technology. So there are different cases, they're not the same.
And we feel like we have a great case for boat.
So we're looking forward and the most important thing for us is to develop drugs that make a difference in cancer patients' lives.
They don't go away from that but it's also where we work with a lot of other companies.
When we work with the company and we.
We do deals with them, we expect to continue that.
If they're using our technology, we expect to be their partner and <unk> and so that's where this is.
Got it and maybe if I may ask a follow up question not related to the litigation, but I'm just curious with the strong.
Data that we're recently software in her two versus kept silent in breast cancer, how does that impact your development strategy for the particularly the recently licensed I heard two ADC from Raymond James.
So thanks for that.
The product from Rama Chad.
Really interesting and Internalizes very rapidly keep in mind that whether it be the.
The original her two ADC, Tyler or and hurt you or are they both used the same antibody component, which is trastuzumab, which we know as herceptin.
And that molecule internalizes, but it's kind of middle of the road of internalization.
The antibody used in.
Archie 48, which is why we license from Raymond James that wasn't a unique antibody and was selected based on incredibly rapid internalization and one of the things that we've been able to see based on what <unk> did with their data, which we get a lot of diligence on.
Its impact on two low patients.
That's a big area in fact, it's bigger area that her too high and so we think this rapid internalization could be something really exciting.
Have data I mean, there are approved in gastric cancer in China.
<unk> designation.
For <unk> cancer in the U S with the FDA.
And certainly the data they have.
And <unk> low breast cancer.
Her two low tumors is very interesting to even have data in combination with checkpoint inhibitors, which is not surprising to us since with our other adcs they use and we see very nice activity with checkpoint inhibitors, such as Keytruda. So we think all in all we have a very nice profile, there and yes and her.
Uh huh.
A good drug it's an important drug.
On behalf of cancer patients, we love when we see new drugs. This is great.
Our goal, but my passion and golf for my whole career.
I think that there's a lot of room for cancer patients have different types of therapies. Roger do you want to add anything to that.
Yes, I think we're in a.
We're in a fortunate position in that we have a highly valuable in the act of small molecule <unk>, which is in the hotel space.
We now have a Hershey directed antibody was properties that we think is a very interesting.
And we have the external environment, which includes drugs like <unk>, which we're combining with and then her two which we're exploring in combination with <unk>. So there are lots of possibilities for us going forward, we are not changing our <unk>.
<unk> development program is right now, but what are the next steps with regard to things like the system have the dose in combination with <unk> in her two in combination with <unk> I think all of those things on the table for exploration going forward.
Alright, Thank you very much for answering my questions.
The next question comes from Gena Wang of Barclays. Please go ahead.
Thank you for taking my questions.
So maybe just to follow the IP.
Arbitration just wanted to make sure.
So would the timing still be full queue and how would you.
That information with investors and then also another question regarding Raymond James.
Calpine just wondering.
How's the better comparison efficacy safety, especially see.
Too low compared to see him go to.
ADC.
That profile.
Sure well I'll try to take the first part of the question about the arbitration and then I'll turn it over to Roger to talk about his view differences in safety between <unk> 48.
Or does it hurt you.
So on the.
Arbitration, we we feel that we're confident based on where we sit based on here.
Hearing it from our internal and external counsel that there'll be a resolution of some type in the arbitration case not in the patent infringement case, which starts in April but in the arbitration case prior to the end of the year.
And that's something that.
You know I think would be shared with the.
The investors, we probably put out some sort of.
Release or something like that on it.
We look forward to that once again, we think we have a strong case.
We've been going at this now for some time and look forward to getting it resolved.
Roger on the safety sure with regard to the sort of the clinical profile. The data that <unk> has generated to date looks pretty impressive it is.
Not that dissimilar from <unk>.
And I think we obviously see Jim need to generate our own data with the population defined his or her too low.
And determine.
What are next steps, but we see this as a meaningful.
Really meaningful opportunity and it may not necessarily be limited to.
<unk> cancer.
With regards to.
The efforts that the herd to low program in China has generated we will obviously also leverage as much as possible data from China to supplement whatever efficacy, making the United States.
Thank you.
The next question comes from Andy Shay, Oh, William Blair. Please go ahead.
Great. Thanks for taking my questions and congratulations on the beat and raise quarter.
I have a question about the EV 104 study that.
That you kind of unveiled today.
So in terms of the <unk> administration, and Pat says curious how you think about the dosing.
We usually think about that as in a systemic <unk>.
And also for us the maintenance phase.
Also curious about your thinking about stopping dosing at.
I know month 10 to 11.
<unk> versus maybe a longer treatment duration. Thank you.
Andy Thank you for those questions Roger you want to take those.
Thanks, Andy.
Yes, <unk> is a non muscle invasive bladder cancer opportunity for pets is could be very meaningful just to remind you at.
At least in our hands pre clinically when we introduce a pad into the bladder and not exposed.
Systemically.
We really expect that the safety profile.
We'll look more favorable than systemic therapy, obviously, you have to generate that data in humans, but the preclinical package supports that so very little systemic exposure.
With regard to dose it's a great question. The trials has just begun we are using the current <unk>.
Commercially available tests of image and we're hoping that we will be able to define an efficacious dose using.
That current formulation Thats certainly in our plan with regard to beyond the initial sort of induction through to maintenance and I think when we when we shared details of the trial itself to things like poster presentations I think that would be a good time to address some of those points, but obviously we are just beginning so under.
Standing all the way through what our eventual plan may look like it's a little difficult at this point to predict.
Oh.
Operator, we'll take the next question. The next question comes from Jay Olson of Oppenheimer. Please go ahead.
Oh, Hey, guys congrats on the quarter and thank you for taking the question.
Can you talk about your first line combination strategy that Youre planning for <unk> and also when should we expect to see some data for <unk> in other tumor types.
So thank you for the words about our quarter.
We are really excited about to the deck, we presented some combination data.
Two different ways at ESMO, and certainly going to earlier lines is very important for us.
Roger do you want to talk a little bit about that.
Yeah. So.
Frontline cervical cancer the standard of care is combination chemotherapy with or without Bevacizumab. The recent.
Reveal of Keytruda as a as an addition to that combination now adds another another layer of drug but actually produces a much better outcome. So when you think about how to move into a frontline space and creates a regimen that is competitive that is potentially better than.
The various current standards of care, we see with Tim Dec as the sort of backbone of that regimen, we believe combining it with chemotherapy Sydney based on the Carboplatin combination.
Combination we've seen will be an important element. We also believe that <unk> will be an important element and we need we've shown already of the doublets, we need to go further we need to.
Put into the clinic and test what we would consider to be the final regimen that will be included in the in the frontline study and that's exactly what we're doing now.
Great. Thank you and other tumor types.
With regards to other tumor types Es, we are working on a plan to present data publicly.
When the appropriate time.
Okay, great. Thank you.
Yeah.
The next question comes from Glenn Schorr of Aaron Berg. Please go ahead.
Great. Thank you and congrats on the quarter as well.
I'd like to ask you about the debt.
At least as a bcm MA program that you're going to present at ash.
What are we going to see at this initial data presentation and I guess can you comment on the market opportunity for this drug thanks very much.
Yeah. So.
First of all on the market opportunity this.
Is that an area that is mainly targeted to ultra myeloma.
A subset of market there is great drugs out there like Revlimid and Velcade and antibodies.
Antibodies to CD 38.
And other drugs. So there really is good different therapies out there, but the disease is certainly not sure where it says these are therapies that have extended the life of patients, but there really is still always room for a great trucks to come in especially ones that have very low.
Safety signals and like what we would expect with S. M. A.
Roger could you talk a little bit about the drug and what we're our thoughts on there and obviously as far as ash presence.
We present, we are not going on.
Inappropriate to talk about the presentation garage could give you a little color Roger.
Sure. So the clinical trial program with the CIB CMA has been running for a little while now and we've been evaluating it as a monotherapy and we've been looking at various ways of dosing it.
We've been evaluating it in combination with dexamethasone, which is a essentially a almost.
Sort of mandatory combination drug in multiple myeloma and so it's that type of data in late line myeloma patients that we will be presenting and we obviously at this point do you believe that the data is mature enough and and.
And meaningful enough that it's time for us to produce this in.
In a public forum. So we're looking forward to presenting the CMA initial data it is initial data.
At Ash this year.
Great. Thanks very much.
The next question comes from Ren Benjamin of JMP Securities. Please go ahead.
Hey, good afternoon, guys. Thanks for taking the questions and congrats on a great quarter.
I guess I'd love to just learn a little bit more about the set of map that out in the euro filial data.
To date can you just remind us of that and how should we be thinking about the development plan of this of this new asset kind of going forward are you guys only going to be focusing on kind of low her two expressing tumors or is bladder cancer or you see a potential option and how do we think about.
And that can for expression versus her too and how the two drugs might ultimately worked together.
Sure so we.
We have not laid out the entire plan at this point for <unk>.
Send them up Doug on TV, but youre touching on a lot of important things that we considered when we did intelligence and put it in and now we have a very big client that we've been hatching and building up so I don't think you'll have to wait long to really hear everything.
We're looking at.
Bladder cancer, where there's already breakthrough designation currently we're looking at ultra low breast cancer, where there's a.
A big slug of data.
And also we can't look past gastric cancer I mean, that's an important cancer has already improved in China. So there's a lot of different.
Stability is for this truck and I think we're very well positioned to take this forward and make it into a real product that could get out on a global scale not just in China right now so.
Roger do you want to comment more about the question.
Yeah.
Yes with regard to <unk> cancel the data that's been generated by re imaging is really impressive.
Bear in mind that this was a head to defined population, which is something that we'll need some working better cancer because it isn't a population that is sort of up to this point been readily identified but a biomarker driven population.
Two high expresses and perhaps the third too low group in bladder cancer is.
As the population, we're interested in and as Clay mentioned.
Essentially.
As this drug comes into our hands, we will look at all the opportunities in her two disease, whether it's traditional <unk> amplification or overexpression or two so I think all possibilities are on the table, but our initial focus is on euro PDL cancer and on her two low breast cancer.
And just as a follow up Roger do you have a sense as to the potential overlap.
Between that expression about her two expression electing for or.
Or are they kind of like you know maybe a little bit exclusive.
Yes.
Item, four, especially we see as sort of near ubiquitous.
Two expression is obviously more limited.
The epidemiology of of Euro CDL cancer is less well defined and that's something that we need to work on and I think when we have a clear and accurate view of the distribution of traditional her two high versus low too low.
In cancer, where you would feel cancer, we will bring that forward, but it is not the whole population. Obviously it is a biomarker defined groups of patients.
Perfect. Thanks for taking the questions and congrats.
Okay.
The next question comes from Joe Catanzaro of Piper Sandler. Please go ahead.
Hey, guys. Thanks, so much for squeezing me in and taking my question here and just maybe one quick one from me. So Roger you had mentioned a new basket combination trial for CCD 40, I'm wondering if you could elaborate a little bit on that and maybe how your experience in pancreatic cancer and the combination youre looking at there informed your decision to <unk>.
Start this trial.
Okay.
Sure it's a great question.
I think we believe strongly in the in the scientific hypothesis, which is the combination.
When the agonist CD 40 agonists together with agents.
That engine and kill cancer cells.
And potentially also as well together with PD, one inhibitors that relieve the exhausted T cell population that as a scientific construct tests. We think is really interesting obviously pancreatic cancer itself.
Foray into that pancreatic cancer as you well know is not an easy disease to treat.
It is I guess traditionally considered to be less.
Less immune responses in other tumors and that's why we're taking the basket trial further into diseases, where in fact immunotherapy has already proven to work. So we think it makes sense to continue.
To test this approach in other tumors as well. So that's why we're opening up this basket trial, which will include diseases like non small cell lung cancer.
<unk> melanoma.
Okay perfect. Thanks for taking my question.
This concludes our question and answer session I would like to turn the conference back over to management for any closing remarks.
Thank you operator, and thanks, everybody for participating in our call today and have a good rest of your day.
Yeah.
The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Okay.
Hmm.
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