Morningstar | No-Moat Seattle Genetics' Oncology Portfolio Continues to Expand
We think Seattle Genetics' next-generation cancer therapy Adcetris and robust pipeline, which are based on its proprietary antibody-drug conjugate, or ADC, technology platform, make it stand out among its emerging biotech peers. The firm's leading ADC technology has allowed it to develop an internal pipeline of innovative cancer treatments and become the partner of choice for leading oncology players. The technology improves the potency and safety of cancer-targeting monoclonal antibodies by linking them to potent cell-killing drugs (chemotherapies), thereby enhancing antitumor activity while reducing the potential toxicity. This approach has yielded remarkable results. Notably, the firm's anti-CD30 ADC, Adcetris, had a 75% response rate in patients with relapsed/refractory Hodgkin lymphoma, or HL, while an earlier non-ADC version of the antibody failed to demonstrate any objective responses. In addition, the firm's ADCs are synthetically produced, which boosts manufacturing scalability and reduces production costs. Adcetris was approved in 2011 for relapsed/refractory HL, in 2018 for frontline HL, as well as several rare subtypes of non-Hodgkin lymphomas over the years. Seattle Genetics markets the drug in North America and partnered the marketing rights abroad to Takeda in exchange for milestone payments and double-digit royalties on sales. Takeda also shares in the development costs, and we think Seattle Genetics' broad clinical program for the candidate, including ongoing trials in earlier lines of therapy and other CD-30-positive malignancies, could bring in more than $1 billion in annual sales by 2022. Given the broad applicability of its ADC technology, Seattle Genetics has partnered with leading drugmakers, including Pfizer, Roche, Bayer, and GlaxoSmithKline, which provides the firm with much-needed cash and could net the firm several billion dollars in future milestone and royalty payments. Seattle Genetics' early-stage pipeline contains several ADCs targeting hematological and breast cancers, and the company has started to branch out beyond ADCs with its recent acquisition of Cascadian, which we think positions the firm for solid long-term growth.Seattle Genetics is a biotechnology company that develops and commercializes therapies targeting cancer. The company is commercializing ADCETRIS?, or brentuximab vedotin, for the treatment of several types of lymphoma. The company is also developing a pipeline of therapies for solid tumors and blood-related cancers designed to address unmet medical needs and improve treatment outcomes for patients. Many of the company's programs, including ADCETRIS, are based on its antibody-drug conjugate (ADC), technology. The company's late-stage pipeline includes two ADCs and an oral tyrosine kinase inhibitor, for solid tumors that are in clinical trials designed to support applications for potential regulatory approvals.
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