Seagen Inc

F:SGT

Earnings Call Transcript 2021-Q1

[Operator]

Good day and welcome to Seagen's First Quarter 2021 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Peggy Pinkston, Senior Vice President of Investor Relations. Please go ahead.

[Peggy Pinkston, executive]

Thank you, operator, and good afternoon, everyone. I'd like to welcome all of you to Seagen's First Quarter 2021 Financial Results Conference Call. This afternoon, we issued a press release with our results. The press release and supporting slides are available on our website in the Investors section, Events and Presentations page.

Speakers on today's call will be Clay Siegall, President and Chief Executive Officer; Chip Romp, Executive Vice President, Commercial U.S.; Todd Simpson, Chief Financial Officer; and Roger Dansey, Chief Medical Officer. Following our prepared remarks, we'll open the line for questions. We aim to keep this call to 1 hour. [Operator Instructions]

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. Factors 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 faced by Seagen is contained under the caption Risk Factors included in the company's annual report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission and the company's subsequent reports filed with the SEC.

And with that, I'll turn the call over to Clay.

[Clay Siegall, executive]

Thank you, Peg, and good afternoon, everyone. Following a transformational 2020, we continue to make substantial progress in the evolution and global expansion of our business. We remain focused on investments to maximize the opportunity and value of our assets fueling our ability to advance cancer care worldwide. We look forward to sharing key business, regulatory and development progress on the call today.

We reported record net product sales of $303 million in the first quarter, representing 3% sequential quarterly growth and 52% growth over the first quarter of 2020. These results reflect rapid adoption of both PADCEV and TUKYSA on top of strong sales of ADCETRIS. Our financial strength is driven by product sales as well as royalties and multiple strategic collaborations. We ended the quarter with $2.5 billion in cash and investments, which positions us to expand our programs, advance our research and development, and invest in our business.

As we look ahead, we're focused on 3 strategic priorities to drive continued innovation and growth. Focusing on these key pillars will ensure our organization is aligned and empowered to deliver substantial benefit to shareholders, our employees, oncology health care providers, and especially cancer patients. Our first strategic priority is to maximize the global potential of our 3 approved medicines through robust clinical development programs and exceptional commercial execution.

I'll begin with ADCETRIS, a remarkable product that is the foundation of care in multiple CD30-expressing lymphomas. With 6 indications in the U.S., ADCETRIS serves as the basis of our core business. ADCETRIS is commercially available in 76 countries. Importantly, our partner, Takeda, continues to pursue additional approval for frontline Hodgkin lymphoma and peripheral T-cell lymphoma in its territories.

We are committed to maximizing ADCETRIS' patient reach and are advancing a clinical development program in Hodgkin lymphoma and multiple other malignancies. Our global success with ADCETRIS is enabling us to continue investing in our pipeline in newer medications.

Our next key product is PADCEV, a first-in-class ADC that has quickly become standard of care in previously treated metastatic urothelial cancer. Locally advanced and metastatic urothelial cancer is an aggressive disease with poor survival, high associated health care costs, and limited treatment options. PADCEV is the first drug to improve survival after patients have received a platinum chemotherapy and a checkpoint inhibitor.

Since the beginning of 2021, we've made substantial progress with health authorities toward expanding the U.S. label and securing global approvals across Europe, Asia and Latin America. Roger will share details about these activities during his remarks.

We're also advancing 2 trials designed to redefine frontline treatment for metastatic urothelial cancer patients globally with a focus on the combination of PADCEV and KEYTRUDA. And we continue to make significant headway in exploring earlier stages of bladder cancer. In collaboration with Astellas and Merck, PADCEV is being tested in 2 randomized Phase III trials in muscle-invasive bladder cancer patients. And we intend to initiate an exploratory study of PADCEV in non-muscle-invasive bladder cancer.

Our third key product is TUKYSA, a best-in-class HER2 tyrosine kinase inhibitor for HER2-positive metastatic breast cancer patients with and without brain metastasis. TUKYSA is now approved in 36 countries. In February the European Commission approved TUKYSA in the EU, and regulators in the U.K. granted its marketing authorization in Great Britain. This is a significant milestone for patients in Europe, who will for the first time have an approved medicine that has demonstrated a survival benefit for HER2-positive metastatic breast cancer after disease progression following 2 anti-HER2 treatment regimens.

In anticipation of these approvals, over the past year we've established affiliates in key European countries and built teams with deep industry experience. We recently launched TUKYSA in Germany, France and Austria. We're pleased by the early uptake, physician feedback and that TUKYSA has already been included in some key treatment guidelines, given the strength of clinical evidence. Through our expanded European footprint, we are poised to execute upon another upcoming TUKYSA launches (sic) and collaborate with individual countries to maximize its ability, availability and patient access. In addition to this commercial progress, we are conducting a broad clinical development program design to maximize TUKYSA's potential, including trials evaluating it in HER2-positive breast, colorectal and gastric cancers and in HER2 mutant tumors.

Our second strategic priority is to advance our late-stage programs towards securing approvals for new products. One such asset is tisotumab vedotin or TV. Earlier this month, FDA accepted for priority review our BLA seeking accelerated approval for TV with an action date of October 10. The submission comprised data from the innovaTV 204 pivotal Phase II trial, which was presented at ESMO and was recently published in The Lancet Oncology. This is an important development in the treatment of cervical cancer, which remains one of the leading causes of cancer death in women globally. TV is positioned to be our fourth commercial product as we look to expand our portfolio further. And together with our partner, Genmab, we are preparing for its launch.

Our third strategic priority is to advance our innovative early-stage pipeline through continued leadership and innovation in antibody drug conjugates, internal R&D investments and corporate development opportunities. Our earlier-stage pipeline includes 7 programs in clinical trials and multiple preclinical assets advancing toward INDs. I'm proud of the remarkable progress we've made in growing and evolving our business and assets to better meet the needs of cancer patients.

Next, I'll turn the call over to Chip, who will discuss our commercial business. Then Todd will provide an overview of our quarterly financial results. After that, Roger will detail our clinical development and pipeline progress. Chip?

[Charles Romp, executive]

Thanks, Clay.

Our 3 approved products are important first-in-class or best-in-class medicines that have been embraced by oncologists and patients. We believe that each of the brands have blockbuster potential, and we continue to invest in our commercial capabilities to ensure we can maximize the opportunity to gain future approvals and label expansions. We are engaging with our customers through multiple channels and are pleased that most of our sales representatives have been able to safely return to making face-to-face calls.

ADCETRIS sales were $163 million, a 1% decline versus Q1 2020. The COVID-19 pandemic continues to impact Hodgkin lymphoma diagnosis, but we are seeing early signs of recovery. And despite this headwind, we have maintained share in our frontline indications. We are monitoring these trends, and it is our expectation that diagnosis rates will return to historic norms.

We continue to message the landmark 5-year ECHELON-1 progression-free survival data in frontline Hodgkin lymphoma. We are encouraged by the favorable reaction to the data we received during recent market research with physicians.

Moving on to PADCEV. First quarter sales were $70 million, double the first quarter of 2020. We are pleased with our quarterly growth after a strong launch. Our efforts continue to focus on promoting the full breadth of the PADCEV label. The locally advanced metastatic urothelial cancer marketplace is rapidly changing, and we are confident that PADCEV is well positioned this year for continued growth as the market evolves. Our sales representatives have been proactive in educating health care providers on our label update, and customer sentiment remains positive on PADCEV's risk/benefit profile.

Transitioning to TUKYSA, first quarter sales were $70 million, an increase of 14% over last quarter. These results are in line with our expectations, given the challenging Q1 patient co-pay dynamics of oral oncolytics. We continue to gain market share in both patients with and without brain metastasis. TUKYSA provides an overall survival benefit for patients with and without brain mets, and we are confident that we can continue to drive share gains for all patients. TUKYSA is now the most utilized product in second and later lines for HER2-positive breast cancer patients with brain mets.

And finally, we are very pleased to receive a priority review for TV. A brand team is in place, and we are working closely with our co-promotion partner, Genmab. We will be ready for a launch ahead of the October 10 PDUFA date. If approved, this would be an important new drug for women with metastatic cervical cancer, and we look forward to adding it to the proven Seagen commercial model.

Now I'll hand over to Todd.

[Todd E. Simpson, executive]

Great. Thanks, Chip. And thanks to everyone for joining us on the call this afternoon.

Our financial results for the first quarter reflect significant progress across the business. I'll briefly summarize our financial results for the quarter, which are in line with our expectations for the full year.

Total revenues were $332 million in the first quarter of 2021. This included net product sales of $303 million from ADCETRIS, PADCEV and TUKYSA, representing growth of 52% over the first quarter of 2020. Growth in product sales is driven by the continued strong uptake of PADCEV and TUKYSA since their launches in the U.S.

Royalty revenues in the first quarter of 2021 increased to $27 million compared to $20 million in the first quarter of 2020. This growth reflects royalties earned on increasing sales of ADCETRIS by Takeda as well as royalties on sales of Polivy by Roche and Blenrep by GSK.

Collaboration revenues were $2 million in the first quarter of 2021 compared to $16 million in the first quarter of last year. As discussed when we gave our 2021 financial guidance, collaboration revenues are primarily driven by progress-dependent milestone payments from our collaborators, which causes quarterly variations in revenue. In the future, we expect collaboration revenues to reflect the profit share from Astellas from sales of PADCEV in its territories.

Cost of sales in the first quarter of 2021 increased to $64 million. This included product cost of sales and royalties for each of our 3 brands, the PADCEV profit share of $33 million to Astellas, as well as noncash amortization of acquired technology costs for TUKYSA.

R&D expenses increased to $230 million in the first quarter of 2021. This reflects continued investment across our pipeline to drive progress of our late and early stage pipeline.

SG&A expenses increased to $160 million in the first quarter of 2021. And this reflects commercialization efforts related to the launch of PADCEV and TUKYSA in the U.S. as well as investments to support the launch of TUKYSA in Europe.

We ended the first quarter with $2.5 billion in cash and investments, and we have no debt. This positions us strongly to advance our plans in 2021 and beyond. And lastly, our financial guidance for 2021 is unchanged.

With that, I'll now turn the call over to Roger.

[Roger Dansey, executive]

Thank you, Todd, and good afternoon, everyone. I'm happy to share today key R&D activities for our approved medicines as well as our pipeline programs.

I'll start today with PADCEV. As a reminder, PADCEV has accelerated approval in the United States for metastatic urothelial cancer patients who previously received both platinum-based chemotherapy and a checkpoint inhibitor. The randomized Phase III EV-301 trial, which compared PADCEV to chemotherapy in this setting, demonstrated a clinically meaningful and statistically significant 30% reduction in the risk of death among patients who received PADCEV. These data were presented at ASCO GU and simultaneously published in the New England Journal of Medicine.

The EV-301 data were also submitted to FDA in a supplemental BLA under the real-time oncology review and Orbis programs. And this month, the application was accepted for priority review with a PDUFA date of August 17. This application seeks to convert PADCEV's accelerated approval to regular approval and integrate into the label the important overall survivor data that PADCEV has demonstrated.

To address the potential for PADCEV in metastatic patients who received a checkpoint inhibitor and are cisplatin-ineligible, we conducted cohort 2 of the EV-201 pivotal trial. Positive data from this cohort were presented at the ASCO GU meeting in February.

Earlier this month, FDA accepted our supplemental BLA to potentially expand the U.S. label to include this population. The application is also being reviewed under RTOR and has been given priority review with the same PDUFA date of August 17. An abstract including additional follow-up data from cohort 2 will be reported at ASCO in June.

Our strong PADCEV data have enabled substantial regulatory progress outside of the United States. In the past 2 months, we and Astellas have engaged with 8 regulatory authorities around the world. And marketing applications are currently under review, including in Australia and Canada with Health Canada assigning priority review; in the EU where the application has been assigned accelerated assessment, importantly this could shorten the time to approval; and lastly in Japan, Brazil, Switzerland and Singapore.

We continue to advance a substantial PADCEV clinical development program, which includes 2 trials that could support approval in first-line metastatic urothelial cancer. We expect to complete enrollment of cohort K of the EV-103 trial in cisplatin-ineligible patients receiving PADCEV plus KEYTRUDA by the end of this year. And if data are supportive, we plan to submit a supplemental BLA after appropriate follow-up for duration of response.

In addition, we continue to enroll patients into the Phase III EV-302 global trial, which includes both cisplatin-eligible and -ineligible patients, evaluating PADCEV plus KEYTRUDA compared to a platinum-containing chemotherapy regimen. These trials are supported by initial data from the EV-103 trial, which resulted in Breakthrough Therapy designation. Updated durability results and long-term outcomes from these initial data will be presented at ASCO.

As we move PADCEV to earlier stages of bladder cancer, 2 Phase III trials are enrolling patients with muscle-invasive disease. Both trials utilize PADCEV in combination with KEYTRUDA. The KEYNOTE-B15 trial, also called EV-304, is enrolling cisplatin-eligible patients. And KEYNOTE-905, also called EV-303, is enrolling cisplatin-ineligible patients. Additionally, we continue to work to bring PADCEV into a clinical trial for non-muscle-invasive bladder cancer patients and have completed our initial regulatory discussion with the FDA. In summary, we are making great progress with PADCEV.

Turning now to TUKYSA. The development team is advancing a similarly broad clinical program to support label expansions in breast cancer and investigate TUKYSA in other HER2-positive cancers. In breast cancer, we are evaluating TUKYSA plus KADCYLA in first and second line metastatic patients in the HER2CLIMB-02 trial. Additionally, we are pleased to report that the first patient was recently enrolled in the randomized CompassHER2 RD trial being run by the alliance cooperative group evaluating TUKYSA plus KADCYLA in high-risk adjuvant breast cancer patients in GI cancers.

We are on track to complete enrollment in the MOUNTAINEER trial by the end of 2021. This trial is intended to support accelerated approval in the United States for patients with advanced HER2-positive CRC.

And also, we are advancing TUKYSA in several exploratory studies, including in combination with an oxaliplatin-based chemotherapy regimen in first-line GI cancers in a basket trial for solid tumors with HER2 alterations that include mutations, and in combination within HER2 for HER2-positive breast cancer.

Moving on now to ADCETRIS. We are excited that the ECHELON-1 5-year manuscript has now been accepted, and we anticipate publication in the coming weeks. Results demonstrated robust and durable remission in patients with newly diagnosed advanced Hodgkin lymphoma who received ADCETRIS in combination with AVD. 5 years free of disease progression is a clinically meaningful and important milestone in a cancer patient's journey.

Going forward, we continue to invest in the development of ADCETRIS with several ongoing clinical trials. Notably, we have a randomized Phase III trial in diffuse large B-cell lymphoma exploratory evaluations of ADCETRIS plus nivolumab plus AD in frontline advanced and early-stage Hodgkin lymphoma. And we are exploring ADCETRIS in combination with KEYTRUDA as an immunomodulatory agent in solid tumors.

Now I would like to turn to our late-stage program, tisotumab vedotin, which we are developing in collaboration with Genmab. Earlier this month, we announced that FDA accepted our BLA seeking approval of TV for treatment of women with recurrent or metastatic cervical cancer. The FDA has assigned a priority review, and the PDUFA action date is October 10. We believe TV could make a meaningful difference to these patients where there is such a high unmet need. We also recently initiated the innovaTV 301 global Phase III trial in a similar population of recurrent or metastatic cervical cancer patients that is intended to support global regulatory applications and serve as the confirmatory trial in the United States.

Turning now to ladiratuzumab vedotin. We continue to work with our partner, Merck, to co-develop LV as monotherapy and in combination with KEYTRUDA in LIV-1-expressing solid tumors. Our clinical development program is focused on optimizing dose and schedule as monotherapy and in combination with KEYTRUDA in breast cancer. A basket trial is also currently enrolling patients with lung, head and neck, prostate, esophageal, gastric cancer and melanoma.

Across the rest of our pipeline, I'd like to summarize a few recent highlights. At the AACR meeting in early April, we presented several compelling preclinical data sets with our Phase I clinical programs. This included SEA-TGT where we showed the enhanced antitumor activity when combining SEA-TGT with a checkpoint inhibitor or a vedotin-based ADC. In addition, we described encouraging preclinical data with SGN-B6A and SGN-STNV, both of which are novel vedotin-based ADCs that have recently entered the clinic.

We also entered into a clinical trial collaboration with Pfizer under which we'll evaluate SEA-TGT in combination with fasinumab, their subcutaneous PD-1 inhibitor. The combination will be evaluated as part of our ongoing Phase I SEA-TGT trial in advanced solid tumors and lymphomas.

And lastly, we completed enrollment in our clinical trial evaluating SEA-CD40 as part of a combination regimen for the treatment of pancreatic cancer. We expect to report clinical data from the trial sometime later this year, which will inform next steps with this novel effector function enhanced non-fucosylated antibody that binds CD40.

In closing, we have achieved many important milestones and have made significant progress across our pipeline in the first quarter of 2021. We look forward to providing you with further updates as the year progresses. And now I will turn the call over to Clay.

[Clay Siegall, executive]

Thank you, Roger.

The past year has been pivotal for Seagen, and the company is well positioned for the future. Today we have a deep and diverse pipeline, a multiproduct commercial portfolio and additional potential approvals on the horizon. Additionally, we have powerful partnerships, a broad geographic footprint, and substantial financial strength to maximize our assets from our early-stage pipeline to our expanding portfolio of approved medicines. The solid foundation we have built sets the stage for Seagen's next phase of innovation and execution. I am confident in our ability to continue to deliver cutting-edge innovation and medicines that make a meaningful difference to the lives of cancer patients.

I would like to thank everyone listening to this call for your continued interest in Seagen. Operator, please open the line for Q&A.

[Operator]

[Operator Instructions] Our first question comes from Geoff Meacham from Bank of America.

[Greg Harrison, analyst]

This is Greg Harrison on for Geoff. The question is what sort of physician reception have you seen with respect to PADCEV after the cases of Stevens-Johnson syndrome that came out? On our end, we've heard KOLs saying it won't affect prescribing much and they can screen out higher-risk patients. But just wanted to see what you guys are hearing on your end.

[Clay Siegall, executive]

So Greg, thank you for the question. PADCEV has really delivered a very strong launch, with rapid penetration into our label indications following its approval right at the end of 2019, so really full year of 2020.

Concerning the label, safety is always a top priority for us. And label updates inform physicians on what to do and how to work with patients to prevent anything from happening. Our sales reps have been educated. Health care professionals have been updated.

And educated physician sentiment remains very positive on the risk/benefit profile, the very positive risk/benefit profile with PADCEV. It has not been an impediment to adoption. It is a very rare occurrence. And it has not changed practice on use of PADCEV.

Roger, did you want to add anything to that?

[Roger Dansey, executive]

Thanks, Clay. So the label initial -- skin reactions have been part of the PADCEV safety profile for some time. And so this was an important of the post-marketing observation that was just extended into the label.

So from the beginning, we messaged very carefully around safety. It's important. Most of the side effects are transient and reversible. And we think it's valuable for physicians to understand this.

So again from a medical perspective, this does not change the risk/benefit for PADCEV. And we believe it will continue to be used, and we certainly haven't changed any of our clinical trial plans.

[Operator]

Next question comes from Matthew Harrison from Morgan Stanley.

[Connor Meehan, analyst]

Clay and team, this is Connor on for Matthew. So on tiso, could you comment on the outlook for the KEYTRUDA combination, and I guess how quickly you could move that into a registrational program?

And then quickly, are you seeing any competition from Tradelvy? And what are your expectations for the impact on that drug to PADCEV?

[Clay Siegall, executive]

Okay, thank you. So 2 completely different questions, one is on TV plus KEYTRUDA. So let's start with that.

So we're very pleased with how TV is moving along. As we said, we took tisotumab [ with our ] TV, and we have submitted it and we now have a PDUFA date. We have the accelerated approval time lines. So we're pleased with that.

And the current therapies for metastatic cervical cancer are really poor. They're generally with response rates of less than 15%. Median OS is between 6 and 9.5 months. So it is a significant unmet need, certainly in the U.S. and around the world, incredibly significant.

And so our program includes a big part of it, which is combining with KEYTRUDA and chemotherapy. So we have multiple arms there, and that's in earlier lines of cervical cancer. And so we were very pleased with the success there, getting patients to the trials and putting together a real opportunity there.

We have not presented any data yet, but the trials have been going very well. And we will be, at an appropriate time, presenting the data and information on these and making decisions to whether or not to go to a pivotal trial. It's my hope that we see great data and we go into a pivotal trial to try and get the kind of data that you could submit for earlier stage cervical cancer, which could be really beneficial to patients and also a substantial market.

Roger, do you want to add anything to what we're doing with TV and KEYTRUDA?

[Roger Dansey, executive]

Right. So Clay, exactly as you say, we have a monotherapy path for approval, which is currently under review, and that same monotherapy in late-line cervical cancer with a global trial that's running.

But of course, our interest is in combinations as well in order to move into earlier lines of therapy. And I think we're well positioned with regard to the way we're evaluating combinations of chemotherapy and KEYTRUDA, such that if we do get positive readouts, we can take those combinations forward into further clinical development.

[Clay Siegall, executive]

So your second question is about competitive impact of Tradelvy. First of all, I want to say that we are very pleased that there are more options for patients. We are a very patient-friendly company and think about how best providers and doctors can treat patients with life-threatening diseases. So the more, the better for patients.

So second of all, PADCEV has become the standard of care in its approved indications. And it's really firmly entrenched in the metastatic urothelial setting post-platinum, post-PD-1. And PADCEV has shown OS benefit. And we're very pleased with where PADCEV is in the lineup.

Roger, you may be able to discuss any updates or thoughts connected with that?

[Roger Dansey, executive]

Sure. So as Clay indicated, the more treatments that are available for patients, the better. However, the PADCEV program, which is substantial, has already created the use of PADCEV in a specific line of therapy. And it is, as you say, essentially a standard of care, which is difficult to displace.

So we're glad that Tradelvy is there. However, we do see PADCEV as having a very strong value proposition.

[Operator]

The next question comes from Salveen Richter from Goldman Sachs.

[Salveen Richter, analyst]

Maybe just a question on TUKYSA here. You noted that it's the most utilized product in second-line positive HER2-positive patients with brain mets. Can you just comment on what you're seeing in the same setting in patients without brain mets?

[Clay Siegall, executive]

Sure. So thanks for the question on TUKYSA. As you know, TUKYSA is approved for patients with visceral disease as well as patients with brain mets. And we are certainly using it in both patients and getting a lot of uptake there.

Chip, could you comment a little bit on the dynamics in the market of using TUKYSA in brain mets and in patients with visceral disease?

[Charles Romp, executive]

Yes. Thanks, Clay, very much. So we're pleased with the progress that the TUKYSA is making. We're seeing both increased utilization in patients with and without brain metastasis. And as I mentioned earlier in the reading, we're now the most used product in second line and beyond for people with brain mets. So again, uptake has been robust on this rollout as well, and it continues to grow.

[Operator]

Your next question comes from Cory Kasimov from JPMorgan.

[Turner Kufe, analyst]

This is Turner on for Cory. So just one on the Phase I SEA-CD40 study, as you mentioned in the prepared remarks, enrollment completed with around 159 patients across a bunch of different tumor types.

Can you just give us a sense of how many tumor types moved into expansion cohorts? Or was it just pancreatic cancer? And also just assuming we see signals with indications like pancreatic later this year, what do you see as potential next steps?

[Clay Siegall, executive]

Sure. So I have in previous calls talked about my interest in working on pancreatic cancer. It's such a huge unmet medical need, and how that's something that I felt as a cancer biologist. And so I'm making cancer drug, and I was really hopeful that we can make an impact on pancreatic cancer patients. So certainly, that's been an important part of this study. Roger, can you talk a little bit about where we are with SEAS -- SEA-CD40 in our plan?

And later on this year, we are planning to have data. I think we committed to presenting data for SEA-CD40 sometime this year. Now that does not mean that we're going to wait to making programmatic decisions until the data is presented. We can make programmatic decisions at any time and meet with regulators at any time and try to go forward on this really emerging, exciting program. But Roger, can you talk a little bit about what we're looking at in our arms before making any decisions on pivotal trials?

[Roger Dansey, executive]

Sure. So the CD40 program began as essentially a monotherapy program. We have an active agent. We have responses based on monotherapy. We then pivoted the program from monotherapy into a combination approach, and that initial focus is in pancreatic cancer.

So as Clay alluded to, we are interested in testing CD40 plus chemotherapy plus a PD-1 inhibitor in frontline pancreatic cancer. And that's the data that we will be focusing on.

However, from a biologic and sort of scientific perspective, we are interested in the construct of combining a CD40 agonist together with some form of cell killing through chemotherapy together with a PD-1 inhibitor. So we are working on plans potentially to look at other possibilities for further CD40 development, but the initial focus in the combination space is pancreatic cancer.

[Operator]

Next question comes from Michael Schmidt from Guggenheim.

[Michael Schmidt, analyst]

I had another one on the early-stage pipeline, specifically on the [ TGT ] antibody. It looks like other [ TGT ] antibodies have had rather similar single-agent activity in Phase I studies with a few anecdotal responses seen there. I guess to what degree would you expect an antibody like yours would enhance effector function to potentially improve upon these competitor molecules?

[Clay Siegall, executive]

So thank you for the question on our SEA-TGT. So we're just studying it now, so we've not reported any data at this point. But preclinically we saw that we had a very high effector function because it uses our SEA technology, which we've talked about before how that augments effector function while decreasing the inhibitory effector function. So I'm not going to go through all that again since I've talked about it a lot.

But we are very excited to take our drug into clinical trial. The hope of any drug is to see single-agent activity. And then the hope with any drug is that not only does it work in single-agent activity, but it works in combination.

And so we have a lot of plans on what to do in combination with PD-1 inhibitor and as with a single agent. And so we're working on advanced cell tumors and lymphomas, and we are cranking forward. And so I look forward to a time where we're presenting data.

[Operator]

The next question comes from Andrew Berens from SVB Leerink.

[Andrew Berens, analyst]

I wanted to see if you guys could give us some color about the presentation. I guess it's cohort K that's going to be at ASCO. Will it be a larger sample size than what you presented previously? Or will it be the same 45 patients with a longer follow-up?

[Clay Siegall, executive]

I'll turn it over to Roger for that. Roger, how about you addressing that?

[Roger Dansey, executive]

Yes, yes. So Andy, thanks for the question. It's actually cohort A. So it's the original data set, some 45 subjects that we saw that initial remarkable signal. And the data we presented has been mature. It's even more mature now, and we're excited to bring that forward. So you can see what the long-term outcomes look like with this combination of PADCEV plus KEYTRUDA in cisplatin-ineligible patients with frontline metastatic urothelial cancer. So it's not cohort K. It's cohort A.

[Operator]

Next question comes from Kennen MacKay from RBC Capital Markets.

[Kennen MacKay, analyst]

Congrats on the quarter. An elaboration on a prior question and then a separate question. Roger and Clay, you mentioned completing that SEA-CD40 study in pancreatic cancer data later this year. And when it happens, like you're excited about this one.

But I'm just hoping you can contextualize a little bit more what is the way here? Is seeing stable disease enough to get excited in pancreatic cancer, given this huge, huge, huge unmet medical need that was mentioned? Or do you really need to see responses to really have conviction there?

And then just on PADCEV, I'm wondering if you could help us with the breakdown of the bladder cancer market, and the incremental size of that metastatic or locally advanced bladder cancer market that was previously treated with the PD-1 or PD-L1 but is ineligible with cisplatin. I'm just trying to think about the incremental add from that sBLA that we're expecting to come online later this year.

[Clay Siegall, executive]

Sure. Why don't we start with the bladder market? And Chip, can you talk a little bit about the question Kennen asked about what we can expect with the potential additional market.

[Charles Romp, executive]

Yes absolutely, Clay. So this is a smaller segment of the population, but nevertheless I think a meaningful number of patients. There is an important unmet need, given these are typically older patients. They suffer from multiple comorbidities like poor kidney function. We are already seeing some unpromoted utilization, but we think there's a remaining opportunity once we get label to promote to.

[Clay Siegall, executive]

So going to your question on pancreatic cancer, Kennen, there are a lot of things you can look at. Now the study we enrolled and will be presenting data on will provide us a lot of information on ORR, objective response rate.

And just for reference, the gem abraxane ORR is about 23% in their Phase III. And so if we come in with 24%, it's not going to be meaningful. So it has to be substantively above the 23%.

Second of all, we want to look at the duration of response. We do that with every drug we do whatever disease it is, we look at duration of response. And you don't want a duration that's super short because that doesn't really help patients. It's not that meaningful. And the regulators also want to see duration. So we want to see it for ourselves in this lead-in trial.

And then the other thing is we want to try to take an initial look at saying, can we learn anything about OS? Now it's not a randomized study. It's not -- that would be the next study we did. But there's a very well-catalogued information on pancreatic cancer and what OS is.

So we think we'll get a handle on that and be able to say, okay, we have ORR. We have duration. And we have some trends in OS. Because it's not going to be statistically meaningful to our data. That would happen next. But we have trends there.

And we saw these kind of things in other drugs we've developed. And it's important to look at them and say, how are you doing in all these really critical data sets?

And that's what we've been doing. And I have gone on record saying I am really interested in this and excited about what we're seeing initially. To that extent, we publicly said we're going to expand what we're doing for -- we -- pancreatic cancer, a lot of people in history have seen data on a little bit in a few patients and have been -- and once you go to a lot of patients, it hasn't really panned out.

So we're trying to be appropriately studying this to know in a expanded population from our initial evaluation, will the data hold? Will it be exciting? And should we go into a pivotal trial with it?

And this is something is the way we develop many drugs. And so this is not unique to S 40. This is something we've done with other drugs and expanded what we've done and get a really good handle on.

And I think that by doing these expansion studies of single-arm studies, your hit rate of Phase IIIs in randomized studies is much higher. And I think that our hit rate historically has been high, once we get some additional conviction based on a little bit bigger study and not just a tiny study.

So that's what we did with this. We had a very small amount of data. We were -- I was -- speaking for myself, I was excited with it. But I and the clinical team here wanted to really be sure of what we're seeing. So that's what the data that will come out is.

Roger, do you want to have any comments on this?

[Roger Dansey, executive]

I think you're -- so this is a single-arm experiment. And obviously the key points are exactly as you say. What's the rate of response? What's the durability of those responders? What does progression-free survival look like? And what does overall survival look like?

And there is a very clear record of what to expect with standard chemotherapy. So hopefully if we see positive data, we'll be able to make some decisions about what a potential next step would be.

[Kennen MacKay, analyst]

Awesome. That's really, very helpful. And it does sound like something to be excited about.

[Operator]

The next question comes from Gena Wang from Barclays.

[Xiaozhou Fan, analyst]

This is Sheldon on for Gena, Maybe just one quick question about TUKYSA launch in Europe. We're glad to hear that you have launched in Germany, France and Austria.

So what do you see the potential ramp-up there over the course of next now like a year? How many additional markets would you expect to enter?

And also -- and a related question on PADCEV's -- potential European launch. So do you expect the launch pace to be roughly the same?

[Clay Siegall, executive]

So first of all, thank you about the TUKYSA question about Europe. We are very pleased with our progress. TUKYSA is now approved in 36 countries worldwide, and that includes EU and the U.K.

We have general managers in major countries. They're building teams. They have deep industry experience.

We have done commercial launches now, as I said, in Germany and France within one month of the EMA approval. So that's brand new. We are working to make TUKYSA available as quickly as possible and feasible in all the European countries.

But we have to navigate the local HTA processes, so that takes time. They don't all come on at once. I mean this is a little bit of a different process than in the U.S. where you could say that once U.S. approvals, all states are approved.

But in Europe, you have to go one at a time at a time. And we don't just do them sequentially. We're working on it at the same time, but it still is not all.

And then with regard to the U.K. we are actively engaging with the organization called NICE, with a decision expected in the fourth quarter of [ the ] year. So very big efforts to get it into all these countries, with just a few of the countries recently having commercial launches.

And so right now, we expect the majority of TUKYSA revenues to come from the U.S., and that's what we are for now. But in the future, we expect more and more to come from Europe.

[Operator]

The next question comes from Stephen Willey from Stifel.

[Ellen Sands, analyst]

This is Ellen on for Steve. So I understand tucatinib is being evaluated in combination in HER2 and HER2CLIMB-04. So I'm just curious what the bar of success is there, and maybe how you're thinking about the safety profile of this combination?

[Clay Siegall, executive]

Sure. Absolutely, we think that TUKYSA is a great drug to combine with and use in a lot of different regimens. Roger, can you talk a little bit about what you're thinking with TUKYSA in HER2?

[Roger Dansey, executive]

Yes, so both drugs are highly active. And obviously combining active drugs in oncology is a potentially fruitful path in terms of trying to find effective combinations.

And just bear in mind because in HER2 with trastuzumab plus chemotherapy, it's essentially the same sort of conceptual construct as was in HER2CLIMB where we combine tucatinib with trastuzumab and chemotherapy, which is capecitabine.

So it's following the path frankly that we are taking with TUKYSA in multiple other places we're using tucatinib in combination with KADCYLA. I don't think we've set any bars. We need to explore. And we'll see once we have some data to hand, we can determine what potential value that regimen may have as a combination.

From a safety perspective, again I don't think we have any expectations one way or the other. I don't think we're expecting amplification of safety from either side. But we need to generate the data and then we can evaluate.

[Operator]

Next question is from Andy Hsieh from William Blair.

[Tsan-Yu Hsieh, analyst]

So I'm just wondering if you could elaborate on your strategic positioning for SGN-CD30C. Would that be kind of an improved product to the medical community? Or you would be exploring areas where you haven't or basically are not as amenable to be targeted by ADCETRIS?

[Clay Siegall, executive]

So I appreciate very much the question. We definitely have second-generation molecules that we're working for ADCETRIS. There's actually a few of them that we're working on. And one of them we call C, as you referred to.

But there are some different molecules. Quite frankly, they're all exciting. It would not be impossible for us to take more than one to Phase I study and compare them there, and then decide which one to go with. So I don't want to rule that out either. There are some technologies that I'm not liberty right now to explain exactly but I think are exciting.

I have a unique perspective. And having been one of the pioneers in this field and building it up, and the field is now really taking on a life of its own and a lot of companies now work on ADCs So. I look in the past and some of the ADCs and how they were made were with bad linkers and natural product drugs, and I call that 1.0.

And then there was better drugs, synthetic drugs and much better linkers that are in drugs like ADCETRIS, and PADCEV and Polivy from Roche and others. And so I call that ADCs 2.0, if you will.

And then how will we get, as a field, to ADCs 3.0? And what can we do and what are the technologies that are needed to continue improving the efficacy in patients and decreasing any of the side effects that you have? That's always the goal. Or what the docs say, getting a better risk/benefit ratio. And how can we do that? And what can we do?

So we've spent many years pioneering some new technologies that we have. And I am really jazzed up about these new technologies based on all of their preclinical data in efficacy and in safety, including nonhuman primates.

So I think what you'll see from us is another generation of new ADCs that may have different payloads, different linkers, different ways of thinking about how to do these different toxicities or lack thereof. And those are coming. So we are working hard on ADC 3.0. So stay tuned. We'll be talking about it as soon as it's appropriate to.

[Operator]

The next question comes from Jay Olson from Oppenheimer.

[Jay Olson, analyst]

Congratulations on all the progress. Since you have an October PDUFA for TV, can you talk about some of the work that you've done to prepare for the launch, including anything on reimbursement or treatment guidelines? And then separately as you look across your broad product portfolio and pipeline, do you see any gaps that you want to prioritize for business development purposes?

[Clay Siegall, executive]

Right. So the first question is on TV and launch and reimbursement and all the rest. We certainly have submitted, and we're certainly working with regulators on this. We have a PDUFA date. We're working on combinations with KEYTRUDA and with chemotherapy. We've talked about that already in the call.

So there's a lot going on that we'll work on and we'll continue to work on in front of our PDUFA date of October 10. But we're really excited that this could be our fourth drug, and we think it's something we understand. We know how it helps patients. The confirmatory study is continuing and with planned enrollment in U.S. and abroad.

And certainly when you look at the commercial planning, we will go ahead and make sure that this gets launched really well. We're working with our partner, Genmab, on this.

Chip, do you want to have a brief comment? I don't want to say too much about this. It's a little early. It's also -- I don't think we want to outline too much yet. We just got, only a few weeks ago, we got accelerated status for approval. So I don't want to get ahead of where we are. But Chip, can you give some general comments?

[Charles Romp, executive]

Yes, sure, Clay, absolutely. So we have key personnel in the commercial organization in place. They've been in place for some time now and have been working to make sure that we're launch-ready by the time of the PDUFA date.

Like Clay mentioned, we're looking forward to co-promoting this with Genmab. We will also pull in some of the best practices that we've had in the PADCEV and TUKYSA launches.

[Operator]

The next question comes from Ren Benjamin from JMP Securities.

[Reni Benjamin, analyst]

I guess mine is regarding the non-muscle-invasive opportunity. Can you maybe provide some color regarding the discussions with the regulatory agency? And the trial is planned for BCG unresponsive patients, but do you have any thoughts on moving that either in combination or potentially supplanting BCG?

[Clay Siegall, executive]

Sure. Thanks, Ren, for the question. Roger, do you want to address what we can talk about now?

[Roger Dansey, executive]

Sure. So non-muscle-invasive bladder cancer is a large unmet need. As you point out, BCG unresponsive is the place to begin. But depending upon what the product profile looks like in terms of its efficacy and safety, there's always a possibility to consider combinations. And a lot of folks are going with combinations with BCG or potentially looking for a new gold standard.

What's attractive about PADCEV in terms of its possibility -- and it is just, at this point, a possibility -- is that in the preclinical experiments that we've done, we have almost no systemic exposure. And that's an important part of the equation for patients who are not going to die necessarily of bladder cancer, but needed to be managed and try potentially to avoid things like surgery. That's the one point.

The other is that the target that PADCEV is going after, which is nectin-4, is highly expressed, no only in the advanced and metastatic populations and in muscle-invasive but in non-muscle-invasive as well.

So we have an opportunity to instill PADCEV tests giving intravesical PADCEV to see if we can gain control first of BCG unresponsive. And then if we have a strong positive benefit/risk that we would like to take forward, yes we would clearly want to develop it further.

[Operator]

Next question comes from Shanshan Xu from Berenberg.

[Shanshan Xu, analyst]

I have a quick one on your CD40 antibody. Maybe can you talk about the biology on that target, that why you think your sugar-engineered Fc enhanced antibody can work better than other antibodies? I think -- it seems like the side effects could be the issue. I guess why do you think Fc enhanced could maybe avoid that problem?

[Clay Siegall, executive]

So I'm not exactly positive how to address this. But what we're looking at is trying to enhance the activity that you get through effector function and also decrease the inhibition that you get. When you look at PD-1, they release the brake on T cells. So it's a very fine balance between getting more activity but releasing inhibition.

And we think that our SEA technology does have some properties that no one else has. And we've observed them in preclinical models, and we've talked about them a lot. So we're really excited about it.

Now the proof is in the pudding. We have to go and we have to test this in humans that have cancer and see what we obtain. Both on safety because we're very, very cautious about making sure we're safe in patients and really transparent about that, but also in efficacy and seeing what happens.

And in addition to working with this as a single agent, there's a lot of efforts going on to bring it in combination. And that's something with a PD-1 inhibitor. And that's something that's important as part of the trial.

So we're bullish on the molecule. We're bullish on our technology. And we're hopeful, but we're not ready to discuss and present the data.

[Operator]

Next question comes from Brad Canino from Credit Suisse.

[Bradley Canino, analyst]

I want to ask, is some of the moderation in the PADCEV sales growth over the past few quarters due to patients being too sick to continue to a third line therapy and not getting the opportunity to try PADCEV? And then more broadly, Clay, how do you think about the low systemic treatment penetration in metastatic bladder cancer overall, and then maybe how PADCEV can change that when it gets approved in earlier lines?

[Clay Siegall, executive]

Okay. So these are questions I certainly want Chip to comment on. Chip, would you -- do you want to see like would you -- how you can answer this?

[Charles Romp, executive]

Yes, absolutely. So it's not uncommon at this stage of the launch to see product growth begin to decelerate. PADCEV is a standard of care. We are very optimistic about the changing market dynamics in this marketplace. PD-1s and PD-L1s have moved up utilization into the front line. We think that's going to continue in 2021, which will provide PADCEV have an opportunity to increase its treatable patient population.

[Operator]

There are no more questions in the queue. This concludes our question-and-answer session. I'd like to turn the conference back over to Peggy Pinkston for any closing remarks.

[Peggy Pinkston, executive]

Okay. Thank you, operator. And thanks, everybody, for joining us this afternoon. Have a great evening.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.