Seagen Inc

F:SGT

Earnings Call Transcript 2021-Q4

[Operator]

Good day and welcome to the Seagen Fourth Quarter and Full Year 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, Investor Relations. Please go ahead.

[Peggy Pinkston, Senior Vice President, Investor Relations]

Thank you, operator and good afternoon everyone. I am pleased to welcome you to Seagen’s fourth quarter and full year 2021 financial results conference call. This afternoon, we issued a press release with our results and that 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 will open the line for questions. We aim to keep this call to 1 hour and so ask that you limit yourself to one question 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 2022 financial outlook, anticipated product sales, revenues, costs and expenses and potential clinical and regulatory milestones, including data readouts, regulatory submissions and potential marketing and reimbursement 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 includes 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 quarterly report on Form 10-Q for the quarter ended September 30, 2021 filed with the Securities and Exchange Commission and the company’s subsequent reports filed with the SEC.

And now, I will turn the call over to Clay.

[Clay Siegall, President and Chief Executive Officer]

Thank you, Peg and good afternoon everyone. Today, we reported $1.4 billion in 2021 net product sales, a 38% increase over 2020 driven by solid growth across our commercial portfolio. Royalty revenues increased to $151 million in 2021, a 19% year-over-year increase, reflecting sales growth by our collaborators. Our total revenue guidance for 2022 is $1.67 billion to $1.75 billion, excluding TIVDAK. With a strong balance sheet and a cash position of $2.2 billion, we are well-positioned to advance our pipeline through internal and external investments. Todd will walk us through our 2022 financial guidance.

But first, I’d like to begin by reflecting on another exceptional year for Seagen. We achieved important milestones in 2021 and continued to expand our global infrastructure and portfolio. I will begin with our commercial products. ADCETRIS is a U.S. standard of care in frontline Hodgkin lymphoma and peripheral T-cell lymphoma and forms the foundation of our core business from a revenue standpoint. ADCETRIS has received approval in more than 75 countries and we and our partner, Takeda, continue to provide this important drug to patients in need.

Notably, last week, we announced that the Phase 3 ECHELON-1 clinical trial demonstrated a statistically significant improvement in overall survival in advanced Hodgkin lymphoma patients treated with ADCETRIS plus chemotherapy in the frontline setting. Over 30 years ago, ABVD was established as standard of care for treating Hodgkin’s disease. And almost 15 years ago, data regarding intensified [indiscernible] was initially released. We are thrilled that ADCETRIS+AVD has now improved overall survival and we believe these groundbreaking data further demonstrate ADCETRIS’ clinical value and importance in this disease.

PADCEV is a first-in-class ADC, which has become a standard of care in the U.S. for previously treated metastatic urothelial cancer. PADCEV has been broadly adopted by U.S. oncologists to treat more than 6,500 patients to-date. Last year, PADCEV received regular U.S. approval and was also granted a cisplatin-ineligible second-line indication. Together with our partner Astellas, in 2021, we secured approvals in Canada, Switzerland, Israel and Japan. We are progressing regulatory submissions across Asia-Pacific and the Americas. PADCEV received a positive CHMP opinion in December 2021. Recently, the European Commission decision-making process was paused for additional CHMP questions related to severe skin reactions in a French compassionate access program. This side effect is described in the USPI and since launch, has been well managed by U.S. prescribing physicians. We believe that the risk/benefit profile of PADCEV remains unchanged. We are committed to working with European authorities to get this important drug approved for urothelial cancer patients.

Beyond these global regulatory activities, we are advancing a robust clinical development program with PADCEV as monotherapy and in combination with KEYTRUDA in earlier lines of therapy. We completed enrollment of EV-103 cohort K and expect data in the second half of this year, which could potentially support accelerated approval in the U.S. in 2023 for first line metastatic urothelial cancer. We are also exploring earlier stages of bladder cancer, which represent larger market opportunities. In muscle invasive bladder cancer, we will report neoadjuvant monotherapy data at ASCO GU later this month and we are now enrolling patients in a trial for non-muscle invasive bladder cancer.

Finally, we are conducting a basket trial evaluating PADCEV in other Nectin-4 expressing solid tumors. TUKYSA is a best-in-class HER2 tyrosine kinase inhibitor with broad potential in HER2 cancers. Overall survival data and inclusion in key treatment guidelines reflects its clinical value in second and later line HER2-positive breast cancer patients with and without brain metastasis. TUKYSA is approved in 36 countries and we have commercially launched in the U.S., Germany, France, Switzerland and Austria. We are working to secure reimbursement and are planning launches in additional European countries over the course of 2022.

We recently announced the appointment of Lee Heeson as Executive Vice President, Commercial International. We look forward to Lee’s contributions towards our continued ex-U.S. expansion. Our strategic partnership with Merck extends TUKYSA’s reach outside of the U.S., Europe and Canada. TUKYSA’s broad clinical development program includes HER2-positive breast cancer, colorectal cancer, gastric cancer and other HER2 amplified or mutant tumors. Notably, we expect data from the Phase 2 MOUNTAINEER trial in the second half of this year, which could potentially support accelerated FDA approval in colorectal cancer in 2023.

Seagen’s fourth approved product is TIVDAK, which we launched in collaboration with Genmab. TIVDAK, which is a tissue factor-targeted ADC, was approved for recurrent or metastatic cervical cancer patients with disease progression on or after chemotherapy. It represents an important new drug in a disease that is characterized by low objective response rates and poor outcomes. TIVDAK’s clinical development program is designed to support global regulatory applications and maximize its future potential in cervical cancer and other solid tumors. As we look to expand TIVDAK in cervical cancer, we recently presented promising combination data in earlier lines of treatment, which could lead to use in much larger patient populations.

In 2021, we also drove key advancements across our deep and diverse pipeline. For example, we in-licensed the late-stage novel ADC disitamab vedotin, which utilizes a high-affinity HER2 antibody with enhanced internalization compared to trastuzumab. DV received conditional approval in China for third line gastric cancer and recently in second and later lines of metastatic urothelial cancer. Our clinical development program prioritizes monotherapy and combination approaches in breast, bladder, gastric and other cancers. DV utilizes our vedotin-based ADC technology. And leveraging our expertise, we are working to maximize its development, potential value and global reach.

Turning to our earlier stage work, we recently initiated two trials for 2 novel ADCs, SGN-PDL1V and SGN-B7H4V. And we have also submitted an IND, which just cleared for SGN-ALPV. We are developing new ADC technologies in order to widen the therapeutic window of this exciting class of drug with a focus on improving tolerability. In addition, we have four programs that use our proprietary sugar-engineered antibody technology. Overall, we are advancing more than 17 programs across our pipeline and approved products in a range of solid tumors and hematologic malignancies.

Next, I want to provide a brief update on the Daiichi Sankyo litigation. Recently, the arbitration hearing record was reopened by the arbitrator to consider additional evidence. As a result, the decision may occur after the first quarter of 2022 as previously anticipated. Our 2021 achievements have helped to bolster our resilient core business and the solid foundation we continue to build upon. We expect to achieve many milestones in 2022, including important clinical data readouts, global regulatory and commercial progress and advances across our pipeline, which will help drive future growth.

As we look to deliver continued innovation and develop transformative therapies, we remain focused on three key areas. First, we are working to maximize the potential of our approved portfolio through exceptional commercial execution, clinical development and strategic partnerships. We have expanded our commercial portfolio from 1 to 4 products in under 2 years and have treated over 110,000 patients to-date. Robust clinical development programs will generate the potential for future label expansions and opportunities. Second, we are advancing our deep and diverse pipeline of assets as we look to bring drugs 5, 6 and 7 to market in the coming years. We believe our ADC leadership and R&D expertise in empowered antibodies provides us with a competitive advantage when it comes to expanding and progressing our pipeline. Finally, we are well-positioned for continued innovation and growth, having built and optimized our infrastructure and capabilities. Our expanding geographic footprint and over 50 strategic partnerships maximize our ability to reach patients across the globe. Our strong corporate development team and significant financial strength allows us to execute upon deals that will further accelerate our trajectory.

Next, I will turn the call over to Chip who will provide an update on our commercial performance. Then Todd will discuss our financial results and 2022 guidance. After that, Roger will detail our clinical development activities and pipeline. Chip?

[Chip Romp, Executive Vice President, Commercial U.S.]

Thanks, Clay. The commercial team delivered another strong quarter to close out a very successful year for Seagen. We have effectively scaled and executed in our efforts to maximize the potential of our commercial portfolio of four products. ADCETRIS fourth quarter 2021 sales were $176 million, an 8% increase over the fourth quarter of 2020. Our focus remains on driving share in frontline Stage 3 and 4 Hodgkin lymphoma. We were pleased to see the recent update to the NCCN treatment guidelines that recognized the significance of the 5-year ECHELON-1 data. We are excited to now have overall survival data from the ECHELON-1 Phase 3 study and we will continue to monitor uptake in the frontline setting.

Moving on to PADCEV, fourth quarter 2021 U.S. sales were $93 million, a 34% increase over the fourth quarter of 2020. We have now seen broad adoption of checkpoint inhibitors as maintenance therapy for patients in the frontline metastatic setting, which has helped PADCEV become the preferred standard of care in the second line post-maintenance setting. In addition, the indication for patients who are ineligible for cisplatinum-containing chemotherapy continues to represent a meaningful option and a modest incremental growth opportunity. We expect growth in 2022 to be driven by existing indications and look forward to potentially promoting to an additional U.S. passive label in the frontline metastatic urothelial cancer setting next year.

Moving on to TUKYSA, fourth quarter 2021 sales were $94 million, a 53% increase over the fourth quarter of last year, with growth coming from both the U.S. and Europe. TUKYSA remains the most utilized product in second and later lines in the U.S. in patients with brain mets. Updated overall survival data in these patients that recently was presented at the San Antonio Breast Cancer Symposium has been well received and is a promotional focus. We are monitoring the evolving HER2 metastatic breast cancer treatment landscape and we have incorporated this into our annual revenue guidance, which Todd will detail shortly. TUKYSA’s sales in Europe for the quarter continued to grow and we look forward to gaining reimbursement in additional countries in 2022.

We are pleased with TIVDAK sales of $6 million for the first full quarter since approval, and launch is going as planned. We are navigating the eye care requirements and have gained valuable insights that are allowing us to enhance our educational efforts. Although the initial indication represents a modest opportunity, TIVDAK is an important treatment option and early feedback has been positive.

With that, I will turn the call over to Todd.

[Todd Simpson, Chief Financial Officer]

Thanks, Chip and thanks everyone for joining us on the call this afternoon. Our financial results reflect significant advances made across the business in the past year. Today, I will summarize our financial results for 2021 and then discuss our outlook for 2022.

Total revenues were $430 million in the fourth quarter and $1.6 billion for the full year in 2021. This included net product sales of $369 million in the fourth quarter and $1.4 billion for the full year, representing an increase of 38% over the year in 2020. This reflects growth in product sales across our portfolio and particularly for TUKYSA and PADCEV. Royalty revenues were $46 million in the fourth quarter and $151 million for the year in 2021. The 19% year-over-year annual growth in royalty revenues is primarily driven by increasing sales of ADCETRIS by Takeda and to a lesser degree, sales of Polivy by Roche and Blenrep by GSK, both of which are ADCs that utilize Seagen technology.

Collaboration revenues were $15 million in the fourth quarter and $38 million for the full year in 2021. 2021 collaboration revenues decreased as a result of $250 million recognized in the fourth quarter and $975 million recognized for the full year in 2020. These amounts related to the ladiratuzumab vedotin and TUKYSA collaborations with Merck that we entered into in 2020. Cost of sales was $87 million in the third quarter and $312 million for the full year in 2021. This included product cost of sales and royalties for each of our brands, the gross profit share due to our collaborators and non-cash amortization of acquired technology costs for TUKYSA.

R&D expenses were $304 million in the fourth quarter and $1.2 billion for the full year in 2021. This is an increase over 2020 and included the $200 million upfront payment to RemeGen for in-licensing disitamab vedotin as well as continued investment across our early and late stage pipeline. SG&A expenses were $211 million in the fourth quarter and $716 million for the full year in 2021. These are increases over 2020, reflecting investments to support the ongoing launches of TUKYSA across Europe and more recently, the launch of TIVDAK in the U.S.

Next, I will turn to our financial outlook for 2022 beginning with our revenue guidance. Across our three key commercial brands, we are guiding to product sales of $1.48 billion to $1.55 billion, representing an increase of 7% to 12% over 2021. ADCETRIS sales are expected to be in the range of $730 million to $755 million, reflecting modest growth while we advance a broad clinical development program intended to secure additional labels.

PADCEV sales are projected to be in the range of $435 million to $455 million. We expect growth in 2022 to be driven primarily by continued utilization within its two current indications. While we expect to report data from cohort K of the 103 trial in the second half of this year, our guidance does not include the impact of a potential label expansion.

TUKYSA sales are expected to be in the range of $315 million to $335 million. And as Chip mentioned, our guidance reflects the ongoing evolution of the treatment landscape. While we expect to report data from the MOUNTAINEER trial later this year in colorectal cancer, we do not anticipate label expansion in 2022. We continue to engage with individual country authorities to secure broader European reimbursement, which can take up to 2 years post-EMA approval. And since we are still early in the launch of TIVDAK, we are not including sales estimates in our 2022 guidance at this time.

Next, we expect royalty revenues to be in the range of $160 million to $170 million, primarily reflecting sales of ADCETRIS by Takeda in its territories, along with contributions from Polivy and Blenrep. Finally, we expect collaboration revenues to be in the range of $25 million to $30 million. As a reminder, collaboration revenues include our profit share from Astellas’ sales of PADCEV in its territory. This now includes royalties from sales in Japan and in future years is expected to include a profit share from the EU 5.

Now, I will turn to 2022 expense guidance. Cost of sales is expected to be in the range of $380 million to $420 million. This is driven by increased product sales across all brands and the higher profit share payments to our collaborators. Cost of sales also reflects third-party royalties owed as well as non-cash amortization.

R&D expenses are expected to be in the range of $1.2 billion to $1.3 billion, primarily related to two items: first, investment in clinical trials to further expand ADCETRIS, PADCEV, TUKYSA and TIVDAK into additional indications; and second, increased investment to advance our earlier stage agents, including more than 13 other programs in the pipeline. We believe that these investments are important to our long-term growth.

SG&A expenses are expected to be in the range of $780 million to $860 million as we continue to focus on commercial execution to drive growth of our approved products. The guidance also includes investment to support the global infrastructure for the continuing launches of TUKYSA in Europe. Non-cash expenses are expected to be in the range of $280 million to $310 million, the majority of which is stock-based compensation. Taken together, our guidance reflects our strategy to expand the commercial opportunity of our portfolio and to advance new product candidates.

Now, I will turn the call over to Roger, who will highlight our development activities.

[Roger Dansey, Chief Medical Officer]

Thank you, Todd and good afternoon everyone. I am happy to share recent clinical development updates for both our approved medicines and our pipeline.

I will begin with ADCETRIS. We are extremely pleased that ADCETRIS in combination with AVD has significantly improved overall survival compared with ABVD in newly diagnosed patients with advanced Hodgkin lymphoma. ADCETRIS was shown to reduce the risk of death by 41% with a hazard ratio of 0.59 and a p-value of 0.009. These data further demonstrates the meaningful difference that ADCETRIS brings to patients and we look forward to presenting the results at an upcoming medical meeting.

In addition, we were recently informed that a Phase 3 study of ADCETRIS in newly diagnosed pediatric patients with high-risk Hodgkin lymphoma, defined as Stages 2b with bulk 3b and 4 has met the primary endpoint of event-free survival as reported by the Data Safety Monitoring Committee. Trial-AHOD1331 is sponsored by the National Cancer Institute and run by the NCI-funded Children’s Oncology Group. The study compared an ADCETRIS-containing chemotherapy regimen to a chemotherapy regimen that included bleomycin. We thank the Children’s Oncology Group for their efforts, and we look forward to their presentation of these exciting data at an upcoming medical meeting.

At ASH, we presented initial data of the combination of ADCETRIS + nivolumab, doxorubicin and dacarbazine in frontline advanced Hodgkin lymphoma, which showed an objective response rate of 93% and a complete response rate of 88% at the end of therapy. We believe these promising results could form the basis in the future for testing this novel regimen in the frontline setting. Later this year, we plan to share results describing ADCETRIS’ potential utility as an immunomodulator in combination with KEYTRUDA in solid tumors. We are also testing ADCETRIS in a Phase 2 study in HIV patients, which will begin enrolling this quarter.

Turning to PADCEV. We remain focused on moving this important product into earlier lines of urothelial cancer. In the frontline metastatic setting, we are evaluating PADCEV and KEYTRUDA in two studies: EV-103 cohort K in patients who are ineligible for cisplatin therapy; and EV-302, which includes both cisplatin eligible and ineligible patients. EV-103 cohort K has completed enrollment, and we expect to report top line results in the second half of 2022. The Phase 3 EV-302 global trial is assessing PADCEV plus KEYTRUDA compared to platinum-containing chemotherapy. And we are pleased that this trial is projected to complete enrollment this year. EV-302 is intended to be a confirmatory trial for cohort K as well as supporting global marketing applications.

In muscle invasive bladder cancer, we, together with Astellas and Merck, are advancing two Phase 3 trials that are testing PADCEV in combination with KEYTRUDA as perioperative treatment in different populations. The KEYNOTE-B15 or EV-304 trial is enrolling cisplatin-eligible patients. And KEYNOTE-905 or EV-303 trial is enrolling cisplatin-ineligible patients. Later this month at ASCO GU, we plan to present the results of the EV-103 exploratory cohort H. In this cohort, PADCEV monotherapy was given as new adjuvant treatment of cisplatin-ineligible muscle-invasive bladder cancer patients for three cycles prior to cystectomy.

Furthermore, we are pleased to announce that we have begun enrollment into the EV-104 trial of single-agent PADCEV in nonmuscle invasive bladder cancer. In this study, PADCEV is administered intravesically in BCG nonresponsive patients. We are also studying PADCEV monotherapy in a basket trial of high Nectin-4 expressing solid tumors, including lung, breast, head and neck, gastric and esophageal cancer. This study continues to enroll patients, and we await initial data this year to inform our next steps.

Turning to TUKYSA, we continue to advance our broad development program in breast and GI malignancies as well as other solid tumors. Today, I will highlight a new study, HER2CLIMB-05, which will evaluate TUKYSA in the frontline maintenance setting of HER2-positive metastatic breast cancer. Standard of care for these patients typically include six to eight cycles of a taxane with Herceptin and PERJETA, otherwise known as THP. Once the chemotherapy is complete, the Herceptin and PERJETA are continued as maintenance. Despite the excellent results obtained with THP, patients remain at risk of relapse and death, including the risk of relapse in the brain.

HER2CLIMB-05 randomizes patients who have completed THP to receive TUKYSA, Herceptin and PERJETA or Herceptin and PERJETA alone. The primary endpoint is progression-free survival and we expect to treat the first patient this quarter. In GI cancers, we are awaiting results of a Phase 2 MOUNTAINEER study, which are expected in the second half of this year. The study assesses TUKYSA and Herceptin as treatment for patients with previously treated HER2-positive colorectal cancer. Additional trials are studying TUKYSA in combination with oxaliplatin-based chemotherapy in first-line GI cancers as well as in combination with Herceptin in a basket trial for solid tumors with HER2 alterations.

I’ll turn now to TIVDAK, which received accelerated approval in the United States for the treatment of patients with recurrent or metastatic cervical cancer with disease progression on or after chemotherapy. A global Phase 3 trial in cervical cancer, innovaTV 301, is currently enrolling in the EU and Asia, including Japan, with plans to expand to other regions such as LatAm. This study is intended to serve as the confirmatory trial in the United States and, importantly, to support global regulatory applications.

Our next goal for TIVDAK is to move into earlier lines of metastatic or recurrent cervical cancer. And in this regard, we presented combination data from the innovaTV 205 trial in the first and second-line setting at ESMO 2021. This study will be expanded to further investigate additional multi-drug combinations, including TIVDAK combined with carboplatin and KEYTRUDA with or without bevacizumab. The results from these new combinations will inform further development of TIVDAK in the first-line setting. Beyond cervical cancer, we continue to study the potential for TIVDAK in other malignancies through an ongoing Phase 2 trial innovaTV 207. Preliminary data evaluating TIVDAK as treatment of head and neck cancer is being presented later this month at the ASCO Head and Neck Cancer Symposium in Arizona.

Turning now to disitamab vedotin or DV, in the second quarter of this year, we expect to begin enrolling our monotherapy trial in urothelial cancer. We are also focusing on the development of DV IN HER2-low breast cancer based on encouraging monotherapy data generated by our partner RemeGen.

I’d like to now briefly mention our early-stage pipeline. We are evaluating multiple products in Phase 1 clinical trials across a range of solid tumors and hematologic malignancies. We recently reported first clinical data from two novel SEA programs. At ASH, we disclosed initial SEA-BCMA monotherapy data that demonstrated an encouraging early safety and efficacy profile in the fifth line plus multiple myeloma setting. In addition, we recently shared SEA-CD40 data in combination with chemotherapy and an anti-PD-1 in metastatic pancreatic cancer, in which we demonstrated evidence of immune activation in patients with an acceptable safety profile and encouraging antitumor activity. Follow-up for survival is ongoing and will inform future development decisions. We are also enrolling a basket trial to assess SEA-CD40 combination in other solid tumors, including melanoma and non-small cell lung cancer. In closing, we continue to make meaningful progress on our pipeline, and we look forward to providing you with updates on future calls.

Now I’ll hand the call back over to Clay.

[Clay Siegall, President and Chief Executive Officer]

Thank you, Roger. I’m proud of the important milestones we have achieved in the past year, which have set the stage for our future. Our portfolio, proven commercial engine, expanded international infrastructure and strategic partnerships increased our global competitiveness and maximized the value of our approved medicines. We believe our significant financial strength, active corporate development, robust clinical development and key 2022 catalysts will continue to bolster our deep and diverse pipeline. We are well positioned for future innovation and growth.

At this point, we will turn to Q&A. Operator, please open the line for questions.

[Operator]

Thank you. [Operator Instructions] Our first question comes from Geoff Meacham with Bank of America. Please go ahead.

[Geoff Meacham, Bank of America]

Hi, guys. Thanks for taking the question. I guess the real obvious one is you guys have talked a lot about all the trends in the fourth quarter and last year. And the guidance for the three main products, one is down year-on-year and the other two are just marginally essentially flat line with fourth quarter. So is it – I get the need to be conservative. But is there something that we should be aware of as it relates to the competitive backdrop for all of your products or the market itself? Just give us a little bit more detail on kind of the idea behind the guidance and maybe any individual kind of nuances that you’d want to point out? Thanks.

[Clay Siegall, President and Chief Executive Officer]

Sure. Thanks, Jeff. So first of all, we like where we are positioned on all our brands. We have OS data in three of these brands [indiscernible] TIVDAK is our newest drug, and that’s something potentially for the future. These are real drugs. These are not incremental drugs, and they really help patients. And as you know, building brands – it takes time to build them up. And we have tons of great catalysts coming out for 2022, which we certainly could go over. Our revenue guidance for 2022 is 6% to 11% higher than last year. Our product sales guidance is 7% to 12% growth over 2021. So we’re certainly not guiding that as a company, we’re going down. The one point about TUKYSA that – if you want to talk about, the guidance is flat to slightly down for TUKYSA. And the rationale for that and really how we’re thinking about it is in brain mets, TUKYSA is the most utilized drug for patients with HER2-positive breast cancer in second or later lines. And the product is growing in Europe. But it’s an evolving and dynamic marketplace. And with the advent of the HER2-DB03 trial, it’s likely to have a near-term effect on our growth, and that’s reflected in our guidance. But we do expect MOUNTAINEER data in the second half of the year to support regulatory submission with potential label in 2023. So there is a lot that we can do. There are so many other things we’re doing with TUKYSA. We have HER2CLIMB-02, as Roger mentioned, soon to start HER2CLIMB-05 in frontline maintenance, continued contributions from Europe as we secure reimbursement. So I think the future is very bright for TUKYSA. That’s where we are right now.

[Geoff Meacham, Bank of America]

Okay, thanks.

[Operator]

Our next question comes from Salveen Richter with Goldman Sachs. Please go ahead.

[Salveen Richter, Goldman Sachs]

Good afternoon, thanks for taking my question. Could you frame the PADCEV muscle-invasive bladder cancer cohort H data that’s coming up in terms of how we should think about what’s meaningful here?

[Clay Siegall, President and Chief Executive Officer]

Sure. We’re really excited about what we could see with the – what we’re going to be presenting at ASCO GU. Roger, can you outline a little bit what we are looking at and the context?

[Roger Dansey, Chief Medical Officer]

Sure. Thanks, Clay. So the data that we will be presenting from EV-103 cohort H is PADCEV monotherapy in the neoadjuvant setting. And these are folks who are cisplatin-ineligible with MIBC. And so they have not yet undergone any surgery. So what this will do and – when the data is presented publicly, you will have a better understanding and a better indicator of what PADCEV as a monotherapy is able to achieve in this disease state. We’re excited to have the data presented, but it is important to just note that the ongoing registration trials that are being run, which I mentioned in the prepared remarks, are focusing on the combination of KEYTRUDA plus PADCEV. KEYTRUDA has already shown meaningful activity in this population. When we’ve shared the PADCEV data, there will be an understanding of what PADCEV can do and then some idea of potentially what a combination could produce.

[Operator]

Our next question comes from Cory Kasimov with JPMorgan. Please go ahead.

[Cory Kasimov, JPMorgan]

Hi, good afternoon, guys. Thank you for taking my question. I wanted to ask about the significance of the arbitrator reopening the Daiichi litigation to consider additional evidence. Can you talk about kind of what this means, a precedent there? And are you able to say what parties submitted the additional evidence? Thank you.

[Clay Siegall, President and Chief Executive Officer]

Thanks for the question. So as we said, the arbitration hearing was reopened. I just want to repeat this and – by the arbitrator to consider additional evidence. As a result, the decision may occur after the first quarter. We don’t know exactly at this point. And what’s important is for us to say is that legal matters are confidential and they are pending. And it’s not appropriate for us to discuss them in detail. However, what I will say is we believe that our case is strong. We continue to believe that. We have no change whatsoever in our belief, in our case. And this delayed resolution does not change our view that we have a great case.

[Cory Kasimov, JPMorgan]

Okay, thank you.

[Operator]

Our next question comes from Kennen MacKay with RBC Capital Markets. Please go ahead.

[Kennen MacKay, RBC Capital Markets]

Hi. Maybe just thinking about the product revenue guidance for ‘22, can you talk a little bit about net price assumptions here? We’ve heard more and more that revenue growth is going to rely much more on volume growth and pricing growth, which is a little bit different from some of the trends for the last 15 years or so. I’d just love to hear how you’re thinking about that for 2022 and beyond. Thanks.

[Clay Siegall, President and Chief Executive Officer]

Sure. Thank you, Kennen, for the question. Todd, would you like to comment?

[Todd Simpson, Chief Financial Officer]

Yes. Thanks, Kennen. I’ll try to jump in here. I think when you look across the brands, we are projecting volume growth. We have, as you know, historically done price increases, although today, we’re not commenting on which prices we have or will or won’t do. But what we’ve tried to do with our guidance is really kind of look across each of the brands. Look at where we are, for example, with ADCETRIS. This is a drug that’s been on the market 10 or 11 years. It’s an incredible drug that has helped a lot of patients. And we’re projecting growth this year because we think we can continue to increase adoption. And we commented on the call with the OS data that we presented last year. I’ll point out that those data are only out in top line for right now. We’re looking forward to presenting the full data set at a medical conference later in the year. So we haven’t tried to assume uptake in our guidance based on that, but it’s certainly positive. I think PADCEV will see a nice growth year. We continue to see patients that are completing checkpoint inhibitor maintenance therapy in the frontline setting that fall really nicely into the current label indications. And of course, we’ve got clinical trials underway to continue to broaden the label is the longer term goal. And then with TUKYSA, we’ve been on the market now approaching 2 years in the U.S. We’re starting to reach steady state there. Europe continues to grow. But as Chip mentioned in the call, we’re also aware that – nicely for patients, the treatment landscape continues to evolve here. So we think TUKYSA is going to continue to be an important drug. And as Roger mentioned, there is a lot of work underway to move it into earlier line combination settings with drugs like Kadcyla in the HER2CLIMB-05 trial setting as maintenance therapy and then, of course, the colorectal data. And hopefully, that leads to a label next year out of the MOUNTAINEER trial. So we’re really bullish on the drugs. This is a little bit of a year of executing on clinical trials, which is what you’ve got to do to generate data to support label expansions. And that’s been a stated goal of ours for a long time.

[Operator]

Our next question comes from Matthew Harrison with Morgan Stanley. Please go ahead.

[Matthew Harrison, Morgan Stanley]

Great. Good afternoon. Thanks for taking the question. Thanks for all the comments on the product guidance you’ve already provided. I guess I was just hoping on TUKYSA to ask a bit more specific question. So could you comment so far in 2021, what impact you’ve seen from the DESTINY-03 results for Enhertu? And have you seen share loss – off-label share loss from Enhertu being used there? And then can you give us some sense of how much of an impact you’re thinking this is going to cause in 2022? That would be very helpful. Thanks.

[Clay Siegall, President and Chief Executive Officer]

Right. Well, in 2021, it’s not really where we’re predicting the impact. It’s really in 2022. Chip, do you want to give a little bit of color on that?

[Chip Romp, Executive Vice President, Commercial U.S.]

Sure, Clay. Absolutely. It is early to see impact of new data. Moving forward, we do expect to see changes in the market – as the market digests the data more thoroughly. As far as the adjustments, those are reflected in the guidance that we put forth for 2022.

[Operator]

Our next question comes from Andrew Berens with SVB Leerink. Please go ahead.

[Andrew Berens, SVB Leerink]

Hi, thanks. Appreciate all the color, you guys have given. Maybe one on the EMA pause of the PADCEV review. You mentioned that there was a positive CHMP decision. Didn’t this include a consideration of the skin rash and Stevens-Johnson syndrome tat has been seen previously? Just trying to understand what’s new about what we’re seeing in the French compassionate use program that caused the EMA to pause the review?

[Clay Siegall, President and Chief Executive Officer]

Yes. Thanks for the question. So we had some severe skin reactions in a – as you pointed out, as we stated, a French compassionate access program. This is a well-documented side effect, and it’s very consistent with our USPI. Safety is our highest priority for patients. But we believe fully that the benefit-risk profile is unchanged for PADCEV. And we’re excited with this drug. It’s been used in many, many thousands of patients in the U.S. Docs use it well in the U.S. They understand how to use it. And it’s important to – for docs around the world to use it according to the label. Roger, do you want to add any additional color?

[Roger Dansey, Chief Medical Officer]

Yes. So Andy, I think that the – this is the European regulatory process that we’re going through. And the exact reason why decision was made to pause on an approval is really for the regulators to make that call. But just to reiterate what Clay is saying, there is nothing in the data that we are aware of that we see that is any different from what we’ve generated elsewhere and what is currently reflected very clearly in the USPI.

[Andrew Berens, SVB Leerink]

Thank you.

[Operator]

Our next question comes from Michael Schmidt with Guggenheim. Please go ahead.

[Michael Schmidt, Guggenheim]

Hi, guys. Thanks for taking my questions and congrats on the nice fourth quarter, actually. But I had another one on the 2022 product guidance, specifically on TUKYSA. When we talk to breast cancer docs, they really tell us that they use the drug predominantly in patients with brain met and that would really not change based on the new Enhertu data. So just wondering what your market research there says. And then on the other hand, PADCEV guidance for 2022, it was actually higher than what we expected, especially since you have stated in the past that you already have very high market penetration in bladder cancer in the U.S. And so just wondering how you see the market evolving there in the near-term that – and what the growth drivers could be for PADCEV in 2022?

[Clay Siegall, President and Chief Executive Officer]

So first of all, we will start with PADCEV. Our guidance shows about a 30% growth over 2021. So we believe PADCEV is really helping patients. And there is a lot we could talk about with this, but we believe it’s still a growth opportunity post checkpoint – post checkpoints and post checkpoint and eligible patients, which is reflected in our guidance. And so checkpoint inhibitors have grown the market for PADCEV, actually. And so we’re excited with that. But we’re also excited from we’re going to get data in cohort K this year. It’s not in our guidance because we’re going to get – we expect the data in the second half of the year. And so we think that based on the timing for submitting that and everything, the approval wouldn’t happen until 2023. So obviously, we could put that into ‘22 guidance. We do expect to complete enrollment of EV-302 this year, which is to support global submissions in first line urothelial cancer regardless of whether your cyst eligible or ineligible. And we’re going to have presentations very soon on muscle invasive bladder cancer, which is a bigger opportunity in metastatic disease. And then the trials are underway not only in muscle invasive, but in non-muscle invasive, which is a much bigger opportunity. And we also have basket trials enrolling. So, expect data this year for – initial data on basket trials. So, when you look at PADCEV, if you look at our guidance of a 30% growth and where we are with new labels for the year. Yes, the product is still doing really well. So, I appreciate you pointing that out. As far as TUKYSA goes, we have discussed everything here. We believe it will still be used and doctors rely on it in terms of brain mets. And so that’s something that we are really happy about. The other thing is – one of the things that’s kind of been interesting is docs use – the duration of use of TUKYSA has been strong. So, we are really pleased with that. And I don’t know if you found that out in your market assessment. But docs – often, you see a drug that – you do a clinical trial, and you see a shorter duration in the real world. That’s not what we are seeing in the real world. We are seeing something that’s very good. But we do – we are including in our guidance some effect of the DB-03 trial. It’s not just – TUKYSA is not just used in brain met patient, although that’s a very big area. It’s also used in patients with visceral disease. And Chip, do you want to give any color on that part of patients and a little bit about our guidance on what we are thinking?

[Chip Romp, Executive Vice President, Commercial U.S.]

Sure, Clay. So, as I mentioned in past calls, we have seen uptake in both patients with and without brain metastasis. TUKYSA has strong data in both those patient subsets. So, it’s really broad utilization. It has established – TUKYSA established itself as an important treatment option, especially for patients that do have brain metastasis. So, our thinking around this is that we are going to continue to get utilization. We are going to continue to work to make sure that every eligible patient has an option that is available to them, that physicians, quite frankly, have anchored to since launch. But we look forward to continuing to promote the product. The guidance recommendation that we have is our best current thinking on how the marketplace and the landscape is going to change.

[Michael Schmidt, Guggenheim]

Okay. Thank you.

[Operator]

Our next question comes from Boris Peaker with Cowen. Please go ahead.

[Boris Peaker, Cowen]

Great. I just want to follow-up on TUKYSA and the new HER2CLIMB-05 study that you announced earlier today. Just thinking given the relatively good prospects for these patients, how large will this trial be? How long do you think it will take? And based on the kind of estimated time of completion, how much exclusivity do you think there will be left on TUKYSA at that point?

[Clay Siegall, President and Chief Executive Officer]

We haven’t outlined everything. Roger, can you give a little color and context on TUKYSA-05 trial?

[Roger Dansey, Chief Medical Officer]

Yes, sure. So, as you have heard us in our prepared remarks, outlining what this trial will do is from a medical perspective, it’s very appealing. Yes, the frontline therapy with THP is successful, but there are still patients who relapse. And using TUKYSA in a maintenance mode like this – actually positions as well has a lot of appeal and makes a lot of sense. The size of the trial, the assumptions of the treatment effect, the rate of events are all things that will influence timing. But we decided to move ahead with the trial. So, we believe that based on its size, based on how long it will take and based on when we expect the readout, that we will have a meaningful opportunity if the trial is successful to commercialize that indication.

[Clay Siegall, President and Chief Executive Officer]

We think this is – the appeal of the trial, as Roger says, goes to the fact of how quickly you can enroll. And as far as timing goes, the faster you can roll, the faster you can have data and go towards helping patients on the commercial market. So, we are really excited with the trial. We believe it’s strongly positive from a financial standpoint and we are excited in going forward.

[Boris Peaker, Cowen]

Great. Thanks for taking my question.

[Operator]

Our next question comes from Steven Willey with Stifel. Please go ahead.

[Bonnie Quach, Stifel]

Hi. This is Bonnie Quach on for Steve Willey. And I just had a quick question for your top line results that we anticipate to see for a Cohort K and EV-103. Are there any expectations that you can frame for us in terms of what type of data and how much data we can anticipate now that enrollment is complete?

[Clay Siegall, President and Chief Executive Officer]

We have – as I said, we will have data in the second half of this year. I think that the specifics of what we expect or what it will look like, we will just have to wait until the data come out. And our intention is with these type of data, we have put out top line, but we have had also presented at a conference as fast as we can and obviously right on publications. That’s what we usually do, and we would continue to do that. But as soon as possible, after gaining – allowing the time to go on to really watch the trial and make sure that we see the appropriate data and duration and everything, safety and all different features at the agency, we will put out top line data at our soonest appropriate timing. So, and that’s the second half of this year.

[Operator]

Our next question comes from Gena Wang with Barclays. Please go ahead.

[Gena Wang, Barclays]

Thank you. Just one quick question, clarification question regarding arbitration reopen for additional evidence. Just want to make sure like was the additional evidence already submitted or arbitrator is asking for additional evidence? If the latter, is there a deadline to submit the data?

[Clay Siegall, President and Chief Executive Officer]

Right. Well, thank you very much for the question. The evidence doesn’t come from arbitrators in the case. They come from the companies. So, that’s all I will say about that. It’s not from the arbitrator. And there – I can’t give you details on deadlines or things like that. I want to be very respectful of – that this is a pending legal matter and it’s inappropriate to give you more in-depth color than I am allowed to at this point. But I want to remind everyone on the call that we believe our case is strong. It’s been strong. It continues to be strong. And this has no bearing on the strength of our case whatsoever.

[Operator]

Our next question comes from Jay Olson with Oppenheimer. Please go ahead.

[Jay Olson, Oppenheimer]

Hey. Thanks for the update and thanks for taking the question. I want to follow-up on your clinical development strategy in breast cancer based on the work you are doing with TUKYSA in combination with in ENHERTU and also considering the evolving standard of care in HER2-positive breast cancer that you mentioned. Would you consider studying ENHERTU as an active comparator in first-line breast cancer and/or adjuvant treatment setting? And then related to that, how are you thinking about the potential to add disitamab vedotin into your breast cancer portfolio as – either as a standalone agent or in combination with TUKYSA?

[Clay Siegall, President and Chief Executive Officer]

Sure. Thank you for the question. Some of this, we have thought about and we have talked about. Some of that is not publicly released yet information. We are not ready to talk about. But Roger, can you give a little more color on TUKYSA in first and adjuvant? And then maybe just a little color on DV and what we are thinking?

[Roger Dansey, Chief Medical Officer]

Sure. So, the TUKYSA development program, as we presented and as it’s laid out, does cover almost all aspects of breast cancer, including this new trial, which is a true frontline trial. And the approach we have taken – because TUKYSA is a drug that is appropriate for combinations. It’s a small molecule HER2-TKI. It profoundly inhibits the pathway. We have shown now with HER2CLIMB that inhibiting HER2 signaling both from outside the cell and inside the cell is a right sort of medical strategy to follow. And so in principle, combining TUKYSA and ENHERTU makes complete sense, two very active agents, same type of principle with the chemotherapy delivery and a trastuzumab binder. And that applies also to disitamab vedotin, which is an optimized antibody with a vedotin payload and TUKYSA is obviously in that space with the HER2 over-expressing or the HER2 amplified. So, we haven’t disclosed plans, but it’s an obvious question that we are looking at very carefully, which is what is the synergy between those two products and how would we develop those two as a combination, so that’s under serious consideration. Beyond that, concepts like head-to-head against ENHERTU, it’s not an obvious thing, I think that’s in our thinking. But of course, we wouldn’t exclude any possible trial if it makes sense.

[Jay Olson, Oppenheimer]

Great. Thank you.

[Operator]

Our next question comes from Andy Hsieh with William Blair. Please go ahead.

[Andy Hsieh, William Blair]

Okay. Thanks for squeezing me in. So, two questions. So regarding ADCETRIS, congratulations on the OS win. Just wondering if you mind sharing with us about how that 40%-plus reduction in the risk of death could change perception and prescribing patterns? And the second question is really on the Nectin-4 expression in lung cancer. So the 202 study, you are looking at lung cancer, but it’s not biomarker selected. Just curious about what kind of data inform that decision. Thank you.

[Clay Siegall, President and Chief Executive Officer]

Sure. Let’s start with the ADCETRIS data. Look, we are thrilled at the OS. I mean this is a long time coming. And it’s in a disease, Hodgkin lymphoma, which takes a long time to watch and monitor and look at this. But it’s very clear to us that this is a great regimen. And we are excited to present the data in full detail, not just top line at a conference by the investigators. And so Roger, can you talk a little bit about the impact of the risk of death and what we can do about this with regulators, etcetera?

[Roger Dansey, Chief Medical Officer]

Sure. So, as Clay said, this is a great result because, historically, it has been very difficult to improve overall survival in Hodgkin lymphoma. I mean that’s good news because patients have good outcomes. But E1 after multiple years of follow-up has actually reached the point and it’s a pre-specified outcome. So, this is an endpoint that was defined in the protocol in terms of how many events one needs and such. And so it has the potential, once you have presented the data publicly and worked through all of the information that we will get, it has the potential to be – to form part of things such as regulatory submissions because of the nature of the way the trial was conducted. So, I think the first sort of data point is to present it publicly, let everyone see the full data set, as Clay mentioned. And we are obviously thinking about all those other components as well. With regard – do you want me to answer the EV…?

[Clay Siegall, President and Chief Executive Officer]

Sure.

[Roger Dansey, Chief Medical Officer]

So, it’s a great question, Andy, with regard to biomarker expression. What I would say – and we haven’t disclosed the information, but the trial is moving along. And we are clearly at some point in the next – in a while, we will start to talk about some data and present. I can’t comment on which particular cohort we will look at. But in general, from a biomarker perspective, clearly, we measure and we evaluate Nectin-4 in all cohorts. We enroll all comers, but we evaluate the biomarker. And so if there was – if it was appropriate to enrich the population using a biomarker, that’s something we would do. Again, I am not saying that is what we are doing. But if that produces a response rate that we found compelling, we would be able to do that.

[Andy Hsieh, William Blair]

Great. Thanks so much.

[Operator]

Our next question comes from Reni Benjamin with JMP Securities. Please go ahead.

[Reni Benjamin, JMP Securities]

Hi. Good afternoon guys. Thanks for taking the questions. Just one, can you talk a little bit more about SEA-CD40? The update at ASCO GI we thought was pretty compelling. The response rates look pretty good. And so just trying to think about next steps. What are the gating steps, I guess, to pursue a Phase 2 trial and then a registrational study?

[Clay Siegall, President and Chief Executive Officer]

Yes. Thank you for the question, Reni. SEA-CD40 continues to be a drug we are very interested in. I think you are asking about next steps in pancreatic cancer after the data we put out at ASCO GI. Certainly, there was encouraging in the tumor activity in a disease that’s arguably one of the worst cancers. There are incredibly difficult to treat disease in general. From what we are looking at, we want to make sure these standard test of time and I want to – we need to evaluate the survival curves over a little bit of a longer period of time before we make any final decisions. And so I think it’s important – it’s hard to know until you really see the durable data to know – even if you are going forward, it’s like how do you size this, what are the statistics you need in the study, what’s the appropriate way to talk to regulators, you need the right data set. So, I am very proud of the work we are doing on this horrible disease. The initial data was encouraging, but we have been very clear that we want to see the full Kaplan-Meier curves and how they compare to what we think that some of the best regimens of the day – of today would work. So, stay tuned on that. It’s something we talk about regularly. And it’s just a little premature to give you any more definitive data yet, but stay tuned.

[Reni Benjamin, JMP Securities]

Thanks.

[Operator]

Our next question comes from Zhiqiang Shu with Berenberg. Please go ahead.

[Zhiqiang Shu, Berenberg]

Great. Thank you very much for taking my question. I want to ask about PADCEV, EV-104 in a non-muscle invasive bladder cancer. Given Pembro is approving this indication on single-arm accelerated approval, what do you expect this trial to achieve? Do you think the data could be sufficient for approval? Thanks very much.

[Clay Siegall, President and Chief Executive Officer]

Yes. Thanks for the question. Roger, do you want to address that?

[Roger Dansey, Chief Medical Officer]

Sure. So, we have just begun. I think we are very excited, and the potential to use PADCEV instilled directly into the bladder is a pretty compelling argument if, indeed, the product is both safe and effective. And provided there is an accelerated approval path available for BCG non-responsive population – again, without saying that we would or we wouldn’t do it, that at least in theory, is a potential approach. So, I would say we are still working out where the PADCEV will produce the type of efficacy we hope to see, and we could potentially move forward with the late line population. That is one possible outcome.

[Zhiqiang Shu, Berenberg]

Great. Thank you very much.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

[Peggy Pinkston, Senior Vice President, Investor Relations]

Thank you, operator, and thanks, everybody, for participating and joining us on our call this afternoon. Have a wonderful evening.

[Operator]

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