Seagen(SGEN) - 2023 Q1 - Quarterly Report

Financial Performance - Seagen reported a 22% growth in both net product sales and total revenue for Q1 2023 compared to the same period last year[81]. - Total revenues for Q1 2023 increased to $519.7 million, up from$426.5 million in Q1 2022, representing a growth of 22% driven by higher net product sales[141]. - Net product sales reached $468.6 million in Q1 2023, a 22$383.1 million in Q1 2022, with ADCETRIS sales growing by 34% and TIVDAK sales increasing by 71%[143][144]. - Royalty revenues for Q1 2023 were $28.2 million, a 7$30.2 million in Q1 2022, driven by higher net product sales by licensees[147]. - Collaboration and license agreement revenues increased by 38% to $20.9 million in Q1 2023, compared to$15.2 million in Q1 2022, primarily due to higher royalties from Astellas' sales of PADCEV[150]. - The company reported a net loss from operating activities of $249.6 million for the three months ended March 31, 2023, compared to a loss of$216.8 million in the same period of 2022[184]. - Cash, cash equivalents, and investments totaled $1.5 billion as of March 31, 2023, with total stockholders' equity at$2.7 billion[142]. - The company expects existing financial resources to be sufficient to fund operations for at least the next twelve months[189]. Research and Development - Total research and development expenses rose by 20% to $356 million for the three months ended March 31, 2023, with significant increases in clinical development and manufacturing costs[168]. - Research and development expenses for Q1 2023 were$356.0 million, with an expected increase in investment for the year[192]. - The company anticipates an increase in total research and development expenses in 2023 compared to 2022, primarily due to ongoing product development and employee retention costs[176]. - The company is developing SGN-B7H4V, an ADC for solid tumors, with initial data expected in the second half of 2023[124]. - Disitamab vedotin is being developed under a license agreement with RemeGen, with ongoing phase 2 and planned phase 3 trials for HER2-expressing metastatic urothelial cancer[119]. - Ladiratuzumab vedotin is in phase 1 and phase 2 trials for metastatic breast cancer and select solid tumors, with initial data expected in the second half of 2023[120]. Product Approvals and Collaborations - The FDA granted PADCEV accelerated approval as a combination therapy for adult patients with locally advanced or metastatic urothelial cancer who are not eligible for cisplatin-containing chemotherapy[81]. - TUKYSA received accelerated approval for adult patients with HER2-positive metastatic colorectal cancer that has progressed after prior chemotherapy[83]. - ADCETRIS received Orphan Drug Exclusivity for its indication in children with previously untreated high-risk Hodgkin lymphoma, providing seven years of market exclusivity[84]. - TIVDAK was granted accelerated FDA approval in September 2021 for recurrent or metastatic cervical cancer, supported by data from the innovaTV 204 trial, with continued approval contingent on confirmatory trials[100]. - An exclusive collaboration with Zai Lab for TIVDAK in mainland China, Hong Kong, Macau, and Taiwan included a $30 million upfront fee and potential milestone payments[102]. - The company has established collaborations with Takeda for ADCETRIS and Astellas for PADCEV, sharing development costs and profits in respective territories[152][153]. - A collaboration with Sanofi aims to develop multiple novel ADCs, with the first preclinical data presented in April 2023, targeting an IND filing in 2023[126]. Future Outlook - The company expects growth in net product sales for 2023 to be primarily driven by ADCETRIS and PADCEV, with ADCETRIS growth supported by its seven indications[130]. - Future growth in net product sales is expected to be supported by sales volume growth and anticipated price favorability in 2023 compared to 2022[145]. - The company plans to fund material cash requirements through current financial resources, accounts receivable, product sales, and collaboration revenues[191]. - The company may require additional capital for ongoing operations, product development, and potential strategic transactions[190]. - The company has no committed sources of funding and may need to scale back operations if unable to raise additional funds[190]. Costs and Expenses - Total costs and expenses rose to$704.2 million in Q1 2023, compared to $559.5 million in Q1 2022, primarily due to increased sales, general, and administrative expenses, as well as higher research and development costs[142]. - Selling, general and administrative expenses increased by 36$236.4 million for the three months ended March 31, 2023, reflecting higher commercialization efforts and $30 million in acquisition-related expenses[178]. - Cost of sales increased by 28$111.8 million for the three months ended March 31, 2023, driven by higher sales and gross profit sharing, totaling $64 million compared to$52.8 million in the same period of 2022[166]. - Future minimum lease payments as of March 31, 2023, totaled $18.9 million for short-term and$148.4 million for long-term lease liabilities[193]. - Capital expenditures for Q1 2023 amounted to $38.7 million, with expectations to grow to support business expansion, including a$300 million to $350 million investment in a new facility in Everett, Washington through 2024[194]. Market and Economic Conditions - The evolving effects of the COVID-19 pandemic have previously impacted diagnosis rates for ADCETRIS, although these rates have recently returned to pre-pandemic levels[138]. - The company has experienced a favorable effect on gross-to-net deductions in the U.S. market due to high inflation, but future inflation trends remain uncertain[130]. - Gross-to-net deductions are expected to increase in 2023 due to anticipated growth in gross product sales, influenced by government-mandated discounts and rebates[145]. - There have been no material changes to market risk disclosures as of the latest report[198].