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Seattle Genetics (SGEN) Loss Wider than Expected in Q4, Revenues Miss
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Seattle Genetics, Inc. reported a loss of 39 cents per share, wider than the Zacks Consensus Estimate of a loss of 34 cents and wider than the year-ago loss of 18 cents.
Revenues came in at $105.3 million, up 12.6% year over year, primarily on the back of strong sales of Adcetris. Revenues, however, missed the Zacks Consensus Estimate of $106.6 million.
Seattle Genetics’ share price has gained 132.3% year to date, while the Zacks classified Medical - Biomedical and Genetics industry declined 0.6%.
Quarter in Detail
Seattle Genetics’ top line comprises product revenues, collaboration and license agreement revenues and royalties.
The company’s only marketed product, Adcetris, generated revenues of $70.8 million, up 12% year over year.
Collaboration and license agreement revenues increased 16.4% to almost $20.8 million. Collaboration revenues included fees earned from the company’s agreement with Takeda Pharmaceutical Company Ltd. for Adcetris and other ADC collaborations.
Royalty revenues surged 8.7% to $13.7 million driven by royalties from Takeda on international sales of Adcetris.
Research and development (R&D) expenses were $108.2 million, up 45% year over year. Also, selling, general and administrative (SG&A) expenses increased 23% to $41.4 million. Costs were high primarily due to investment in vadastuximab talirine, Adcetris collaboration activities for product supply to Takeda and pipeline development.
2016 Results
For the full year net loss came in at $1 per share compared with a loss of 93 cents in 2015 and wider than the Zacks Consensus Estimate of 94 cents.
For 2016, revenues came in at $418.1 million, up 24.2% year over year but missed the Zacks Consensus Estimate of $419.69 million.
2017 Outlook
Seattle Genetics expects total revenues in 2017 to be in the range of $405 million to $445 million. Net sales of Adectris is expected to be in the range of $280 million to $300 million. R&D expenses are expected to be in the range of $460 million to $500 million. SG&A expenses are expected to be in the range of $160 million to $170 million.
Pipeline Update
Meanwhile, Seattle Genetics continues to work on expanding Adcetris’ label further. The company and its collaborator Takeda released full data from the ALCANZA phase III study in patients with CD30-expressing cutaneous T-cell lymphoma (CTCL). The study met its primary endpoint demonstrating that treatment with Adcetris resulted in a highly statistically significant improvement in the rate of objective response lasting at least four months (ORR4) versus the control arm as assessed by an independent review committee.
Seattle Genetics plans to submit a supplemental biologics license application to the FDA for CTCL in mid-2017.
The company expects top-line data from the phase III ECHELON-1 study (frontline classical Hodgkin lymphoma) during 2017 while top-line data from the ECHELON-2 study (frontline CD30-expressing mature T-cell lymphoma) should be out in 2018 (previously expected in the 2017 to 2018 timeframe).
In addition, the company continues to enroll patients in the phase III study on vadastuximab talirine in combination with hypomethylating agents in older patients with newly diagnosed acute myeloid leukemia.
Our Take
Seattle Genetics missed both its earnings and sales expectations in the fourth quarter of 2017. In Dec 2016, the FDA placed a full or partial clinical hold on several early-stage trials of vadastuximab talirine in acute myeloid leukemia (AML). The clinical hold was initiated to assess the potential risk of hepatotoxicity in patients who were treated with vadastuximab talirine and received an allogeneic stem cell transplant.
The company is working with the FDA to resolve the clinical hold. Since the company is highly dependent on Adcetris for growth, failure to develop any new product will magnify this dependence.
Zacks Rank & Stocks to Consider
Seattle Genetics carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. , Enzo Biochem, Inc. (ENZ - Free Report) and Applied Genetic Technologies Corp. . All of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Enz Biochem’s loss estimates for 2017 narrowed 5.88% over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 22.50%. Its share price was up 48.7% in the past one year.
Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.
Applied Genetic Technologies earnings estimates for 2016 and 2017 were up 300% and 6.7%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 222.92%.
Seattle Genetics, Inc. Price, Consensus and EPS Surprise
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Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Seattle Genetics (SGEN) Loss Wider than Expected in Q4, Revenues Miss
Seattle Genetics, Inc. reported a loss of 39 cents per share, wider than the Zacks Consensus Estimate of a loss of 34 cents and wider than the year-ago loss of 18 cents.
Revenues came in at $105.3 million, up 12.6% year over year, primarily on the back of strong sales of Adcetris. Revenues, however, missed the Zacks Consensus Estimate of $106.6 million.
Seattle Genetics’ share price has gained 132.3% year to date, while the Zacks classified Medical - Biomedical and Genetics industry declined 0.6%.
Quarter in Detail
Seattle Genetics’ top line comprises product revenues, collaboration and license agreement revenues and royalties.
The company’s only marketed product, Adcetris, generated revenues of $70.8 million, up 12% year over year.
Collaboration and license agreement revenues increased 16.4% to almost $20.8 million. Collaboration revenues included fees earned from the company’s agreement with Takeda Pharmaceutical Company Ltd. for Adcetris and other ADC collaborations.
Royalty revenues surged 8.7% to $13.7 million driven by royalties from Takeda on international sales of Adcetris.
Research and development (R&D) expenses were $108.2 million, up 45% year over year. Also, selling, general and administrative (SG&A) expenses increased 23% to $41.4 million. Costs were high primarily due to investment in vadastuximab talirine, Adcetris collaboration activities for product supply to Takeda and pipeline development.
2016 Results
For the full year net loss came in at $1 per share compared with a loss of 93 cents in 2015 and wider than the Zacks Consensus Estimate of 94 cents.
For 2016, revenues came in at $418.1 million, up 24.2% year over year but missed the Zacks Consensus Estimate of $419.69 million.
2017 Outlook
Seattle Genetics expects total revenues in 2017 to be in the range of $405 million to $445 million. Net sales of Adectris is expected to be in the range of $280 million to $300 million. R&D expenses are expected to be in the range of $460 million to $500 million. SG&A expenses are expected to be in the range of $160 million to $170 million.
Pipeline Update
Meanwhile, Seattle Genetics continues to work on expanding Adcetris’ label further. The company and its collaborator Takeda released full data from the ALCANZA phase III study in patients with CD30-expressing cutaneous T-cell lymphoma (CTCL). The study met its primary endpoint demonstrating that treatment with Adcetris resulted in a highly statistically significant improvement in the rate of objective response lasting at least four months (ORR4) versus the control arm as assessed by an independent review committee.
Seattle Genetics plans to submit a supplemental biologics license application to the FDA for CTCL in mid-2017.
The company expects top-line data from the phase III ECHELON-1 study (frontline classical Hodgkin lymphoma) during 2017 while top-line data from the ECHELON-2 study (frontline CD30-expressing mature T-cell lymphoma) should be out in 2018 (previously expected in the 2017 to 2018 timeframe).
In addition, the company continues to enroll patients in the phase III study on vadastuximab talirine in combination with hypomethylating agents in older patients with newly diagnosed acute myeloid leukemia.
Our Take
Seattle Genetics missed both its earnings and sales expectations in the fourth quarter of 2017. In Dec 2016, the FDA placed a full or partial clinical hold on several early-stage trials of vadastuximab talirine in acute myeloid leukemia (AML). The clinical hold was initiated to assess the potential risk of hepatotoxicity in patients who were treated with vadastuximab talirine and received an allogeneic stem cell transplant.
The company is working with the FDA to resolve the clinical hold. Since the company is highly dependent on Adcetris for growth, failure to develop any new product will magnify this dependence.
Zacks Rank & Stocks to Consider
Seattle Genetics carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the health care sector include Sunesis Pharmaceuticals, Inc. , Enzo Biochem, Inc. (ENZ - Free Report) and Applied Genetic Technologies Corp. . All of them carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Enz Biochem’s loss estimates for 2017 narrowed 5.88% over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 22.50%. Its share price was up 48.7% in the past one year.
Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.
Applied Genetic Technologies earnings estimates for 2016 and 2017 were up 300% and 6.7%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 222.92%.
Seattle Genetics, Inc. Price, Consensus and EPS Surprise
Seattle Genetics, Inc. Price, Consensus and EPS Surprise | Seattle Genetics, Inc. Quote
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017?
Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>