It has been about a month since the last earnings report for Seattle Genetics (
SGEN Quick Quote SGEN - Free Report) . Shares have lost about 10.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Seattle Genetics due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Seattle Genetics Q1 Earnings Beat, Adcetris Aids Sales
Seattle Genetics incurred an adjusted loss of 54 cents per share for the first quarter of 2020, narrower than the Zacks Consensus Estimate of 81 cents but wider than the year-ago loss of 32 cents.
Adjusted loss in the quarter excluded a market-to-market net investment income related to Seattle Genetics’ common stock holdings in Immunomedics, Inc.
Revenues of $234.5 million were up 20.1% year over year, primarily driven by higher royalty revenues in the reported quarter and sales from the lead drug, Adcetris. The top line also comprehensively beat the Zacks Consensus Estimate of $212 million.
Quarter in Detail
Seattle Genetics’ top line mainly comprises product revenues, collaboration and license agreement revenues plus royalties.
Adcetris generated net sales of $164.1 million in the United States and Canada, up 22% year over year.
Newly-launched Padcev in its first full quarter since its launch generated sales worth $34.5 million. On the first-quarter conference call, management seemed pleased with the uptake of Padcev so far, which exceeded its internal predictions.
Collaboration and license agreement revenues of $15.6 million tanked 65% year over year.
Royalty revenues of $20.4 million soared from the year-ago quarter’s $15.6 million. The company records royalty revenues on the sales of Adcetris from Takeda in the ex-U.S. markets and outside and to a lesser extent, on the sales of Polivy under its collaboration with Roche.
Research and development (R&D) expenses of $195.2 million escalated 23.3% year over year, primarily due to higher investment in developing the late-stage pipeline candidates.
Selling, general and administrative (SG&A) expenses shot up 52.1% year over year to $122.2 million, mainly on account of higher costs related to the launch preparations of Padcev and Tukysa.
Seattle Genetics reiterated its guidance for 2020. The company projects Adcetris’ full-year net sales in the range of $675-$700 million, unchanged from its last projection.
The company expects collaboration and license revenues in the band of $30-$50 million while royalty revenues are anticipated within $105-$115 million, both unchanged from the earlier provided guidance.
Seattle Genetics expects SG&A expenses within $475-$525 million. R&D is estimated in the bracket of $860-$950 million, which too is intact with the last expectation.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 22.82% due to these changes.
Currently, Seattle Genetics has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Seattle Genetics has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.