I previously posed an investment thesis for Seattle Genetics (SGEN) published here at MS Money Moves on May 24th, when the share price was $69.11. Seattle Genetics closed trading on December 24th at $115.45, representing a 67.1% gain. The second half of 2019 has definitely rewarded investors with a host of positive developments, and the company is set-up for continued success. Here, I will take a first look at the recently approved Enfortumab Vedotin (Padcev).
The approval of Enfortumab Vedotin was announced on December 18th. There was a very valuable webcast that is available on the company webpage which can be found here. This approval came nearly three months before the PDUFA date. For this, I think kudos to the FDA are in store for rapidly reviewing this BLA application and allowing the commercialization of the drug for those patients who will benefit from the drug.
Enfortumab vedotin’s Indication: for the treatment of adult patients with locally advanced or metastatic urothelial cancer (mUC) who have previously received a programmed death receptor-1 (PD-1) or programmed death-ligand 1 (PD-L1) inhibitor, and a platinum-containing chemotherapy in the neoadjuvant/adjuvant, locally advanced or metastatic setting.
- This is synonymous to third line therapy.
Addressable Market: There are roughly 18,000 to 20,000 patients diagnosed with metastatic urothelial carcinoma (mUC) annually in the Unites States. This is a new indication that does not have great data available to estimate the total number or patients, nor was there previously a drug approved in this setting for which to compare enfortumab vedotin to. As discussed in the webcast, Seattle Genetics estimates that there are 2,000 to 4,000 patients eligible for therapy under this indication.
Expected Cost: During the webcast, the leadership revealed the estimated WAC price for a course of enfortumab vedotin will be $110,000 to $120,000. They also discussed their expectations that net price may be closer to $90,000 after accounting for discounts and rebates.
Sales Rights: Seattle Genetics has entered into a collaboration agreement with Astellas for the research, development, and commercialization of enfortumab vedotin. As per this agreement, Seattle Genetics and Astellas with split (50/50) the cost/profits for the development and commercialization of enfortumab vedotin.
My Thoughts: Using the data available, I estimate that the peak sales for this indication currently approved could be around $277 million annually. One must remember, this is only for the United States, and does not include international sales. Furthermore, these sales are split 50/50 with Astellas, meaning my estimated peak US sates for this indication is around $138.5 million annually.
Interestingly, there appeared to be a sense of surprise among analysts on the webcast regarding the price of enfortumab vedotin. This being that the drug is priced on the lower end of expectations. I believe that this is in expectation of future indications for enfortumab vedotin, most notable in front line therapy in combination with pembrolizumab, for which a global phase three trial is in the works. Combining enfortumab vedotin with pembrolizumab could be a very expensive regimen, especially when considering patients will be on therapy for longer period of time. Based on preliminary data, I have come up with some estimates. For first line cisplatin ineligible mUC, I estimate that peak sales for enfortumab vedotin could be around $595 million for the Unites States alone. Remember, 50% of these sales are due to Astellas, however this still results in an additional $300 million in sales for Seattle Genetics annually in the United States alone.
In conclusion, this approval of enfortumab vedotin provides patients with a high unmet need an option in later lines of therapy. I anticipate there will be great uptake of the drug and it will find its way into earlier lines of therapy. Earlier lines of therapy as well as international sales represent a significant revenue opportunity for Seattle Genetics on top of its already diverse commercial pipeline.
This is in no form a recommendation to buy/sell securities.
I/we long SGEN.
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