The earnings season continues with SeaGen reporting strong numbers on the backs of fantastic Adcetris sales. This was driven largely because Adcetris was approved as a frontline treatment for Hodgkins lymphoma.
This is a big boost for the "wedge" concept in ADC drug approvals. Step 1) Get approved for the most narrow indication that you can (i.e. as a third line treatment for one rare type of cancer in patients with highly expressed cell membrane target). Step 2) slowly buy surely use off-label studies to "wedge" the treatment window wider and wider over time. Step 3) report good results on earnings for years to come.
What the ADC market has been missing is a proven path towards profit, and SeaGen is leading the charge in this respect. This doesn't just help them, this will propel forward the entire market.
On a somewhat related but altogether different note. In researching this report, I came across this:
And the gem inside of here is this -
Cost of Sales: Cost of sales in the fourth quarter were $30.2 million, compared to $10.2 million in the fourth quarter of 2017. Cost of sales were $66.1 million for the year in 2018, compared to $34.8 million for the same period in 2017. The increases in 2018 reflect an inventory write-off of $18.1 million recorded in the fourth quarter of 2018 related to in-process production that did not meet manufacturing specifications and did not impact availability of product supply required to meet demand for ADCETRIS.
I know pharma is always living in the world of big money, but an $18.1 Million right off is pretty extraordinary. Just sayin'.
Hopefully this is the start of a strong trend for SeaGen and Adcetris. I would love to see this become a repeatable model by all of the ADC companies going forward. Do you agree?