BOTHELL – The gloomy winter skies dominate the view from Seattle Genetics’ hilltop headquarters, but things have never been sunnier for the developer of targeted cancer treatments.
A lucrative news drug licensing agreement with one of the world’s largest biotechnology companies has solidified Seattle Genetics’ finances for the foreseeable future. The company’s first potential drug using its patented targeting technology is now in a human-testing phase. The company’s work force and stock price both are growing.
No wonder Clay Siegall smiles as he talks about the company’s position.
“We have less pressure now than in the entire history of the company,” said Siegall, chairman and chief executive at Seattle Genetics.
That doesn’t mean he and his staff are sitting back. There are still years of clinical testing and research ahead before the company gets even its first approved drug to market. The company’s eager to learn from its collaboration with Genentech.
But the day-to-day, bottom-line worries that keep the CEOs of many biotech firms up at night are gone.
As of last fall, Seattle Genetics already had $96 million in cash and investments. The Genentech agreement adds another $60 million upfront to the company’s coffers. Eventually Seattle Genetics could earn another $800 million, not counting its share of royalties if the drug makes it to market.
“We’ve always been relatively strong financially, now we’re just stronger. It allows us to plan longer term than before,” Siegall said.
The object of Genentech’s affections is SGN-40, an antibody being tested as a treatment for blood cancers, such as non-Hodgkin’s lymphoma, multiple myeloma and chronic lymphocytic leukemia.
Jonathan Drachman, senior medical director at Seattle Genetics, said the compound seeks out and binds with CD40, a protein present on the surface of cancer cells. In addition to being present on cells for blood cancers, CD40 also is found on many types of solid tumors, including those for bladder, renal and ovarian cancer, and possibly in other diseases.
“This antibody binds to CD40 and the cell and it does a number of things to it,” said Drachman, who’s led the SGN-40 development team in recent years. “It binds to it directly to stop its growth and it recruits more antibody cells to attack it.”
The treatment also can make cancer cells more sensitive to chemotherapy.
SGN-40 is in a phase 2 clinical trial for patients with the most common type of aggressive non-Hodgkin’s lymphoma and in phase 1 trials for other cancers.
In phase 1 tests on lymphoma patients, 20 percent of them responded to the experimental drug, with few side effects.
“We’ve seen some nice responses in patients, especially those with lymphomas who haven’t responded to other treatments,” Drachman said. “One of the big benefits of this deal is we can increase the speed with which we can do clinical trials.”
Caroline Pecquet, spokeswoman at South San Francisco, Calif.-based Genentech, said SGN-40 is an “excellent strategic fit” to Genentech’s strong portfolio of cancer drugs. She pointed out the two companies had an existing relationship aimed at developing Seattle Genetics’ antibody-drug conjugate technology.
“They have an experienced management team that’s made some wise and good decisions, especially in the development of SGN-40,” Pecquet said.
Siegall said Seattle Genetics received interest from numerous potential suitors for SGN-40 after the first clinical trial results came out. From the beginning, though, Genentech was its preferred partner.
“We talked to several big pharmaceutical firms and biotechs. It was an intense process,” said Eric Dobmeier, Seattle Genetics’ general counsel, who negotiated the agreement with Genentech.
In the end, the details were hammered out in just six weeks during the holiday season.
“I think it’s a fair deal, but I think it’s a real favorable deal for us,” Dobmeier said.
That’s the consensus of analysts. Liisa Bayko, senior biotech analyst with Next Generation Equity Research in Chicago, said the terms were unusually good for a drug that’s still in midstage development.
Bayko, who has recommended Seattle Genetics’ stock, said she’s been impressed with the biotech firm’s roster of other potential cancer drugs and its “solid” management team.
“I like the company,” she said. “I think they’ve got a pretty good handle on all the moving parts.”
If approved one day for all the cancers and other conditions it may help, SGN-40 could generate more than $1 billion in sales annually, Seattle Genetics estimates.
In the meantime, Siegall said the firm will move ahead with SGN-40 and its other candidates, including SGN-35, which entered a phase 1 trial late last year. It is the first treatment based on the novel antibody-drug conjugate technology, which focuses like a smart bomb to target cancerous cells.
Because Genentech will pay for most of SGN-40’s development now, Seattle Genetics should have more flexibility in paying to develop its follow-up candidates. And Genentech’s multimillion-dollar vote of confidence should help attract potential partners for those drugs.
In the meantime, Seattle Genetics will continue to grow, but carefully. Siegall said the company may have close to 180 employees, an increase of about 25, by the end of the year. The additions will help Seattle Genetics chase after new ways to combat cancer.
“We’re a small company, and our goal is to make an impact on cancer patients’ lives,” he said. “There’s a wealth of exciting targets to go after.”
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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