Seattle Genetics Reports First Quarter 2004 Results.Business Editors/Health/Medical Writers BOTHELL, Wash.--(BUSINESS WIRE)--April 27, 2004 Company Ends First Quarter with Three Product Candidates in Clinical Trials and $131.7 Million in Cash and Investments Seattle Genetics, Inc. (Nasdaq:SGEN SGEN Signal/System Generator ) today reported results for its first quarter ended March 31, 2004. Revenues for the first quarter of 2004 were $2.0 million, compared to $710,000 in the first quarter of 2003. The increase is attributable to fees earned from the company's ongoing collaborations with Genentech, Protein Design Labs, Celltech and Genencor International. Total operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the first quarter of 2004 were $9.2 million, compared to $7.0 million for the first quarter of 2003. Research and development expenses increased to $7.6 million in the first quarter of 2004, compared to $5.5 million in the first quarter of 2003. This growth was primarily driven by an increase in manufacturing activities for clinical grade materials and growth of the company's workforce. General and administrative expenses were $1.5 million in the first quarter of 2004, compared to $1.1 million in the first quarter of 2003. As of March 31, 2004, Seattle Genetics had 113 employees, up 18 percent from 96 as of March 31, 2003. Seattle Genetics recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. for a preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. deemed dividend of $2.2 million for the first quarter of 2004. The non-cash preferred stock deemed dividend is associated with the company's $41 million private placement of Series A convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". that closed in July 2003. Seattle Genetics will record non-cash charges for the preferred stock deemed dividend of $27.1 million and $7.2 million, respectively, in the second and third quarters of 2004. Net loss attributable to common stockholders for the first quarter of 2004 was $8.9 million, or $0.24 per share, compared to $6.0 million, or $0.20 per share, for the same period in 2003. As of March 31, 2004, Seattle Genetics had $131.7 million in cash, cash equivalents, short-term and long-term investments, compared to $73.7 million as of December 31, 2003. The increase is primarily due to Seattle Genetics' follow-on public offering in February 2004 that resulted in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). to the company of $62.1 million. "We achieved significant milestones during the first quarter, including initiating phase II clinical trials of SGN-30, commencing a phase I clinical trial Noun 1. phase I clinical trial - a clinical trial on a few persons to determine the safety of a new drug or invasive medical device; for drugs, dosage or toxicity limits should be obtained phase I of SGN-40 and reporting progress with SGN-35, SGN-75 and our industry-leading antibody-drug conjugate conjugate /con·ju·gate/ (kon´jdbobr-gat) 1. paired, or equally coupled; working in unison. 2. a conjugate diameter of the pelvic inlet; used alone usually to denote the true conjugate diameter; see technology at the American Association for Cancer Research Wikipedia is not the place for advertisement or self-advertising. The American Association for Cancer Research (AACR) is an organization based in Philadelphia, Pennsylvania, that focuses on all aspects of cancer research including basic, clinical and translational annual meeting," commented Clay B. Siegall, Ph.D., president and chief executive officer of Seattle Genetics. "We also completed a follow-on public offering that places us in a strong financial position to continue advancing our pipeline of clinical and preclinical product candidates." Recent highlights include: On March 25, 2004, Seattle Genetics announced that it had initiated a phase I clinical trial of SGN-40, a humanized monoclonal antibody monoclonal antibody, an antibody that is mass produced in the laboratory from a single clone and that recognizes only one antigen. Monoclonal antibodies are typically made by fusing a normally short-lived, antibody-producing B cell (see immunity) to a fast-growing that targets the CD40 antigen, for patients with multiple myeloma multiple myeloma A malignant proliferation of abnormal plasma cells that populate the marrow-containing bones of the body. The affected plasma cells produce myeloma protein, a monoclonal antibody that replaces normal antibodies in the blood, thereby increasing susceptibility . The single-agent, open label study of SGN-40 is being conducted at four leading cancer centers in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The company plans to initiate another clinical trial of SGN-40 in patients with refractory non-Hodgkin's lymphoma non-Hodg·kin's lymphoma n. Any of various malignant lymphomas characterized by the absence of Reed-Sternberg cells. Non-Hodgkin's lymphoma in the second half of 2004. On March 24, 2004, Seattle Genetics reported advances in its preclinical research, including its industry-leading antibody-drug conjugate (ADC (1) See A/D converter. (2) (Apple Display Connector) A peripheral connector from Apple that combines digital video display, USB and power in one cable. ) technology, during five poster presentations at the 2004 Annual Meeting of the American Association for Cancer Research (AACR AACR American Association for Cancer Research AACR Anglo-American Cataloging Rules AACR Australasian Association of Cancer Registries AACR African Armed Conflicts Resolved ) held in March. The data describe the significant advances the company is making toward the optimization of the stability, potency and safety of ADCs, such as SGN-35, as well as novel findings on SGN-75, an anti-CD70 ADC in development in renal cancer. In addition, the company presented preclinical data showing synergistic activity of SGN-30 in combination with chemotherapy. On February 26, 2004, Seattle Genetics announced that the U.S. Food and Drug Administration (FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. ) granted orphan drug orphan drug, drug developed under the U.S. Orphan Drug Act (1983) to treat a disease that affects fewer than 200,000 people in the United States. The orphan drug law offers tax breaks and a seven-year monopoly on drug sales to induce companies to undertake the designation to its product candidate SGN-30 for T-cell lymphomas, a category of non-Hodgkin's lymphoma that includes anaplastic an·a·plas·tic adj. 1. Relating to the surgical restoration of a lost or absent part. 2. Of, relating to, or characterized by cells that have become less differentiated. anaplastic 1. and cutaneous cutaneous /cu·ta·ne·ous/ (ku-ta´ne-us) pertaining to the skin. cu·ta·ne·ous adj. Of, relating to, or affecting the skin. Cutaneous Pertaining to the skin. lymphoma. SGN-30 is a monoclonal antibody currently in phase II clinical trials for the treatment of anaplastic large cell lymphoma Anaplastic large cell lymphoma (ALCL) is a type of non-Hodgkin lymphoma that features in the World Health Organisation (WHO) classification of lymphomas. Diagnosis To make this diagnosis under its present system of classification, the WHO: Requires On February 24, 2004, Seattle Genetics announced that it had entered into an agreement with Abbott Laboratories Abbott Laboratories (NYSE: ABT) is a diversified pharmaceuticals and health care company. It has over 65,000 employees and operates in 130 countries. The corporate headquarters are in Abbott Park, Illinois, a neighborhood of North Chicago, Illinois. for manufacturing of SGN-30. This antibody is also used in Seattle Genetics' SGN-35 ADC product candidate. Under the terms of the agreement, Abbott will perform scale-up and GMP GMP (guanosine monophosphate): see guanine. manufacturing for clinical trials, as well as supply commercial-grade material to support potential regulatory approval and commercial launch. On February 10, 2004, Seattle Genetics announced the completion of its follow-on public offering of 8,050,000 shares of common stock, which includes the over-allotment option exercised by the underwriters of the public offering. Total net proceeds from the offering were approximately $62.1 million. On January 22, 2004, Seattle Genetics announced that it had initiated phase II clinical trials of SGN-30 in patients with Hodgkin's disease or anaplastic large cell lymphoma. The studies are designed to assess the tolerability and antitumor an·ti·tu·mor also an·ti·tu·mor·al adj. Counteracting or preventing the formation of malignant tumors; anticancer. Adj. 1. activity of SGN-30 in patients who have relapsed or are refractory to prior therapies. On January 12, 2004, Seattle Genetics announced that it had expanded its existing ADC collaboration with Protein Design Labs (PDL See page description language. 1. PDL - Page Description Language. 2. PDL - Program Design Language. 3. PDL - Push Down List. 4. PDL - Dave Lebling, one of the co-authors of Zork. ). Under the amended agreement, Seattle Genetics is providing additional research and development support to PDL for products combining PDL's therapeutic antibodies and Seattle Genetics' proprietary ADC technology. In exchange, PDL will pay Seattle Genetics increased fees, milestones and royalties under the modified ADC collaboration. PDL has also granted Seattle Genetics a license and options for two additional licenses under PDL's antibody humanization Humanization Fusing the constant and variable framework region of one or more human immunoglobulins with the binding region of an animal immunoglobulin, done to reduce human reaction against the fusion antibody. Mentioned in: Alemtuzumab patents. About Seattle Genetics Seattle Genetics discovers and develops monoclonal antibody-based therapeutics to treat cancer and other human diseases. The company has built a diverse portfolio of product candidates targeted to many types of cancer, including three being tested in multiple ongoing clinical trials, SGN-30, SGN-15 and SGN-40, and three in preclinical development, SGN-35, SGN-75 and SGN-17/19. The product candidates encompass three platform technologies: genetically engineered genetically engineered adjective Recombinant, see there monoclonal antibodies, antibody-drug conjugates (ADCs) and antibody-directed enzyme prodrug prodrug /pro·drug/ (-drug) a compound that, on administration, must undergo chemical conversion by metabolic processes before becoming an active pharmacological agent; a precursor of a drug. therapy (ADEPT). Seattle Genetics has developed leading ADC technology comprised of highly potent synthetic drugs and stable linkers for attaching the drugs to monoclonal antibodies. The company currently has license agreements for its ADC technology with Genentech, Celltech Group and Protein Design Labs and for its ADEPT technology with Genencor International. More information about Seattle Genetics can be found at www.seattlegenetics.com. Certain of the statements made in this press release are forward-looking, such as those, among others, relating to ongoing and planned clinical trials and preclinical development activities. Actual results or developments may differ materially from those projected or implied in these forward-looking statements. Factors that may cause such a difference include risks related to adverse clinical results as our product candidates move into and advance in clinical trials, risks inherent in early stage development and failure by Seattle Genetics to secure collaborators. More information about the risks and uncertainties faced by Seattle Genetics is contained in the Company's filings with the Securities and Exchange Commission. Seattle Genetics disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Seattle Genetics, Inc.
Statements of Operations
(Unaudited)
(In thousands except shares and per share amounts)
Three months ended
March 31
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2004 2003
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Revenues $ 1,972 $ 710
Expenses
Research and development 7,572 5,528
General and administrative 1,455 1,138
Noncash stock-based compensation expense 153 344
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Total operating expenses 9,180 7,010
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Loss from operations (7,208) (6,300)
Investment income, net 543 338
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Net loss (6,665) (5,962)
Noncash preferred stock deemed dividend (2,244) -
----------- -----------
Net loss attributable to common stockholders $ (8,909) $ (5,962)
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Basic and diluted net loss per share $ (0.24) $ (0.20)
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Weighted-average shares used in computing
basic and diluted net loss per share 36,548,127 30,549,829
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Seattle Genetics, Inc.
Balance Sheets
(Unaudited)
(In thousands)
March 31, December 31,
2004 2003
------------ ------------
Assets
Current assets
Cash, cash equivalents and short-term
investments $ 50,650 $ 40,830
Other current assets 2,869 1,841
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Total current assets 53,519 42,671
Property and equipment, net 6,720 5,500
Long-term investments 81,021 32,852
Restricted investments 980 976
Other assets - -
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Total assets $ 142,240 $ 81,999
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Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities $ 3,679 $ 1,726
Deferred revenue 4,041 2,106
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Total current liabilities 7,720 3,832
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Deferred rent 416 390
Deferred revenue, net of current portion 3,308 2,899
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Total long-term liabilities 3,724 3,289
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Stockholders' equity 130,796 74,878
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Total liabilities and stockholders'
equity $ 142,240 $ 81,999
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