This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Seattle Genetics Nearing Key Test for Investor Confidence

SGEN Chart
SGEN data by YCharts

NEW YORK (TheStreet) -- Seattle Genetics (SGEN - Get Report) is having a bipolar year. Significant progress is being made to expand the use of the lymphoma drug Adcetris and on advancing the pipeline, yet the stock price is caught in a significant downtrend. Seattle Genetics bulls focus less on near-term Adcetris sales, believing more in the company's armed antibody platform as a long-term growth driver. Bears, on the other hand, argue Adcetris sales cannot support the stock's current valuation.

The end of 2014 will provide a significant test of the Seattle Genetics' bull thesis when results are announced from the "AETHERA" study of Adcetris in post-stem cell transplant Hodgkin's lymphoma patients. This new commercial market opportunity for Adcetris is not as larger as moving into front-line Hodgkin's, but it's still important as a test of confidence -- proving delayed timelines translate into study success.

As originally designed, the primary endpoint of the AETHERA trial is progression-free survival (PFS), with an analysis triggered by a predetermined number of tumor progression events. However, Seattle Genetics found the progression events were happening too slowly, which pushed the timeline for data analysis (and potential approval) too far out. To remedy the situation, the company went to the FDA and reached an agreement allowing an analysis of the PFS endpoint to be conducted at the end of the year.

Given the robust efficacy demonstrated by Adcetris in previously conducted trials, it's reasonable to assume the delay in AETHERA is due primarily to Adcetris-treated patients performing better (having fewer tumor progressions) relative to assumptions made by Seattle Genetics when designing the trial. Of course, that's only an assumption and needs to be confirmed with actual results. There is always the risk the trial's control arm patients are actually performing better, too.

If Seattle Genetics does report positive results from the AETHERA trial at the end of the year, it should raise investor confidence in two additional Adcetris trials: ECHELON- 1 in frontline Hodgkin's and ECHELON-2 in frontline mature T-cell lymphoma. Both of these trials also appear to be progressing slower than expected, and the company is considering adjustments to generate data earlier rather than later.

The weakness in Seattle Genetics' shares going into the AETHERA data is an interesting entry point for investors. Bears will insist the stock remains over-valued, but I believe positive AETHERA data is an important and bullish inflection point for the stock because it demonstrates Seattle Genetics' ability to expand use of Adcetris into new indications. Outside of Adcetris, Seattle Genetics is developing one of the deepest drug pipelines in mid-cap biotech, and possibly as strong as the pipelines managed by large-cap biotechs.

Ultimately, Seattle Genetics is following a growth path laid out years ago. The stock's weakness this year likely reflects a change in sentiment more than any fundamental change in the prospects of the company. It is also quite possible that positive AETHERA data later this year will help that reverse negative sentiment.

Sobek is long Seattle Genetics.

David Sobek has been writing on biotech for a number of years through various outlets with a general focus on small cap oncology and antibiotics companies. He received his PhD in political science from Pennsylvnia State Univeristy in 2003 and a BA in international relations from The College of William and Mary in 1997.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
SGEN $33.61 1.17%
AAPL $92.72 -0.56%
FB $119.49 1.43%
GOOG $711.12 1.38%
TSLA $214.93 1.61%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs