Summary
- Company - Seattle Genetics (SGEN)
- Drug candidate - ADCETRIS (brentuximab vedotin)
- PDUFA - Aug 30, 2011
- July 14, 2011 - FDA advisory committee unanimously recommended accelerated approval of for TWO indications
ADCETRIS (brentuximab vedotin)
ADCETRIS is an antibody-drug conjugate (ADC) that targets CD30, a defining marker of Hodgkin lymphoma (HL). CD30 is also expressed on other cancers, including anaplastic large cell lymphoma (ALCL). ADCETRIS is comprised of an anti-CD30 monoclonal antibody linked to a potent cell-killing agent, monomethyl auristatin E (MMAE), using Seattle Genetics’ proprietary technology. This technology enhances specific uptake of ADCETRIS into CD30-expressing tumor cells, inside which the MMAE is released, achieving a targeted cell-killing effect.
ADCETRIS has received orphan drug designation in the United States and Europe for both HL and ALCL. SGEN had also obtained Fast Track designation from the FDA for brentuximab vedotin in HL.
Worldwide development
Seattle Genetics is jointly developing brentuximab vedotin with Millennium: The Takeda Oncology Company under an agreement where Seattle Genetics has full commercialization rights to brentuximab vedotin in the United States and Canada, while Millennium has exclusive rights to commercialize the product candidate in all other countries. In June 2011, the European Medicines Agency (EMA) accepted for review Millennium's Marketing Authorization Application (MAA) for brentuximab vedotin for the treatment of relapsed or refractory HL and relapsed or refractory systemic ALCL.
Just shy of a home run
On July 14, 2011, SGEN announced that the Oncologic Drugs Advisory Committee (ODAC) to the FDA voted 10-0 to recommend that the FDA grant accelerated approval of ADCETRIS for the treatment of patients with Hodgkin lymphoma who relapse after autologous stem cell transplant (ASCT). In addition, ODAC voted 10-0 to recommend that the FDA grant accelerated approval of ADCETRIS for the treatment of patients with relapsed or refractory systemic anaplastic large cell lymphoma (ALCL). The FDA is expected to act on the two Biologics License Applications (BLAs) for ADCETRIS by August 30, 2011 under the Prescription Drug User Fee Act (PDUFA).
This is clearly positive news for the company to have complete endorsement from the panel, but the tricky part now is the fact that the company may need to conduct an additional confirmatory trial to support full approval of ADCETRIS. The ADCETRIS BLAs were based primarily on data from a pivotal trial in relapsed or refractory Hodgkin lymphoma that was conducted under a Special Protocol Assessment with the FDA and from a phase II trial in relapsed or refractory systemic ALCL. These smaller, single-arm trials with surrogate endpoints such as response rate rather than patient survival rate are sufficient for an accelerated approval which considerably shortens the time required prior to receiving FDA approval; however, in order for ADCETRIS to be granted full approval, SGEN will still need to conduct a phase 4 confirmatory trial to confirm that the surrogate endpoint in fact translates into prolonged patient survival.
Trading map
The only drawback of an accelerated approval is the time and money required to conduct a phase 4 trial. Upon initial approval though, SGEN can immediately market ADCETRIS, which is predicted to experience rapid adoption by hematologists/oncologist as the first approved therapy in relapsed/refractory patients.
Prior to the panel meeting, SGEN had seen a nice 'Hike' from $15 to a 52-week high of $21.41, a 43% climb in a period of two and a half months. However, the concern around the additional trial SGEN needs to conduct as well as the broad market pessimism on US debt ceiling negotiation had dragged the stock down more than 18% since the advisory panel gathering. With the PDUFA date being a month away (8/30), I believe that this is a reasonable entry point for another 'Hike' before the drug regulator decides on the fate of SGEN's drug. The superior activity that ADCETRIS demonstrated in the clinical trials, the strong FDA interest in making this drug available to patients, and the potential runup SGEN had seen ($21.41) will spur enough hype to push SGEN back up to $19-20 ahead of the 8/30 PDUFA. Given this estimate, Sept OTM $17.5 call options seem well priced at $.95. I will look into adding to my existing position (IN at $.90) in the next few days pending complete resolution of the US debt issues (don't want to get caught by irrational sell-off) and SGEN's 2Q earnings report on 8/4 (may buy before; expect more news coverage to 'remind' investors about near term PDUFA). Follow me on Twitter (@Michaeljuan01) for trading updates. Good luck!
