Seattle Genetics CEO Clay Siegall: An Interview With “The Pink Sheet” DAILY (Part 1 Of 2)

Head of the Bothell, Wash.-based biotech sat down with "The Pink Sheet" DAILY at the BIO CEO & Investor conference in New York Feb. 13 to discuss the company's partnership with Genentech on SGN-40 for cancer, commercialization strategy and other pipeline candidates. In the first part of the interview, Siegall talks about the comprehensive development program for SGN-40 and the deal with Genentech, valued at more than $860 million.

Siegall co-founded Seattle Genetics in 1998, leading development of the company's portfolio of cancer and autoimmune disease drugs. Prior to founding Seattle Genetics, he worked at Bristol-Myers Squibb Pharmaceutical Research Institute from 1991 to 1997 and the National Cancer Institute from 1988 to 1991.

"The Pink Sheet" DAILY: Seattle Genetics, with partner Genentech, has a comprehensive program for SGN-40 for non-Hodgkin's lymphoma and multiple myeloma underway. Can you talk about that program and the potential benefits of the CD40 target?

Clay Siegall: Based on data [we released at ASH in 2006 in NHL] ...and other data as well that were not released publicly, we ended up getting contacted by quite a few companies, and we ended up deciding to do a partnership with Genentech. They're the world's leader in antibody therapeutics. They impressed us with working with us to define what would be the program going forward, rather than just focusing on the financials. ...We came up with six different trials we wanted to do. One of them is a single agent trial in Phase II in NHL. Another is an NHL study, this one is in second line in combination with standard chemotherapy. That study is ongoing. It's a blinded randomized, placebo-controlled study. Then we have four different Phase Ibs, two of them combined with chemotherapy in different NHL settings, one in aggressive NHL and one in indolent, and then we have two studies in myeloma, one with [Celgene's] Revlimid and one with [Millennium's] Velcade.

In myeloma, we're pursuing combination with chemotherapy not a single agent, which we are doing with NHL. We think that when you look at myeloma especially, there is no antibody product used in myeloma, and if you harken back ... NHL was treated for many years with cytotoxic drugs, and then [Genentech/Biogen Idec's] Rituxan was approved in 1997 and then in 1998 it got approved with CHOP-chemotherapy. It's really transformed how NHL was treated. In myeloma there is no cure rate. ...The armamentarium to treat myeloma has improved, but if you are a patient with myeloma, you still have an incredibly low chance of surviving. Your one- and two-year survival rate may be improved, but your five-year survival rate is grim. We think myeloma is a type of cancer where an antibody could potentially transform, on top of standard chemotherapy, the disease from one where there is a response rate to maybe, in the future, a cure rate of some percentage like there is with lymphoma.

In lymphoma there are cure rates, depending on if you have indolent or low-grade or high-grade disease. Right now it appears that if you have high-grade disease you have a bigger chance for a cure rate initially, but if you relapse from that, your prognosis is pretty grim. If you have indolent or low-grade disease, there's a smaller cure rate immediately but the patients last a lot longer. In both cases, if you're in the group of patients who have not responded well to front-line therapy, which is R-CHOP, your prognosis is much more grim and the concept of adding a CD40 antibody, SGN-40, to improve the complete response rate and the duration of that is really critical. We have spoken to the FDA, and the CR rate is what is very important in lymphoma.

"The Pink Sheet" DAILY: What then do you see going forward as the potential path first to approval for SGN-40?

Siegall: One of our studies is a large Phase IIb study. It's a randomized blinded, placebo-controlled study. It compares R-ICE (ifosfamide, carboplatin and etoposide), which is a pretty standard second-line therapy, to R-ICE plus SGN 40, and if we can make it a statistically important positive impact on the CR rate, that is the type of study that can go toward approval. That in the second-line setting is something that we are embracing and are excited with. There's also the third-line setting that we can go for, which is basically in combination with Rituxan/[Lilly's] Gemzar, which is used now in third line. As you go from line to line with lymphoma, the response rate goes down and down and down. There are ways to get it approved in second-line and third-line and lymphoma and with myeloma. Initially, we're looking at patients who are relapsed. They're not front line.

We have a trial with Revlimid. You can have prior Revlimid [or] you may have been treated with other drugs like Velcade and come into the study, but it's Revlimid plus SGN-40. It's kind of interesting because if you take Revlimid and you don't respond and then you take Revlimid with an antibody and you do respond, that would be very interesting. It also would be interesting if you took a patient that had Velcade and relapsed and then treated that patient with Revlimid plus SGN-40 and showed it works. ...We're including all these patients in there to really see what we can determine and whether we can get to some really long-term durable CRs by using an antibody like a Rituxan antibody, except this one binds to CD40 instead of CD20, and see if we can really make a difference in these diseases.

"The Pink Sheet" DAILY: Are you going to be studying SGN-40 in other types of cancers?

Siegall: We'd like to. The other diseases that we're interested in are chronic lymphocytic leukemia and we're also interested in bladder cancer and ovarian cancer. Bladder cancer is where CD40 was first discovered. Unlike some other markers that are on B-cells, like CD-20, CD-40 is on B cells, but it's also on solid tumors, epithelial tumors. CD-20, the target for Rituxan, is not on myeloma, so that's why this is a little bit different. But each of these CDs are clustered determinants, which is on the cell surface, and there's now over 200 CDs that mark different receptors on the surface, but each CD is different. We're just trying to understand what these are.

"The Pink Sheet" DAILY: Would you say the deal with Genentech was a transformative deal for Seattle Genetics?

Siegall: It's been an important deal. I wouldn't call it a transformative deal. To me, the transformative event that we're looking for in the future is when we get a product approved, and to me, that would change us ... [to the point where] we're no longer a startup company, we're now an emerging company. We do not feel like we're a successful company. We're hungry for successes, driving toward that. We've done a few things well, but we think we have a lot still to show and to do with our products, and we think the transforming event is getting product approvals.

We think this deal was very important. From a financial standpoint, it gave us a lot of dollars upfront and in milestones. We got $60 million upfront in the first year of the deal. We already raised $20 million in milestones, and then another $15 million or so in payments. We have pulled in quite a lot just on the SGN-40 front. We were cash flow positive in 2007 by approximately $40 million. From a financial standpoint, we did a financing not too long ago. We have $220 million or so in the bank to invest into our products and our pipeline. The deal is great with Genentech, but not the transformative event.

[Genentech signed an exclusive licensing deal with Seattle Genetics in January 2007, valued at up to $860 million (¹ (Also see "Genentech Gets Non-Hodgkin’s Lymphoma Candidate With Seattle Genetics Deal" - Pink Sheet, 8 Jan, 2007.)).]

- Jessica Merrill ([email protected])