How Many Drug Sales in 2012?

The solid, but by no means extreme, launch of Seattle Genetics' (Nasdaq: SGEN  ) lymphoma treatment Adcetris continues. The company announced sales of $33 million in the fourth quarter after posting $10 million in sales in the third quarter.

It was what Seattle Genetics didn't say that might interest investors most: how much Adcetris it plans to sell this year. Clearly $132 million, the current run rate, isn't going to cut it.

I can't really blame Seattle Genetics for skirting the issue. As Dendreon (Nasdaq: DNDN  ) showed, setting guidance and then missing it can be very costly for your share price. On the flip side, there's Regeneron Pharmaceuticals (Nasdaq: REGN  ) , which set rather low guidance and then doubled it, although there's danger there, too, if investors actually believe the initial conservative guidance. Keeping its mouth shut about expectations is probably the best move for Seattle Genetics.

On the conference call, one intrepid analyst tried asking for cash guidance for the end of the year. The company laid out expenditures for the year, so with the cash level, one could work back up the profit-loss statement to figure out the expected sales.

Management didn't bite.

All they were willing to say is that the company didn't expect to have to raise capital this year. So we know Seattle Genetics will burn through less than $330 million this year, the amount in the coffers at the end of the year. Last year the company spent only about $200 million in cash, so that doesn't tell us much.

In the short term, sales of Adcetris will be defined by how long patients stay on the drug. Unlike a drug like Vertex Pharmaceuticals' (Nasdaq: VRTX  ) Incivek, where the patient takes the drug and then is cured, Adcetris doesn't really cure the patients. Instead, they stay on the drug until they're ready for another treatment -- usually a stem-cell transplant -- or they relapse. If Seattle Genetics can keep patients on Adcetris for extended periods, they can increase sales because new patients will be additive rather than just replacing the patients going off the drug.

Longer term, expanding Adcetris into other indications, including solid tumors, will drive sales. The drug looks mighty impressive as a first-line treatment for T-cell lymphomas, but it'll be a while before phase 3 data confirms the early results and Seattle Genetics is able to gain FDA approval for the indication.

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