Seagen Inc.

SGEN Details

Seagen Inc. (NASDAQ: SGEN) is a global biotechnology company focused on developing and commercializing targeted therapies to treat cancer. The company’s key products include ADCETRIS (brentuximab vedotin), used for the treatment of certain CD30-expressing lymphomas, PADCEV (enfortumab vedotin-ejfv), which treats certain types of metastatic urothelial cancers, and TUKYSA (tucatinib), used for treating certain metastatic HER2-positive breast cancers. SGEN also has an extensive pipeline of novel therapies for tumors and other blood-related cancers, focused on improving treatment outcomes for patients.

Favorable Trial Outcomes: On June 03, 2021, the company announced that there were remarkable improvements in overall survival and progression-free survival logistics with long-term follow up from its HER2CLIMB trial, which evaluated the addition of TUKYSA to trastuzumab and capecitabine in patients with HER2-positive metastatic breast cancer (MBC), both with and without brain metastases.

Earlier, On May 19, 2021, SGEN and Astellas Pharma Inc. announced that they observed durable responses in two trials of PADCEV in combination with Merck’s KEYTRUDA (pembrolizumab) in locally advanced or metastatic urothelial cancer patients that are ineligible for cisplatin chemotherapy.

Receipt of FDA Acceptance for Tisotumab Vedotin BLA: In April 2021, the company and Genmab announced that the US Food and Drug Administration (FDA) accepted, on a priority review basis, the tisotumab vedotin BLA, used for treating patients with metastatic cervical cancer. The FDA has set a target action date of October 10, 2021, based on the observations of the innovaTV 204 phase 2 trial.

Q1FY21 Results: The company reported a 41.56% increase in total revenue to USD 331.98 million in Q1FY21 (ending March 31, 2021) compared to USD 234.51 million in Q1FY20, as a result of the commercialization of TUKSYA and higher sales of PADCEV. Net loss for Q1FY21 amounted to USD 121.42 million in Q1FY21, an improvement from USD 168.40 million reported in Q1FY20.

Key Risks: The company is currently running various clinical trials for its products, and has also announced plans to commence additional trials of future product candidates. These clinical trials require substantial time and capital investment, and their outcomes are uncertain and may not generate favorable returns. In addition, SGEN commercializes ADCETRIS and PADCEV through a limited number of distributors. Hence, its ability to effectively market these products depends, in part, on the performance of these distributors. Also, the loss of a major distributor could adversely affect SEGN’s results of operations and financial condition.

Outlook:

FY21 Guidance (Source: Financial and Business Update, April 29, 2021)

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

• % Premium/(Discount) is based on our assessment of the company’s FY21E trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

SGEN Daily Technical Chart

Stock Recommendation: SGEN has surged 8.87% in the past 3 months, and is currently leaning towards the lower band of the 52-week range of USD 133.20 to USD 213.94. The stock is currently trading between its 50 and 200 DMA levels, and its RSI Index is 52.46. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 147.47. Considering the correction in the stock price, product commercialization, growth potential, and current valuation, we recommend a “Watch” rating on the stock at the current price of USD 156.12, down 1.36% as of July 02, 2021, at 1.45 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.