- Seattle's largest biotechnology company, Seagen, lost roughly $4 billion in market value Thursday morning, following an earnings report in which the company's outlook for one of its newer cancer medicines appears to have disappointed investors.
- The medicine, called Tukysa, is cleared by the Food and Drug Administration for patients with a certain kind of breast cancer. In an earnings report released Wednesday afternoon, Seagen said net sales of Tukysa totaled $334 million last year, or nearly triple the amount brought in during 2020.
- Looking ahead, however, Seagen expects flat or falling net sales of Tukysa this year due to growing competition in the breast cancer treatment market. Particularly concerning to Seagen is Enhertu, a rival therapy that recently showed profound effects in the same group of patients Tukysa is approved to treat.
Seagen, formerly known as Seattle Genetics, ended last year with almost $1.4 billion in net sales from its four marketed drugs, an annual increase of 38%.
Normally, such growth would boost investor confidence. But the forecast for Tukysa sales — and, perhaps to a lesser extent, Seagen's other products — seems to be weighing heavily on shareholders, as Seagen's stock priced dipped as much as 17% in Thursday morning trading. The Tukysa revenue expectations are a "specific point of concern," according to Kennen MacKay, an analyst at RBC Capital Markets.
Tukysa works by blocking HER2, a protein that promotes cell growth and is often found at higher-than-normal levels in certain cancers. In female breast cancer, a disease which affects at least 3.8 million people in the U.S. alone, it's estimated that around 20% of cases are positive for the HER2 protein.
After showing positive effects in clinical testing, Tukysa received FDA approval in April 2020 to be part of a treatment regimen for HER2-positive breast cancers that either cannot be surgically removed or had spread after one or more therapies targeting the protein. Since then, Seagen claims its drug has become the most used product in the "second-line or later" setting for U.S. patients whose breast cancer has metastasized to the brain.
Seagen, though, has competition. Enhertu is also designed to inhibit the HER2 protein, and in late 2019 secured FDA approval as a so-called third-line treatment for breast cancer patients whose disease still progressed after two HER2-targeting regimens.
Enhertu's developers, AstraZeneca and Daiichi Sankyo, have since been trying to broaden its reach. The drug received FDA clearance again in early 2021 for patients with advanced, HER2-positive stomach cancer. Then, last fall, came positive data from a large clinical trial testing it in the second-line breast cancer setting.
In these previously treated patients, the trial found Enhertu cut the risk of death or cancer progression by 72% compared to Roche's Kadcyla, another marketed therapy for HER2-positive breast cancer.
An approval decision for Enhertu in the second-line breast cancer setting is expected sometime in the first half of this year. In its own earnings report issued Thursday, AstraZeneca said Enhertu sales reached $214 million in 2021, up 123% from the year prior. If approved again, a broadened label would likely lead to additional growth.
Seagen is already bracing its investors for such an outcome. For 2022, the company predicts Tukysa net sales in the range of $315 million to $335 million.
"It's an evolving and dynamic marketplace," Clay Siegall, Seagen's CEO, said on an earnings call Wednesday. The recently released Enhertu data, he added, are "likely to have a near-term effect on our growth, and that’s reflected in our guidance."
Seagen hopes to offset these challenges by further expanding Tukysa's label. For example, a closely watched study evaluating the drug in combination with trastuzumab — the active ingredient in the blockbuster breast cancer treatment Herceptin — should have reportable data by the end of May.
Still, the near-term threat from Enhertu is spurring caution from some analysts.
"Given Enhertu's impressive results ... we now assume Tukysa will receive more truncated use in [second-line settings] in 2022, especially in patients without brain [metastases]," wrote Andrew Berens, an analyst at SVB Leerink, in a note to clients.