Seattle Genetics Inc. (SGEN, Financial) filed Quarterly Report for the period ended 2009-03-31.
Seatlle Genetic develops monoclonal antibody-based drugs to treat cancer and related diseases. Using its monoclonal antibody-based technologies and its expertise in cancer the company have assembled a portfolio of drug candidates targeted to many types of human cancers. The company utilizes its monoclonal antibody-based technologies to increase the potency and efficacy of antibodies with specificity for cancer. The company is testing our two most advanced product candidates SGN-15 and SGN-10 in patients with breast colon prostate or other cancers. Seattle Genetics Inc. has a market cap of $742.4 million; its shares were traded at around $8.67 with and P/S ratio of 21.1. Seattle Genetics Inc. had an annual average earning growth of 0.7% over the past 5 years.
Genentech revenues increased 33% to $8.5 million in the first quarter of 2009 compared to the first quarter of 2008. The increase primarily resulted from revenues earned under the dacetuzumab collaboration agreement with Genentech entered into in January 2007. Under the terms of this agreement, we perform research and development activities over the six-year development period of the agreement, the costs of which are reimbursed by Genentech. We are also entitled to receive milestones as dacetuzumab progresses through development and royalties on future product sales. The $60 million upfront payment received in 2007 and all reimbursement and milestone payments received are deferred and recognized as revenue over the development period of the agreement using a time-based method. Genentech revenues also reflect the earned portion of payments received under our ADC collaboration agreement. Daiichi Sankyo revenue reflects the earned portion of a $4.0 million upfront payment received by us in the third quarter of 2008, and reimbursable support and research materials provided to Daiichi Sankyo by us under the ADC collaboration agreement we entered into with Daiichi Sankyo in July 2008. Revenues attributable to reimbursable support and research materials increased under our Bayer collaboration during the first quarter of 2009 compared to the first quarter of 2008. Revenues decreased under both our MedImmune and Progenics collaborations from the first quarter of 2008. The research term has been completed for both of these agreements.
Investment income, net decreased 48% to $1.0 million in the first quarter of 2009 from $1.9 million in the first quarter of 2008. The decrease resulted from lower average yields on investments.
Our combined cash, cash equivalents and investment securities increased to $192.4 million at March 31, 2009, compared to $160.7 million at December 31, 2008. This increase reflects cash provided by financing activities, which included net proceeds of $52.5 million from our public offering of common stock which closed in February 2009. We used $18.6 million during the first quarter of 2009 and $11.3 million during the first quarter of 2008 to fund our operating activities. Our working capital was $102.8 million at March 31, 2009, compared to $70.5 million at December 31, 2008. We have structured our investment portfolio to align scheduled maturities of investment securities with our working capital needs. Our cash, cash equivalents and investments are held in a variety of interest-bearing instruments and subject to investment guidelines allowing for investments in U.S. government and agency securities, high-grade corporate bonds, taxable municipal bonds, mortgage-backed securities, auction-rate securities, or ARS, commercial paper and money market accounts. As of March 31, 2009 we held ARS valued at $12.9 million that have failed at auction and are currently illiquid. Liquidity of these investments is subject to either a successful auction process, redemption of the investment, or a sale of the security in a secondary market. As of the date of this filing, the failed ARS carried ratings ranging from BBB to BB. Each of the securities continues to pay interest according to the stated terms on a monthly basis. The interest rates on these ARS is no longer established based on an auction process but as of the date of this filing is set at the 30-day London Interbank Offering rate plus 225 basis points, according to the terms of the issue. Based on our available cash, expected operating cash requirements and our belief that the holdings in ARS can be liquidated in approximately one to three years at par, we believe it is more likely than not that we have the ability to hold, and intend to hold, these investments until they recover substantially all of their cost basis. This belief is based on our current assessment of our future operating plans and assessment of the individual securities and general market conditions. We periodically reassess this conclusion based on several factors, including the continued failure of future auctions, failure of the investment to be redeemed, further deterioration of the credit rating of the investment, market risk and other factors. Any such future reassessment that results in a conclusion that the unrealized losses on these investments are other than temporary would result in a write down in the fair value of these investments. Such a write down would be recognized in our operating results. These securities are valued based on significant unobservable inputs (Level 3) as further discussed in Note 6 to the condensed consolidated financial statements.
The global credit and financial markets have recently experienced a period of unusual volatility and illiquidity. Our investment portfolio is structured to provide for investment maturities and access to cash that aligns with our anticipated working capital needs. However, if our liquidity needs should be accelerated for any reason in the near term, or investments do not pay at maturity, we may be required to sell investment securities in our portfolio prior to their scheduled maturities, which may result in a loss. As of March 31, 2009, our cash, cash equivalents and investment securities are presented net of a cumulative $1.6 million unrealized loss. This amount represents the difference between our amortized cost and the fair market value of the investments and is included in accumulated other comprehensive gain (loss). As of March 31, 2009, we had $131.6 million held in cash reserves or debt securities scheduled to mature within the next twelve months. In addition, we may receive an additional $11.5 million in gross proceeds from the sale of our common stock to Baker Brothers Life Sciences, L.P., or BBLS, and its affiliated investment funds if the sale is approved by our stockholders at our annual meeting of stockholders to be held on May 15, 2009 and the transaction is thereafter consummated.
Read the The complete ReportSGEN is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
Seatlle Genetic develops monoclonal antibody-based drugs to treat cancer and related diseases. Using its monoclonal antibody-based technologies and its expertise in cancer the company have assembled a portfolio of drug candidates targeted to many types of human cancers. The company utilizes its monoclonal antibody-based technologies to increase the potency and efficacy of antibodies with specificity for cancer. The company is testing our two most advanced product candidates SGN-15 and SGN-10 in patients with breast colon prostate or other cancers. Seattle Genetics Inc. has a market cap of $742.4 million; its shares were traded at around $8.67 with and P/S ratio of 21.1. Seattle Genetics Inc. had an annual average earning growth of 0.7% over the past 5 years.
Highlight of Business Operations:
To date, we have generated revenues principally from our collaboration and license agreements. These revenues reflect upfront technology access fees, milestone payments and reimbursement for support and materials supplied to our collaborators. For the three months ended March 31, 2009, revenues increased 29% to $9.1 million, compared to $7.1 million for the same period in 2008. Operating expenses increased 43% to $37.4 million, compared to $26.1 million for the same period in 2008. Our net loss for the three month period ended March 31, 2009 was $27.3 million, or $0.33 per share, compared to $17.1 million, or $0.22 per share, for the same period in 2008. As of March 31, 2009, we had $192.4 million in cash, cash equivalents and short-term and long-term investments, and $107.5 million in total stockholders equity.Genentech revenues increased 33% to $8.5 million in the first quarter of 2009 compared to the first quarter of 2008. The increase primarily resulted from revenues earned under the dacetuzumab collaboration agreement with Genentech entered into in January 2007. Under the terms of this agreement, we perform research and development activities over the six-year development period of the agreement, the costs of which are reimbursed by Genentech. We are also entitled to receive milestones as dacetuzumab progresses through development and royalties on future product sales. The $60 million upfront payment received in 2007 and all reimbursement and milestone payments received are deferred and recognized as revenue over the development period of the agreement using a time-based method. Genentech revenues also reflect the earned portion of payments received under our ADC collaboration agreement. Daiichi Sankyo revenue reflects the earned portion of a $4.0 million upfront payment received by us in the third quarter of 2008, and reimbursable support and research materials provided to Daiichi Sankyo by us under the ADC collaboration agreement we entered into with Daiichi Sankyo in July 2008. Revenues attributable to reimbursable support and research materials increased under our Bayer collaboration during the first quarter of 2009 compared to the first quarter of 2008. Revenues decreased under both our MedImmune and Progenics collaborations from the first quarter of 2008. The research term has been completed for both of these agreements.
Investment income, net decreased 48% to $1.0 million in the first quarter of 2009 from $1.9 million in the first quarter of 2008. The decrease resulted from lower average yields on investments.
Our combined cash, cash equivalents and investment securities increased to $192.4 million at March 31, 2009, compared to $160.7 million at December 31, 2008. This increase reflects cash provided by financing activities, which included net proceeds of $52.5 million from our public offering of common stock which closed in February 2009. We used $18.6 million during the first quarter of 2009 and $11.3 million during the first quarter of 2008 to fund our operating activities. Our working capital was $102.8 million at March 31, 2009, compared to $70.5 million at December 31, 2008. We have structured our investment portfolio to align scheduled maturities of investment securities with our working capital needs. Our cash, cash equivalents and investments are held in a variety of interest-bearing instruments and subject to investment guidelines allowing for investments in U.S. government and agency securities, high-grade corporate bonds, taxable municipal bonds, mortgage-backed securities, auction-rate securities, or ARS, commercial paper and money market accounts. As of March 31, 2009 we held ARS valued at $12.9 million that have failed at auction and are currently illiquid. Liquidity of these investments is subject to either a successful auction process, redemption of the investment, or a sale of the security in a secondary market. As of the date of this filing, the failed ARS carried ratings ranging from BBB to BB. Each of the securities continues to pay interest according to the stated terms on a monthly basis. The interest rates on these ARS is no longer established based on an auction process but as of the date of this filing is set at the 30-day London Interbank Offering rate plus 225 basis points, according to the terms of the issue. Based on our available cash, expected operating cash requirements and our belief that the holdings in ARS can be liquidated in approximately one to three years at par, we believe it is more likely than not that we have the ability to hold, and intend to hold, these investments until they recover substantially all of their cost basis. This belief is based on our current assessment of our future operating plans and assessment of the individual securities and general market conditions. We periodically reassess this conclusion based on several factors, including the continued failure of future auctions, failure of the investment to be redeemed, further deterioration of the credit rating of the investment, market risk and other factors. Any such future reassessment that results in a conclusion that the unrealized losses on these investments are other than temporary would result in a write down in the fair value of these investments. Such a write down would be recognized in our operating results. These securities are valued based on significant unobservable inputs (Level 3) as further discussed in Note 6 to the condensed consolidated financial statements.
The global credit and financial markets have recently experienced a period of unusual volatility and illiquidity. Our investment portfolio is structured to provide for investment maturities and access to cash that aligns with our anticipated working capital needs. However, if our liquidity needs should be accelerated for any reason in the near term, or investments do not pay at maturity, we may be required to sell investment securities in our portfolio prior to their scheduled maturities, which may result in a loss. As of March 31, 2009, our cash, cash equivalents and investment securities are presented net of a cumulative $1.6 million unrealized loss. This amount represents the difference between our amortized cost and the fair market value of the investments and is included in accumulated other comprehensive gain (loss). As of March 31, 2009, we had $131.6 million held in cash reserves or debt securities scheduled to mature within the next twelve months. In addition, we may receive an additional $11.5 million in gross proceeds from the sale of our common stock to Baker Brothers Life Sciences, L.P., or BBLS, and its affiliated investment funds if the sale is approved by our stockholders at our annual meeting of stockholders to be held on May 15, 2009 and the transaction is thereafter consummated.
Read the The complete ReportSGEN is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC.
