BOTHELL — At a time when fellow biotechnology companies in Bothell are shrinking, Seattle Genetics just expanded into a second building and recently topped 200 employees. There is talk of expanding the company’s lab space as well.
They’re signs of steady progress at a time when many of the region’s other biotech firms are struggling mightily.
In the past six months, two nearby biotech companies — Sonus Pharmaceuticals and Nastech — have suffered key setbacks that resulted in huge stock value drops and layoffs.
Meanwhile, Seattle Genetics has survived a rough time on Wall Street and has emerged as the largest Washington-based biotech company in terms of its market value. With its stock trading at $8 a share, Seattle Genetics was worth about $632 million as of last week. Seattle-based Zymogenetics Inc., now second in market capitalization was at about $607 million.
The company even recently celebrated the 10th anniversary of its founding with an in-house concert by the rock band The Presidents of the United States of America.
Clay Siegall, Seattle Genetics’ chief executive, allowed that the company remains in a good position a year after entering a lucrative drug development pact with Genentech Inc., one of the world’s largest biotech firms.
Genentech’s interest, along with a relatively deep research pipeline, has spurred other companies to approach Seattle Genetics, Siegall said.
“A number of large companies are talking with us about our programs and partnering in the future,” he said. “It’s possible we may do more deals, but we’re not pressed to do it.”
That’s because the company is far from poor, thanks to a recent stock sale and payments from Genentech and other partners. At the end of last year, it had just under $130 million in cash and investments, before raising $97 million more with a stock offering in January.
David Miller, president of Biotech Stock Research LLC in Seattle, said Genentech’s involvement has helped to keep Seattle Genetics’ shares from swooning as deeply as other biotech stocks. But there’s more than that to its success.
“They’re on the very crest of a wave toward using powered antibodies. Their technology is one of two out there that’s captured a lot of attention from the big pharmaceutical and bioscience companies,” Miller said.
Seattle Genetics’ specialty is targeting antibodies to battle cancer cells, using two different approaches. Its engineered monoclonal antibodies are designed to recognize and fight against specific invading organisms, while its antibody-drug conjugates link antibodies to drugs to make them more potent.
SGN-40, an engineered antibody, is the one Genentech is helping to develop, with hopes of having it approved to treat blood cancers and some types of leukemia. It’s in phase 2 tests right now.
Under the deal with Genentech, Seattle Genetics received $60 million up front last year, and periodic payments under the agreement could one day total $800 million.
SGN-33, another engineered antibody, is in phase 2 tests to treat blood cancers.
SGN-35, the company’s most advanced antibody-drug conjugate, is in phase 1 tests against Hodgkin’s lymphoma and other cancers. The company also hopes to start clinical trials in the next two years on two more drug candidates, SGN-70 and SGN-75. The first, an engineered antibody, could treat auto-immune diseases, while the SGN-75 conjugate drug is aimed at treating solid tumors.
“We’ve been very fortunate that our drugs have borne out in the clinical trials so far,” Siegall said.
Seattle Genetics has had failures, too. SGN-10, SGN-15 and SGN-30 made it to phase 1 or 2 studies before being dropped for lack of potential. Even with those, however, the decisions made have tended to be well-timed. Other firms probably would have pushed those drug candidates into late-stage trials despite so-so results, Miller explained.
“They do make smart decisions, so when they do move a drug into a pivotal trial, you can be reasonably sure it will move forward,” he said.
Decisions on which drugs to advance from the lab into clinical trials, along with when to do that, are made by Seattle Genetics’ executive committee, which Siegall credits greatly. He added that the company has tried to grow carefully.
“We prefer to run slightly lean,” Siegall said, adding there have been no layoffs in the company’s decade-old history. Seattle Genetics uses outside contractors for some tasks, he said, because “you can go up and down with contractors without affecting the lives of our employees.”
By the end of the year, Siegall added, the company expects to employ about 250 people.
With expensive clinical trials outstripping revenue for now, the company’s not about to run in the black. After generating $10 million in revenue during 2006, and $22 million last year, Seattle Genetics is looking at revenue of up to $30 million in technology licensing fees, milestone payments and the like this year.
Its major partnership with Genentech and earlier deals with that company have generated talk that Seattle Genetics would be a good takeover target for the larger firm. Siegall said that’s always possible down the road, but his goal is to keep the company independent and, one day, profitable.
And if Seattle Genetics grows into the biggest biotech based in this region along the way, all the better, he said. “We’re excited about where we are. We’re no longer an early-stage company, but we’re not a successful company yet,” Siegall said. “We’re an emerging company.”
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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