Looking at Seattle Genetics' (SGEN)
value makes me think of a barbell, as the valuation is split between
the near-term potential of the approved oncology drug Adcetris in
maintenance and salvage indications in Hodgkins, anaplastic large cell,
and cutaneous T cell lymphomas, and the longer-term potential of
extending Adcetris into front-line therapy and the company's pipeline.
As is, I think there's enough value in the existing Adcetris business to
support a price in the mid-$20's, but it is clear that the real value
lies in the longer-term opportunities.
I think Seattle Genetics
deserves to trade in the mid-$40's today, but this could well be a
frustrating stock to own. With most of the company's pipeline in early
stages of development and partnered programs offering only modest
royalties, I suspect investors may get impatient with the years-long
wait for data from the front-line ECHELON trials and the Street's
fixation on the quarter-to-quarter wobbles in Adcetris sales.
Please continue here:
Weighing Out The Seattle Genetics Barbell
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