Founder Stories: Clay Siegall, Co-Founder and CEO of Seattle Genetics

My concept of treating cancer and the company that I have built. So let me start with telling you a little bit about Seattle Genetics. The concept of Seattle Genetics is really to make a difference in the life of cancer patients, and we use antibody-based therapies. I'll explain all about this during my talk and give you a concept of what we are doing. Now, we are the leaders in the world for something called antibody drug conjugates, and we have a product. Our first product is called Adcetris, and that was approved initially by the FDA in 2011. It's now available in 47 countries, including 11 in the last year. The most recent country was Brazil.

We are addressing many different types of cancer: solid tumors, leukemias, lymphomas, solid tumors including breast cancer, kidney cancer, colon cancer, bladder cancer. The company, as Bill said, was founded in 1998, and we're located just north of Seattle in a suburb called Bothell. We are publicly traded on the NASDAQ market and have about 650 employees, but that should rise pretty dramatically over the next year.

Now, cancer therapy really started decades ago with cytotoxic therapies. These are cytotoxic or cell-killing therapies. It's traditional. When you hear about chemotherapy, it kills cancer cells, but it also kills normal cells. So there are a lot of side effects that you've seen with cancer patients. The kinds of cells that divide that are important are bone marrow cells, for example. So you try to kill the cancer in the patient with chemotherapy, and you kill as many cells as you can, but you don't want to kill the patient, so you have to back off. Then the cancer cells also come up with a mechanism of resistance, so these chemotherapies start stopping working. It does help some patients, but not all patients.

Then there was a technology which Michael Potter participated in discovering from NIH, where I did an internship, and it's called monoclonal antibodies. These are proteins. They're targeted, they're very well tolerated. They're targeted to cell surfaces. They can decorate cancer cells, but they can't kill them. A few of them can kill them on their own, but the vast majority don't. So we reasoned putting together a cytotoxic therapy on the vehicle on an antibody and making an antibody drug conjugate could make an effective drug. You have the vehicle of the antibody finding the cancer cell, and then you have a cytotoxic agent to be potent and kill the cancer cell.

So monoclonal antibodies were first discovered in the 70s, and the Nobel Prize was awarded to Kohler and Milstein in '76. Then there were genetically engineered forms to allow them to be given to humans over and over without rejecting them. Then the first antibody for cancer, called Rituxan, came from the industry. In 2013, there was $62 billion of antibody sales. This year they expect $71 billion, and if you look only a few years from now, the expectation is for more than $100 billion in sales of antibodies. I put this up not to show you about the money, but pharmaceutical drugs are not prescribed and are not used, and sales don't go up unless these drugs really work and help patients.

I was asked to tell you a little bit about myself. I was introduced, so you've heard this. I went to University of Maryland undergrad, George Washington for a PhD in genetics. I did postdoctoral training at the National Cancer Institute at the NIH. I entered the antibody field in the late 80s but had a lot of trouble with making decisions, putting them into place, and getting them to work because they were hard. It was really ahead of its time. We didn't know how to manufacture them. We didn't know the right targets. Bristol asked me to move to Seattle. They had bought a biotech company out there called Oncogen, and they renamed it Bristol-Myers Squibb Seattle and asked me to move out there and bring my entire team from Connecticut, which I did in 1992. Then by 1997, Bristol-Myers Squibb grew tired of all the money they were putting in, hundreds of millions of dollars, into antibody therapies. Interestingly, now Bristol-Myers Squibb many years later is back in the antibody field. But all of a sudden, they weren't going to be working on what I wanted to do and what I believed in, and I had passion for it. So the choices were to stay with Bristol-Myers, who asked me to move back to the East Coast where I came from, this time actually to Princeton to their headquarters, with a great job there. But I decided instead to start a company to follow my passion and my dreams. So instead of looking at Bristol-Myers Squibb closing the Seattle facility as a bad thing, I looked at it as an opportunity and co-founded Seattle Genetics in January 1998 and worked with my co-founder for a few years before he went on to do some other things that he was more interested in.

So what do you need when you start to say you want to build a biotech company? It's a little daunting. What do you need? You need facilities that are really state of the art, or you can't get scientists to want to work in them. You need to understand all of the clinical and regulatory work that's required by the FDA to even attempt to treat patients because there's a lot of regulation. You need to make sure that investors are aware of what you're doing and oncologists know the drugs you're doing and want to test them. You also have, once you start raising capital, a board of directors. So a lot of people have one boss, but I have eight bosses. We have nine people on the board of directors. I'm one, but the other eight are my bosses, and they know it and call me 24/7 whenever they want. I have to answer. And you have to raise capital often because building cancer drugs is a very cost-intensive business. You have shareholders, and they're not happy. You can make products and then partner them with big pharmaceutical companies that can provide you capital and pay for the development, but you're now giving up a lot of your product, and you only own a piece of the product by selling off a product to a company. And you could also develop technology, which we did separately from our products. We're largely a product-based company to make products for cancer, but we also developed and discovered a lot of technology that other people want licenses to, so that can give you a non-dilutive approach to raising capital.

Now, just starting with financings, the first financing I ever did was in April 1998 for Seattle Genetics, and that was $7 million. Now, I started about nine months before that. I had no track record. I had never made a company before. This is me. This is what I do, and I want you to write checks to me, and I might blow the money and you might get nothing for it. So it's hard to do that. So it took nine months to raise $7 million from a number of very good venture capital companies. Then about a year and a half later, we had started to really get things rolling and get things moving along, so it only took three months this time to raise $30.5 million from venture capitalists led by Bank America Ventures. We had competing term sheets for who would be in the lead position, so now it's a little bit easier to raise capital. We also got money from Cascade, which was Bill Gates' personal investment.

Then I took the company public in 2001. Now, in '98 and '99, the stock market was hot, the dot-com era was rolling, a lot of IPOs. But by 2000, it really started to close, and in 2001, and this is before 9/11, the stock market was really shut down. We were the only biotech company to go public, and it was a tough time to go public. We went to 91 meetings in 17 cities over three weeks. JP Morgan led the financing from the banking side, and we raised $51 million, and we were publicly traded on NASDAQ. The reason to go public is access to capital. It's not to look at your stock ticker in the paper every day or on the internet. It's to raise capital and have access to future capital to build the company. We did one in 2003, 2004, 2006, 2008, 2009, 2011, and then you don't see one since 2011. It's been about three and three-quarters years since we raised a nickel because we have strong revenues now. So we don't need to raise money from Wall Street. In fact, we have more cash now than we've ever had because we do have revenues. But you can also see that generally, not perfectly, it was always raising capital at a higher share price. The last time we raised capital was at $15.50 a share. Today we closed at about $36.50 a share roughly. So everyone that I ever sold stock to in a transaction like this has made money.

It's not simple to take out some super glue, attach a potent drug to an antibody, and let her go. It's not that simple. The linker that you attach the drug to the antibody has to have two properties, and those two properties have opposing forces. You want to have a small drug, a tiny dot, onto a big antibody, which is a big glob, a big protein macromolecule. The very potent cytotoxic agent is tiny. It has to attach, and it has to be stable in the bloodstream. Now, the opposing force is once it gets inside a cancer cell, it has to be released because it's not active if it's not released. So you have to have something that's stable and labile at the same time. We developed a linker that uses an enzyme called cathepsin. This enzyme is stable in the bloodstream, but inside of tumor cells in the lysosome, it allows cleavage through its substrate to release the drug. So it's more like an on-off switch at the right place inside the cell.

Now, very early, before we developed this cathepsin-cleavable linker and were able to make second-generation ADCs and products that really worked well in people, we had an early generation ADC we called SGN-15. This is a project we probably put about $50 million investment into, and it failed. But we learned a lot, and I would encourage all the students here that if you do something and you fail at it in science, which happens all the time, if you don't learn anything from it, then you've really failed. SGN-15 targeted a Lewis Y antigen on breast cancer and colon cancer, and preclinically it worked really well. But we needed a very high dose to make it work, way too high for a human being. We went into humans and we tried dose escalation. We couldn't get there, so it was ineffective. It had weak activity in clinical trials, and we halted development in 2003. But we learned what we needed. We needed a better linker, and we developed that. So we also needed a different potent toxin to attach to the antibodies, and we looked at hundreds and hundreds of different toxic drugs around the world. We found one called dolastatin, and we made a derivative called monomethyl auristatin E, MMAE. Now, dolastatin was originally purified from the Indian Ocean from a little mollusk. That's not a really good business to be in for a scientist. Instead, we have a synthetic product that you could have a building in New Jersey making as much material as you want rather than going to the Indian Ocean. So we have a synthetic drug, and we tested lots of linkers, and we ended up with a linker that was fantastic, which I explained is cleaved by enzymes. We decided to target a number of targets on cancers. The first one I'll tell you about is CD30. CD30 is expressed on virtually all Hodgkin lymphoma cells. It targets the defining cells of Hodgkin lymphoma called a Reed-Sternberg cell. It also targets the malignant cells in anaplastic large cell lymphoma. It's not on normal cells, so it's a real opportunity to say, can we use that as a delivery system for something potent to knock out the tumors and not kill the normal cells?

Now, our molecule we made, we called it SGN-35. As you can see, the numbers start going up. We've made quite a lot of molecules and failed with a number of molecules. SGN-35 used a protease or cathepsin-cleavable site to release the drug. Here's a picture that's actually completely backwards. The antibody, which is the Y over on the left, is a massive molecule, and the rest of this is a piece of chemistry which is tiny from a size perspective, but just to blow it up and see what it looks like. Our linker is put into a mouse that had a Hodgkin lymphoma xenograft on its back. So we artificially put a tumor on the back of a mouse and said, does this work? We did it at one milligram per kilogram and two milligrams per kilogram. You could see at two milligrams per kilogram, in the red triangles, the tumors were completely regressed in the mice. We said, okay, this could be something interesting. You have to make sure things are safe and you can scale them, so this is only one step along the way. Then we did a Phase 1 clinical trial in patients, and the results of the Phase 1 trial were so spectacular that we were able to publish it in the New England Journal of Medicine. This drug, SGN-35, or the generic name brentuximab vedotin, we had a patient with a PET scan. The two spots on the right that you can see that are dark is really where the contrast stain goes, and that's in the heart, in the bladder. That's what you normally would see with the contrast stain. But you can see all the speckles on the left side as well as the tumor right below the shoulder, and it's complete remission and gone. So this patient did extremely well.

Now, we treated over 100 patients, and this is what's called a waterfall plot. It's how you plot it. Each line is an individual patient. This was in the New England Journal of Medicine paper. We treated patients, and 94 of these patients were Hodgkin lymphoma patients that had been given every possible drug known to mankind already. Now, what I want to show you here is how we had to learn on this drug from a predecessor drug. Not only was the drug conjugate technology developed on a different drug, but we had started, if you look on the right, SGN-30, that was the naked antibody. We had this antibody by itself. We knew it bound to tumors. A number of years before, we took this naked antibody and we put this into patients, SGN-30, at up to 12 milligrams per kilogram weekly. Notice the dose versus the dose of the drug conjugate of 1.8 milligrams per kilogram because cost in patients and what you want to charge people is also measured in cost of goods. If something's very expensive to make, you have to charge even more money for it. So with the naked antibody that targets CD30, we got some tumor regressions up to 90%, and when you're over 99% of the tumor, that's called a complete response. So we got some 30 and 40 percent regressions of tumors, but nothing over 50 percent to get an objective partial response. So we knew we had a good target. We knew it was safe. Delivering this antibody was safe. It didn't hurt patients. So we took the same SGN-30 antibody, we empowered it with our technology we developed, and you could see a 73% objective response rate in 102 patients at a relatively low dose and giving the drug only every third week. Patients could come in to get the drug, and it was a 30-minute infusion, outpatient therapy. They didn't get sick. These are patients that usually would come in and they were used to chemotherapy that they got that failed. They would get sick for a week, and then at the end of the week when they first started to feel better, they had to do the cycle again. It's really hard with chemotherapy. We were able to make something that was targeted that patients came in as outpatient therapy. You weren't in there for five to six hours in the oncologist's office getting chemotherapy and having a crash cart nearby. You got outpatient therapy. It was 30 minutes. We had some of our first patients would come in. This one woman would come into a major city. She lived in the suburbs, and she came into a major city. The doctor told us the story how she'd come in initially with her husband to drive her because she was used to her chemotherapy, and the chemotherapy she couldn't drive home. So she came in with her husband the first time. Second time, she came in by herself, drove herself in, came and got it, but told her husband that she had to be there. For anaplastic large cell lymphoma, which simply is a T-cell lymphoma, we treated patients and 97% of patients had tumor reduction. So it was even better than Hodgkin lymphoma.

So what happened is we took these data and a plethora of data of hundreds and hundreds of patients we treated, and we brought it to the FDA, and the FDA approved Adcetris. We now have a fancy name. Adcetris starts with ADC, which is antibody drug conjugate. What I had done was we hired a company to help us with a name because you have to be careful with naming pharmaceuticals that it doesn't mean something bad in a different language. There have been examples where people have a name, they launch it globally, and they have to pull the name and change it because in some other language it denotes something that's not good. Adcetris sounds like dessert, and nobody in the world seems to not like the name, so that's good. Now, we've treated more than 15,000 patients, and I really don't know, we could be over 20,000 now because we treat it globally. We decided to keep the drug and launch it ourselves as Seattle Genetics. We had never launched a product before in the United States and Canada and build a commercial team. Then we decided to partner it with Takeda, a very large global company. Over 200 years that company's been existing. It's based in Tokyo, but it's global, and they would launch it in the other countries, of course with our participation. Right now, we have a very broad program. We have more than 30 clinical trials. You could see that we didn't even start clinical trials until November of 2006 with Adcetris, which we called initially SGN-35. So November 2006. So we had eight years spending money, building scientific lab, getting doctors hired before we started this specific drug. We had started with other drugs and it failed, and then we did a number of trials, and we did Phase 1 and Phase 2. Now normally you have to do Phase 1, 2, and 3 to get approval, but in Phase 2, the data were so special that the FDA approved us based on Phase 2. That happens sometimes. The FDA has an awesome task to protect us from bad medicines and to provide approval to good medicines. When a drug has special activity, and I can give you many examples, the FDA moves quickly even though they're accused of moving slowly. They're only being accused of moving slowly when they have difficult decisions, but when the decision is obvious, they move quickly.

Our launch of Adcetris has been strong on a worldwide basis. This year we're going to approach close to $400 million in global sales. In the U.S. and Canada, where my sales people sell this, we just reported the last quarter almost $50 million in sales just in the U.S. and Canada. We're now selling the drug a little bit more globally than in the U.S. and Canada, and that's a very good sign. Our partner Takeda has the right through contractual agreements. There are a lot of cancer drugs that are not very good cancer drugs where the sales in the U.S. are actually bigger than global because of the pharmacoeconomic pressures globally. If the drug is not very good, it won't sell globally even if it sells in the U.S. The best cancer drugs in the world always sell more outside the U.S. than they do in the U.S. One more comment: in the three years we've been approved, we have not been turned down by one reimbursement group globally when a patient has disease. Once the drug was approved, once it's called on-label, before it's approved is a different story, but once it's been approved in a country, U.S. or wherever, no country has ever said no to a patient after approval of this drug, which does happen with other drugs.

My head of public relations comes and says, 'Clay, you have to hear this. We saved Ethan Zahn's life.' I said, 'Wow, that's fantastic. Who is Ethan Zahn?' He evidently was a survivor a year or two or three, and a lot of people knew him. He had a TV show, or he still does maybe, and he became a personality. He had Hodgkin lymphoma, and he was treated. It initially worked, but then it failed. He had another treatment, and it worked and then failed. Then he had a bone marrow transplant, and it worked and then failed. He was in a bad way, and he got treated with Adcetris, went into complete remission. It's been a couple years now, and he has been clean of cancer. I met him now a couple times. He's a wonderful guy.

The product you have to address unmet medical needs. You also have to have, in this era of payer pushbacks, you have to have a payer value proposition. The payers are the insurance companies, countries depending on how medicine is run, and you have to make it so patient outcomes are easy to predict. What we have here is a drug that works in the majority of patients, and we can tell if a patient's going to respond because they have the target CD30. Payers or countries who are paying for medicine like that, they don't like when you say my drug works in 15% of cancer patients but you got to use it in all of them. They view that as an 85% failure rate. You also have to have good programs. We started something called SGEN Secure, and this is a patient assistance program. Our goal was that whether you can afford it or not, we wanted every patient that needed Adcetris in the United States and Canada, which were our territories, and I know Takeda was doing the same thing internationally, to get the drug. So we shouldn't have anybody based on financial need not getting the drug. So like I said, we had a global collaboration with Takeda. They have done a fantastic job in the rest of the world. We've been hand in hand with them going through regulatory approvals around the globe. They paid us a fair amount of money up front to get the rights to do this. They wrote us a check for $60 million. Then as they get approvals, they pay us more money up to $225 million in milestones. It's actually really good for them too. They get to put a lot of money into it and get sales.

Going forward with Adcetris, we're approved only in a few indications, and that's what I have in green there, the green bar on the left. But as you can see, there are many other types of areas where we're interested in. I'll just highlight one or two. The tallest bar is frontline Hodgkin lymphoma and frontline MTCL, or mature T-cell lymphoma. So just talking about Hodgkin lymphoma in frontline, the standard of care globally for Hodgkin lymphoma, if any of you know someone or were diagnosed with Hodgkin lymphoma, about 9,500 patients annually in the United States get it, about the same amount in the rest of the world. The standard of care is called ABVD: Adriamycin, bleomycin, vinblastine, dacarbazine. Four very toxic, cytotoxic, cell-killing drugs that are not targeted. You combine these four, and you get the patients extraordinarily sick. But it works pretty well. It's really toxic but works pretty well. So our goal was to say, let's make Hodgkin lymphoma therapy better in frontline and safer. You know, going back to this, you may say, 'Would you already got approval for Hodgkin lymphoma?' Our approval was only for relapsed Hodgkin lymphoma. So our goal is to get approval and redefine frontline Hodgkin lymphoma for the next 40 years, like ABVD defined it for the last 40 years.

We have extraordinary activity in some of the different disease types, so we really have a very active drug that helps patients. We're in four Phase 3 programs. One of them was unblinded only a few months ago after five years of trials from 2009 to 2014 and about $35 million. We unblinded a trial we called AETHERA, and our data hit our primary endpoint. The primary endpoint was progression-free survival, which was agreed upon with the FDA, and we had a p-value that was very low. The statistics showed it was really strongly powered to hit its primary endpoint. We are going to be presenting this in about two weeks at a medical conference. Right now, we're taking the data. We've requested meetings with the FDA, and we're going to be talking to them about a supplemental label. It's called a supplemental BLA, or Biologic License Application, to add to our existing approval. So when you have a drug that's approved, you can add additional uses to it. That's really important, and that's what we're doing with Adcetris through all sorts of trials, over 30 trials. We expect that Adcetris will get approved in many more indications and earlier lines of patients, including frontline, in relapsed patients as well, in maintenance and consolidation. We expect that Adcetris will probably become a global brand selling somewhere between one and three billion dollars a year when we're done with all the indications.

We have a number of other products with different names. Two of them are in collaboration with Astellas, a big pharmaceutical company, and that's why it's ASG, A for Astellas and SG for Seattle Genetics. But the other ones are just Seattle Genetics products. One that I'm very excited about, I'll tell you about two actually. The first one targets CD19, and that's on certain leukemias and some B-cell lymphomas, so a little different than what Adcetris targets. The other one I'll tell you about targets CD33 for the worst leukemia there is, called acute myeloid leukemia, where survival is often measured in terms of months, not years. This is a plot of basically all the patients. Some of those patients are probably underdosed, but you don't know. You have to learn the safety profile first. So this is a Phase 1 plot. What I showed you earlier with Adcetris, or SGN-35, was Phase 2 plots of only the active dose we wanted to use, the most active dose. So this is actually a very strong plot from a Phase 1 trial. This drug that we're probably going to bring to Phase 2 sometime in the next year. The second drug is targeting AML, acute myeloid leukemia. You get diagnosed with AML, and in the vast majority of cases, 95% of patients, you don't live very long. Survival is measured in months. There was a drug approved for AML by the FDA because it had a six-week survival advantage. So instead of dying in four months, you died in five and a half months. That's just not good. It's not acceptable, and we need to stand up to that challenge.

So we developed a new generation. One of the things I like about this drug is I told you we started with a first-generation ADC technology, and the first-generation ADC technology fails. So we made a new linker. So then we made a second-generation technology, which was in Adcetris, and that one worked. We have been, if you want to be a leader in anything in the world, you have to continue innovating because other people around you will out-innovate you if you sit still. So we developed a third-generation technology. We call it site-specific conjugation. We re-engineered the antibody. We have uniform drug loading because Adcetris does not have uniform drug loading. We've increased the stability. We have a new drug we attached that's called a pyrrolobenzodiazepine dimer, or PBD. It's two to three hundred times more potent than what we have in Adcetris, monomethyl auristatin E. It's not sensitive to the standard multi-drug resistance pathways. So it's really got everything. It's like we've built a new car with all the gadgets on it. It took us about five years, about $25 million to just redo the technology. It was a very good investment. So we've now put it into clinical trials, and for the first time after about a year and a half treating patients, we're going to be presenting data. We can clear the leukemia blasts. That's what leukemia cells are called, blast cells. We can clear in almost half the patients at 40 micrograms per kilogram. At 40 micrograms per kilogram, we can almost completely get rid of in half the patients the tumor blasts from the bone marrow. Now we're still dose escalating. We haven't hit our maximum dose, but that's an impressive number. So I'm really excited with our chance to treat AML patients.

So like I said earlier, we do partnerships with other companies. A lot of companies have come to us and said, 'We like your ADC technology. Can we license your technology and pay you for that onto our own antibodies?' So we've done that. We then also get royalties. Some of the companies that we've done work with are Bayer Pharmaceutical, the big German company; Daiichi Sankyo from Japan; GSK, which is a British company; we have a number of U.S. companies like Pfizer and AbbVie. AbbVie used to be Abbott Pharmaceuticals. They split into two arms, and AbbVie is their new pharmaceutical name. So we're very excited to work with these other companies and allow them to use our technology. This is a chart of what some of the drugs that other companies are putting in clinical trials. These are not my drugs. I own a piece of these drugs. They pay for the drugs, and they pay my company for the technology. You can see that a number of companies, Genentech, have drugs in clinical trials. In revenues, that annualizes to about $300 million. The revenues come from Adcetris sales, collaboration revenues, and royalties. The company has $340 million roughly in the bank, and we have no debt, which is really clean and enables us not to have to go to Wall Street and beg investors for more money.

Now, this is a chart from inception to where we are. When you started in 1998, you could see in the green line we call that market cap, or market capitalization, that's what we were worth as a company. So we start the company at worth zero, and over time we've added value and added value. But you'd see that we raised money. You can see where the IPO was in 2001, and that's where we raised money. You could see at the end, like I said before, the last three years we haven't raised a nickel. We make money now. We have revenues now. Now, this is all of the biotech companies that make therapies, whether it's cancer or cardiovascular or diabetes, it doesn't matter. This is all the companies that are publicly traded that exist out there. A lot of companies used to be on this list, but they got sold, and that's what happens. In this business, there's a lot of consolidation. So we're the 18th largest biotech company now by market value. We're at the top one in the one to five billion category at four and a half billion. We're continuing to grow a lot. I don't know everybody's name, but somehow they know my name. They all walk up to me in the hallways, 'Hi Clay,' and I'm like, 'Hi.' I wish I knew. When we were 20, 30 people, I knew everybody. We were 50 people, I started to get a little fuzzy on a few. We were 100, there's no way. I'm sure the professors here know every student in Maryland, right?

Our internal product pipeline is very robust. We're excited and proud with it. We're helping cancer patients. Now, I wanted to tell you a little bit before I finish just on the challenges of drug development. To develop a drug takes eight to twelve years cycle, but as a public company, you have to have a long-term vision. You can't just follow what Wall Street's telling you: go make money now, sell everything off, do what you can. You have to actually give Wall Street some short-term catalysts to be happy, but also you have to keep your long-term catalysts for yourself. You have to have a balanced portfolio, a diverse portfolio, because a lot of things fail. You need to embrace change. Medicine is constantly changing, and I don't care what business you may be in, but everything changes all the time. The only thing that stays the same is change. Payers push back harder on drugs. Drugs need to be more and more effective now for our payers.

The lessons I've learned along the way is that the best science that you can do wins. Data doesn't lie. Data's data. You look at it and you make your decisions. Don't be afraid to close a program if it's not working. You make something that's not working, take something you learn from it, build, and move on. You need teamwork and collaboration because to develop drugs, or any business you want to do, takes a ton of people. As you get bigger, it's easy to sit back and relax and say, 'Oh, I've accomplished this or that.' No, no. You have to stay flexible, passionate, driven. You have to continue to build on your success. Our goal at Seattle Genetics is really to make a difference in the life of cancer patients, and we're very excited to be harnessing the power of our ADC technology to do that. I get letters from parents of their kids with Hodgkin lymphoma that are 14 years old that have no evidence of disease, thanking me for their children's or their grandchildren's lives. It's really very touching. I put a card I got from a young girl in her teens, Stephanie Loza. She was interesting because she lives in Argentina, and in Argentina they haven't approved the drug. She had relapsed Hodgkin lymphoma, and the doctors thought she was going to live about eight to ten months. I think she was about 16 years old or so. Her family had enough money, and her family came up and brought her to relatives that were in the Colorado area. She was treated at Rocky Mountain. There are a lot of legalities to it and regulations, but we were able to provide free drug for this young girl, and she went into complete remission. It's been a couple years now, and she wrote me a very lovely letter.

So I wanted to finish up with saying that your fearless idea could be next. I will run around the campus, and 'Fearless' is everywhere, every sign. I'm very proud to participate in the future success of this school. Initially, I participated in an important way in the William J. Higgins Distinguished Scholar Teacher Professorship. Recruitment is underway. I was going to say to replace Bill, but there's no replacing Bill, just as an alternative to Bill. Months later, she goes, 'We're so close to the end. Could you finish the fund?' I'm like, 'How close?' It wasn't that close. But fortunately, in honor of Bill, who is a fantastic professor and person, I was delighted to participate in it. So today, I would like to announce that in addition to that, I am going to start a Clay Siegall Scholarship for Life Sciences. I will cover, and I've been working on this with Andrea, we'll cover for an outstanding undergraduate student that also has demonstrated financial need, and we'll cover full tuition, room and board, books, fees for four years.

Yeah, it makes a lot of sense, but the way the rules and regulations are is you can get approved where you test it. So initially when we started, we developed this drug. We didn't know if it worked at all. We knew preclinically it looked good, but you don't want to get first diagnosed and go into the doctor's office and they said, 'Here's some experimental drug. We have no idea if it works.' So you start in the worst patients, the ones that have failed. Then you prove it there, and then it's more morally feasible to test it in frontline patients. So we have now, like in Hodgkin lymphoma, we have a trial running right now in 1040 patients, which was sized to that number by statisticians with two arms. One is a standard of care that's been around for almost 40 years, and the other is a regimen with Adcetris. So it's 520 patients and 520 patients, and it takes years to accrue the patients and then to follow the patients. So we're about four and a half years into a seven-year trial. There's also off-label use, which is where you're not approved, and there are doctors that are using our drug that buy the drug or get a reimburser to fund it without approval. If a drug is good and it's a good cancer drug, that happens. Now, my sales people cannot promote it. That's illegal. You can't go around trying to sell off-label use, but it's a reality that it can happen once a drug is approved in some area. Doctors can write prescriptions on it and somehow get the money from somewhere to buy drugs.

My pitch was that I wanted to make empowered antibodies, and I had three different technologies at that time. One of them was antibody drug conjugates, one was antibody protein toxins, and one was antibody enzymes. I knew I wanted to make empowered antibodies. So from the first business plan till now, we've had the same vision. So many companies start out with a vision, raise money, then change their vision and change their vision. That happens with companies sometimes successfully, sometimes not. I think the best companies are the ones that start out with a vision and stick to their vision.

Well, we actually chose quite a few types of cancers. Our very first drug went into breast cancer and it failed. I now have a new drug in breast cancer that we started only a few months ago that I'm excited about. Not necessarily, you know, my dream has not just been I want to make a drug for Hodgkin lymphoma. I want to, you know, my passion is I want to make new drugs for cancer. So that's why right now we have a very big pipeline across different types of cancers.

Okay, I think there was a question about heterogeneity and the second question was about delivering treatment to non-perfused hypoxic areas. I got it. So, tumors largely are heterogeneous. You have a mass of a tumor. In some tumors, they're homogeneous and almost every cell looks alike, but in most tumors it's not the case. In most tumors, you have a mixed bag of cells. In Hodgkin lymphoma, certainly that's the case. In Hodgkin lymphoma, only about 8% of the mass of the tumor has what's called Reed-Sternberg cells, and those have CD30. But what happens is when you target and kill a mass, a tumor nodule if you will, with an antibody drug conjugate, we get something called bystander activity. We're releasing this small molecule. We have a big antibody to bind to the cell. It gets in, and we're releasing a small, tiny cytotoxic inside the cell that's so small that it can leak out. Now, you don't get much of that in the bloodstream. It's only in the local tumor microenvironment. You could get some of the cytotoxic cells, and we've shown that there's bystander activity for cells that are close by. So if you could get it to a tumor, it's like you drop a bomb on something. You're not killing only what's there. You could hit the area around it. So our drug, if you could get it there, you could hit the cells around it. The second thing you asked about was necrotic cells that are hypoxic and how can you treat those. The areas generally where there are no blood vessels and they're necrotic, a lot of times you can tell. You could do a regular CAT scan and then a PET scan. The CAT scan will show you the region of a tumor. The PET scan shows you what's metabolizing or what's living. The contrast between the two can tell you because you can have a ghost of a tumor, and you can see this ghost of a tumor nodule. But if you look at a PET scan, which shows you what's living and dead, you can know if you've actually treated it. But usually the necrotic cells are not the ones that are causing the problems. It's the actively metabolizing cells.

Yeah, the answer, that's a good question, thank you. The answer is both. We make drugs to targets. We don't make drugs to cancer. Some companies decide we're going to work on lung cancer, and that's what they do. We decide we're going to work on a target, a receptor if you will, that we're targeting. So that's what we do. Because of that, some of our targets go after one disease, and some of our targets can go after a couple of diseases. Thanks for noticing that.

Yeah, so it's kind of interesting. You talk about the blood-brain barrier. Most times, drugs you put them in, if you have a brain tumor, it's hard to get the drug to the brain because there's a blood-brain barrier. So if you have brain cancer, you're often treated with chemotherapy and radiation. What that does is it damages the blood-brain barrier and allows some drugs to get in. But you can also close that and treat through the carotid artery. So treating brain cancer is something that's important. Actually, in talking to doctors, they worry about brain metastasis. So like if you have lung cancer, a surgeon will say, 'Well, I could cut out the lung tumor, but if you've already, too late, and the tumor has broken off, got in the bloodstream, got through the blood-brain barrier, and lodged into the brain, you can't treat them.' So a lot of times patients that have lung cancer die because they have a tumor in their brain and not because of the primary site. So that's something we think about a lot, how we could go after tumors in the brain. I lost my father when I was 24 years old to brain cancer. Thank you.