A Growth-Free Quarter — and That's OK

While $34.7 million is a touch more than $34.5 million, that's not exactly huge quarter-over-quarter growth from Seattle Genetics' (Nasdaq: SGEN) Adcetris.

Still, investors seem to be shaking off the lackluster growth, and for good reason: Sales of Adcetris -- a drug for treating relapsed Hodgkin lymphoma and anaplastic large-cell lymphoma -- are a very small part of the long-term success of Seattle Genetics.

The light growth seems to be the result of declining business at academic centers, where sales dropped off as patients stopped treatment because they finished their therapy cycles or had a strong enough response to undergo a stem-cell transplant.

The number of community doctors using the drug increased in the second quarter, which is good news for the sales trajectory, as most of the lymphoma patients for whom Adcetris is appropriate are seen in the community setting.

Don't expect much growth in the second half, though; management is guiding for sales of $140 million to $150 million in 2012 -- either flat or a 17% increase from the first half of the year to the second half.

Seattle Genetics lost $12.3 million on a GAAP basis in the quarter but didn't actually burn any cash. In fact, the cash, cash equivalents, and investments increased by $21.5 million during the quarter. I don't know how long investors can expect that to continue, as the biotech is still using product manufactured prior to approval.

Of course, aside from Adcetris, Seattle Genetics can bring in cash by licensing out its antibody-drug conjugate technology, which has attracted some big names, including Roche, GlaxoSmithKline (NYSE: GSK) , Pfizer (NYSE: PFE) , and Abbott Labs (NYSE: ABT) .

Internally, Seattle Genetics' future depends on expanding the use of Adcetris into frontline setting for the two lymphomas it's currently approved to treat, as well as other types of cancer. The potential there towers over the $150 million Seattle Genetics will bring in this year.

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A Growth-Free Quarter -- and That's OK