2017 is looking like a transition year for the biotech.

Seattle Genetics (NASDAQ:SGEN) released fourth-quarter earnings on Thursday and gave investors a taste of what's to come later this year. With modest growth for Adcetris, its only drug on the market, investors should be focused on Seattle Genetics' pipeline and clinical trials that could further expand sales of Adcetris.

Metric

Q4 2016

Q4 2015

Year-Over-Year Change

Revenue

$105 million

$93 million

12.6%

Income from operations

($55.8 million)

($25.1 million)

N/A

Earnings per share

($0.39)

($0.18)

N/A

Data source: Seattle Genetics.

Image source: Getty Images.

Clay Siegall, Seattle Genetics' president and CEO, asked investors to look past 2017 guidance and see the bigger picture: "What is really important with Adcetris is not the sales we have now. What's really important is going toward the big items of [ECHELON-1] and [ECHELON-2], and you can even include ALCANZA in there."

On the delay of submitting the application for CTCL patients, Siegall didn't even want to call it that. "To me it's not a delay. To me it's taking advantage of an opportunity," he said. "I think we have a really good opportunity to end up with a bigger market if we can get a bigger label."

Management guided for Adcetris sales of $280 million to $300 million this year, which is 5.3% to 12.9% higher than last year's sales. Royalty revenue is expected to be in the $50 million to $55 million range, down from the $67.5 million in 2016, but last year included a $20 million milestone payment.

The difference between the bottom and top of guidance likely has to do with how many doctors prescribe Adcetris for CTCL off-label ahead of the FDA approval. But capturing those patients now versus next year isn't particularly important for Seattle Genetics' long-term value.

Brian Orelli has no position in any stocks mentioned. The Motley Fool recommends Seattle Genetics. The Motley Fool has a disclosure policy.

Dr. Orelli is a Senior Biotech Specialist. He has written about biotech, pharmaceutical, and medical device companies for The Motley Fool since 2007.

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Seattle Genetics Earnings: Waiting on ECHELON - Motley Fool