Here's Why Seattle Genetic's Adcetris Is A $2 Billion Product

Morgan Stanley’s Andrew S. Berens believes Seattle Genetics, Inc. SGEN's Adcetris is a $2 billion products, with growth primarily being driven by higher usage in transplant settings, as well as a move to front-line lymphoma treatment.

Berens initiated coverage of the company with an Overweight rating and price target of $60.

Blockbuster Potential

The analyst expects Adcetris to grow 16 percent annually from its current sales levels, to reach a peak of $2.5 billion by 2030.

“We think Seattle Genetics is likely to move Adcetris to the frontline in Hodgkin's Lymphoma, based on our high level of conviction that an ongoing Phase trial, ECHELON-1 is likely to be favorable in 2017-18,” Berens mentioned.

Related Link: Exclusive: Oasmia Chairman Talks About How They're Changing Cancer Drug Delivery Treatment

The analyst believes this could be a $1 billion opportunity, which would allow the company to avoid competition by establishing Adcetris as the standard of care, ahead of its competitors.

Underestimated Potential

However, Berens also pointed out that the Street “does not appear to recognize this growth or the durability of this revenue stream afforded by this first mover advantage.”

According to the Morgan Stanley report, “Adcetris is well-entrenched in currently approved indications, with growth emanating from recent transplant approval. Adcetris is approved for usage in Hodgkin's Lymphoma (HL), as well as another rare lymphoma (sALCL).”

The analyst also believes the threat from newer interventions was being overstated by the Street.

At time of writing, Seattle Genetics was up 4.33 percent on the day, trading at $48.16.

Full ratings data available on Benzinga Pro.