Genes for Survival

Seattle Genetics builds a base for growth, but will it survive as an independent company?

By Sally James |   October 2009   |  FROM THE PRINT EDITION

Photograph by Hayley Young

Investors bet big money earlier this year that Bothell-based Seattle Genetics Inc. has a winning technique in the battle against one form of cancer, and many believe the strategy could work against other cancers.

The first product nearing the market for the 11-year-old Seattle company is known as Brentuximab Vedotin, and it works like a smart bomb that uses advanced targeting techniques to carry potent toxins directly to cancer cells in patients with Hodgkin's lymphoma, a form of cancer of the white blood cells. This therapy should be on the market by late 2011, says Clay Siegall, the firm's chief executive officer.

If Seattle Genetics' promise pays off for other cancers, the rising tide of its growth might help drive growth in the rest of Seattle's biotech sector. Already, the business has doubled its employee count to close to 300 in two years. (Another Seattle biotech, Dendreon Corp., said this year it will nearly double its office space as it begins bringing Provenge, its prostate cancer drug, to market.)

But many pitfalls loom for any company transitioning from research and development to delivering commercial products. One of those is getting swallowed up.

In July, Bristol-Myers Squibb Co. bought Medarex, one of Seattle Genetics' competitors, by paying almost double its stock price. Analysts pointed to this move as further proof of the future for antibody-based drugs, and they named Seattle Genetics as a potential takeover target.

The company operates mostly from two beige office and laboratory buildings perched on a slight hill in suburban Bothell, surrounded by many medical, dental and biomedical firms. The lobby boasts framed patent applications, as well as a "wall of honor" where new drug candidates have colorful banners displayed. In the labs, things are a little less formal, with a life-size John Wayne cut-out keeping a steely eye on the equipment.

Seattle Genetics' goal is to remain independent and in Seattle, although several other local biotechs have been swallowed when they reached a similar size and maturity. The largest of these, Immunex, was bought by Amgen in 2001. Another, Icos Corp., was bought out by Eli Lilly and Co. in 2007 and its local facilities closed.

Siegall argues that with plenty of money in the bank and no debt, there is little pressure to find a buyer. The company in August raised $136 million on the public markets, expanding its cash cushion to more than $300 million. Furthermore, insiders, both company executives and board

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