Shares of Seattle Genetics (Nasdaq: SGEN) hit a 52-week high on Friday. Let's take a look at how it got there and see whether clear skies are still in the forecast.

How it got hereIf you're looking for one particular sector that's largely ignored the recent correction, biotechnology would be it.

Seattle Genetics is one of many cancer-focused biotechs tipping the scales at a new high. But it isn't just Seattle Genetics' drugs that have investors excited; it's the pathway by which they work that has both patients and Wall Street abuzz.

Seattle Genetics is one of a handful of biotechs focused on researching antibody-drug conjugates. These ADC's will have a toxin attached to them that only releases when it comes in contact with a very specific protein. For Seattle Genetics' lead drug, Adcetris, which is used to treat Hodgkin's lymphoma, this protein is CD30. When the ADCs come in contact with this protein, the cancer cell is destroyed with minimal side effects and considerably better efficiency (i.e., healthy cells remain predominantly unaffected).

Another firm that's had success with ADCs is ImmunoGen (Nasdaq: IMGN) , whose targeted antibody payload technology supplies the toxin and linker currently used in Genentech's advanced breast cancer treatment, T-DM1 (owned by Roche), which is currently in late-stage trials.

As always, the biggest concern with a company like Seattle Genetics is whether it can turn these aspirations into actual results. Too often we see drug hopefuls fizzle out as constant innovation in the sector and poor product launches doom a stock. Three years ago, Dendreon's (Nasdaq: DNDN) Provenge treatment was supposed to completely change the way we looked at late-stage prostate cancer and become a blockbuster treatment. Three years later, the treatment's $93,000 price tag and a pitiful product launch have Dendreon losing money hand over fist. At a price tag in excess of $100,000, Adcetris, and any future compounds, risks the same fate.

How it stacks upLet's see how Seattle Genetics stacks up next to its peers.

SGEN data by YCharts

In theory, there are only two companies utilizing ADC drug-combining technology: Seattle Genetics and ImmunoGen. I chose to include Pfizer (NYSE: PFE) here as well because it developed an ADC in 2010 called Mylotarg that it pulled from the market because the toxin would not stay linked to the antibody long enough to hit the target cancer cells.

Follow this link:
How High Can Seattle Genetics Fly?

Comments are closed.