false2020FY0001060736us-gaap:AccountingStandardsUpdate201601Membersgen:AccruedLiabilitiesAndOtherLiabilitiesCurrentsgen:AccruedLiabilitiesAndOtherLiabilitiesCurrent00010607362020-01-012020-12-31iso4217:USD00010607362020-06-30xbrli:shares00010607362021-02-0900010607362020-12-3100010607362019-12-31iso4217:USDxbrli:shares0001060736us-gaap:ProductMember2020-01-012020-12-310001060736us-gaap:ProductMember2019-01-012019-12-310001060736us-gaap:ProductMember2018-01-012018-12-310001060736us-gaap:RoyaltyMember2020-01-012020-12-310001060736us-gaap:RoyaltyMember2019-01-012019-12-310001060736us-gaap:RoyaltyMember2018-01-012018-12-310001060736us-gaap:LicenseAndServiceMember2020-01-012020-12-310001060736us-gaap:LicenseAndServiceMember2019-01-012019-12-310001060736us-gaap:LicenseAndServiceMember2018-01-012018-12-3100010607362019-01-012019-12-3100010607362018-01-012018-12-310001060736us-gaap:CommonStockMember2017-12-310001060736us-gaap:AdditionalPaidInCapitalMember2017-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310001060736us-gaap:RetainedEarningsMember2017-12-3100010607362017-12-310001060736us-gaap:RetainedEarningsMember2018-01-012018-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-01-012018-12-3100010607362017-01-012017-12-310001060736srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:AccumulatedOtherComprehensiveIncomeMember2017-12-310001060736srt:CumulativeEffectPeriodOfAdoptionAdjustmentMemberus-gaap:RetainedEarningsMember2017-12-310001060736srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2017-12-310001060736us-gaap:CommonStockMember2018-01-012018-12-310001060736us-gaap:AdditionalPaidInCapitalMember2018-01-012018-12-310001060736us-gaap:CommonStockMember2018-12-310001060736us-gaap:AdditionalPaidInCapitalMember2018-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310001060736us-gaap:RetainedEarningsMember2018-12-3100010607362018-12-310001060736us-gaap:RetainedEarningsMember2019-01-012019-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-12-310001060736us-gaap:CommonStockMember2019-01-012019-12-310001060736us-gaap:AdditionalPaidInCapitalMember2019-01-012019-12-310001060736us-gaap:CommonStockMember2019-12-310001060736us-gaap:AdditionalPaidInCapitalMember2019-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001060736us-gaap:RetainedEarningsMember2019-12-310001060736us-gaap:RetainedEarningsMember2020-01-012020-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-12-310001060736us-gaap:CommonStockMember2020-01-012020-12-310001060736us-gaap:AdditionalPaidInCapitalMember2020-01-012020-12-310001060736us-gaap:CommonStockMember2020-12-310001060736us-gaap:AdditionalPaidInCapitalMember2020-12-310001060736us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001060736us-gaap:RetainedEarningsMember2020-12-31sgen:Segment0001060736us-gaap:BuildingMember2020-01-012020-12-310001060736srt:MinimumMemberus-gaap:EquipmentMember2020-01-012020-12-310001060736us-gaap:EquipmentMembersrt:MaximumMember2020-01-012020-12-310001060736us-gaap:FurnitureAndFixturesMember2020-01-012020-12-310001060736sgen:ComputersSoftwareAndOfficeEquipmentMember2020-01-012020-12-310001060736srt:WeightedAverageMember2020-01-012020-12-31xbrli:pure0001060736sgen:DistributorMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001060736sgen:DistributorMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001060736sgen:DistributorMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001060736us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersgen:DistributorBMember2020-01-012020-12-310001060736us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersgen:DistributorBMember2019-01-012019-12-310001060736us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMembersgen:DistributorBMember2018-01-012018-12-310001060736us-gaap:SalesRevenueNetMembersgen:DistributorCMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001060736us-gaap:SalesRevenueNetMembersgen:DistributorCMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001060736us-gaap:SalesRevenueNetMembersgen:DistributorCMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001060736us-gaap:SalesRevenueNetMembersgen:MerckMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001060736us-gaap:SalesRevenueNetMembersgen:MerckMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001060736us-gaap:SalesRevenueNetMembersgen:MerckMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2018-01-012018-12-310001060736us-gaap:CreditConcentrationRiskMembersgen:DistributorMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001060736us-gaap:CreditConcentrationRiskMembersgen:DistributorMemberus-gaap:AccountsReceivableMember2019-01-012019-12-310001060736us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembersgen:DistributorBMember2020-01-012020-12-310001060736us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembersgen:DistributorBMember2019-01-012019-12-310001060736us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembersgen:DistributorCMember2020-01-012020-12-310001060736us-gaap:CreditConcentrationRiskMemberus-gaap:AccountsReceivableMembersgen:DistributorCMember2019-01-012019-12-310001060736us-gaap:CreditConcentrationRiskMembersgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:AccountsReceivableMember2020-01-012020-12-310001060736us-gaap:CreditConcentrationRiskMembersgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:AccountsReceivableMember2019-01-012019-12-310001060736sgen:AdcetrisMemberus-gaap:ProductMember2020-01-012020-12-310001060736sgen:AdcetrisMemberus-gaap:ProductMember2019-01-012019-12-310001060736sgen:AdcetrisMemberus-gaap:ProductMember2018-01-012018-12-310001060736us-gaap:ProductMembersgen:PADCEVMember2020-01-012020-12-310001060736us-gaap:ProductMembersgen:PADCEVMember2019-01-012019-12-310001060736us-gaap:ProductMembersgen:PADCEVMember2018-01-012018-12-310001060736us-gaap:ProductMembersgen:TUKYSAMember2020-01-012020-12-310001060736us-gaap:ProductMembersgen:TUKYSAMember2019-01-012019-12-310001060736us-gaap:ProductMembersgen:TUKYSAMember2018-01-012018-12-310001060736sgen:MerckCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2020-01-012020-12-310001060736sgen:MerckCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2019-01-012019-12-310001060736sgen:MerckCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2018-01-012018-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2020-01-012020-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2019-01-012019-12-310001060736sgen:TakedaCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2018-01-012018-12-310001060736sgen:OtherCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2020-01-012020-12-310001060736sgen:OtherCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2019-01-012019-12-310001060736sgen:OtherCollaborationAndLicenseAgreementMemberus-gaap:LicenseAndServiceMember2018-01-012018-12-310001060736sgen:BeiGeneMemberus-gaap:LicenseAndServiceMember2019-01-012019-12-310001060736sgen:CollaborationAndLicenseAgreementMember2020-01-012020-12-310001060736sgen:CollaborationAndLicenseAgreementMember2019-01-012019-12-310001060736sgen:CollaborationAndLicenseAgreementMember2018-01-012018-12-310001060736us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Memberus-gaap:AccountingStandardsUpdate201409Memberus-gaap:LicenseAndServiceMember2018-01-012018-01-010001060736us-gaap:RoyaltyMemberus-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Memberus-gaap:AccountingStandardsUpdate201409Member2018-01-012018-01-010001060736us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Memberus-gaap:AccountingStandardsUpdate201409Member2018-01-012018-01-010001060736us-gaap:DifferenceBetweenRevenueGuidanceInEffectBeforeAndAfterTopic606Memberus-gaap:AccountingStandardsUpdate201409Member2018-01-0100010607362019-01-010001060736sgen:CascadianTherapeuticsMember2018-12-310001060736sgen:CascadianTherapeuticsMember2018-01-012018-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ShortTermInvestmentsMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:USTreasurySecuritiesMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:USTreasurySecuritiesMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMember2020-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ShortTermInvestmentsMemberus-gaap:FairValueInputsLevel1Member2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:ShortTermInvestmentsMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:ShortTermInvestmentsMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:ShortTermInvestmentsMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:FairValueInputsLevel2Memberus-gaap:USTreasurySecuritiesMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:USTreasurySecuritiesMemberus-gaap:USTreasurySecuritiesMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:USTreasurySecuritiesMemberus-gaap:USTreasurySecuritiesMember2019-12-310001060736us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel1Member2019-12-310001060736us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel2Member2019-12-310001060736us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMemberus-gaap:FairValueInputsLevel3Member2019-12-310001060736us-gaap:OtherNoncurrentAssetsMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:EquitySecuritiesMember2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310001060736us-gaap:FairValueMeasurementsRecurringMember2019-12-310001060736us-gaap:USTreasurySecuritiesMember2020-12-310001060736us-gaap:USTreasurySecuritiesMember2019-12-3100010607362020-04-012020-04-300001060736us-gaap:LeaseholdImprovementsMember2020-12-310001060736us-gaap:LeaseholdImprovementsMember2019-12-310001060736sgen:LaboratoryAndManufacturingEquipmentMember2020-12-310001060736sgen:LaboratoryAndManufacturingEquipmentMember2019-12-310001060736us-gaap:BuildingMember2020-12-310001060736us-gaap:BuildingMember2019-12-310001060736sgen:ComputersSoftwareAndOfficeEquipmentMember2020-12-310001060736sgen:ComputersSoftwareAndOfficeEquipmentMember2019-12-310001060736us-gaap:FurnitureAndFixturesMember2020-12-310001060736us-gaap:FurnitureAndFixturesMember2019-12-310001060736us-gaap:LandMember2020-12-310001060736us-gaap:LandMember2019-12-310001060736us-gaap:StateAndLocalJurisdictionMember2020-12-310001060736sgen:ForeignOperatingLossCarryforwardMember2020-01-012020-12-310001060736us-gaap:DomesticCountryMember2020-12-310001060736us-gaap:ForeignCountryMember2020-12-310001060736us-gaap:AccountingStandardsUpdate201409Member2018-01-012018-12-310001060736sgen:AstellasCollaborationAndLicenseAgreementsMember2020-01-012020-12-310001060736sgen:AstellasCollaborationAndLicenseAgreementsMember2019-01-012019-12-310001060736sgen:AstellasCollaborationAndLicenseAgreementsMember2018-01-012018-12-310001060736sgen:PADCEVMember2020-01-012020-12-310001060736sgen:GenmabCollaborationAndLicenseAgreementsMember2020-01-012020-12-310001060736sgen:GenmabCollaborationAndLicenseAgreementsMember2019-01-012019-12-310001060736sgen:GenmabCollaborationAndLicenseAgreementsMember2018-01-012018-12-31sgen:agreement00010607362020-09-012020-09-300001060736sgen:CollaborationAndLicenseAgreementMembersgen:LVAgreementMember2020-09-012020-09-3000010607362020-10-012020-10-3100010607362020-10-310001060736us-gaap:LicenseAndServiceMembersgen:PurchaseAgreementMember2020-10-012020-10-310001060736sgen:CollaborationAndLicenseAgreementMembersgen:TUKYSAAgreementMember2020-09-012020-09-300001060736sgen:CollaborationAndLicenseAgreementMembersgen:TUKYSAAgreementMember2020-01-012020-12-310001060736sgen:CollaborationAndLicenseAgreementMembersgen:TUKYSAAgreementMember2020-12-31sgen:petition0001060736us-gaap:SubsequentEventMember2020-12-232021-01-220001060736sgen:UnderwrittenPublicOfferingMember2019-07-012019-07-310001060736sgen:UnderwrittenPublicOfferingMember2019-07-310001060736sgen:UnderwrittenPublicOfferingMember2018-02-012018-02-280001060736sgen:UnderwrittenPublicOfferingMember2018-02-280001060736sgen:StockOptionsAndRestrictedStockUnitsMember2020-01-012020-12-310001060736sgen:StockOptionsAndRestrictedStockUnitsMember2019-01-012019-12-310001060736sgen:StockOptionsAndRestrictedStockUnitsMember2018-01-012018-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMember2020-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMember2020-01-012020-12-310001060736us-gaap:ShareBasedPaymentArrangementEmployeeMembersgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-01-012020-12-310001060736us-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2020-01-012020-12-310001060736us-gaap:ShareBasedPaymentArrangementNonemployeeMemberus-gaap:RestrictedStockUnitsRSUMembersgen:BoardOfDirectorsMembersgen:TwoThousandSevenEquityIncentivePlanMember2020-01-012020-12-310001060736us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-12-310001060736us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-12-310001060736us-gaap:ResearchAndDevelopmentExpenseMember2018-01-012018-12-310001060736us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-12-310001060736us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-12-310001060736us-gaap:SellingGeneralAndAdministrativeExpensesMember2018-01-012018-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMember2019-01-012019-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMember2018-01-012018-12-310001060736sgen:EmployeeStockPurchasePlanMember2020-01-012020-12-310001060736sgen:EmployeeStockPurchasePlanMember2019-01-012019-12-310001060736sgen:EmployeeStockPurchasePlanMember2018-01-012018-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2019-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-01-012020-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2020-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2019-01-012019-12-310001060736sgen:TwoThousandSevenEquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2018-01-012018-12-310001060736us-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2019-12-310001060736us-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2020-01-012020-12-310001060736us-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2020-12-310001060736us-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2019-01-012019-12-310001060736us-gaap:RestrictedStockUnitsRSUMembersgen:TwoThousandSevenEquityIncentivePlanMember2018-01-012018-12-310001060736sgen:LongTermIncentivePlanMember2020-01-012020-12-310001060736sgen:LongTermIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2019-12-310001060736sgen:LongTermIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2020-01-012020-12-310001060736sgen:LongTermIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2020-12-310001060736sgen:EmployeeStockPurchasePlanMember2019-05-012019-05-3100010607362020-01-012020-03-3100010607362020-04-012020-06-3000010607362020-07-012020-09-3000010607362020-10-012020-12-3100010607362019-01-012019-03-3100010607362019-04-012019-06-3000010607362019-07-012019-09-3000010607362019-10-012019-12-31

☒						ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                                      

 

Delaware						91-1874389
(State or other Jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

21823 30th Drive SE, Bothell, WA 98021

Registrant’s telephone number, including area code: (425) 527-4000

Title of class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

SGEN

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
None

Large accelerated filer

☒

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

Smaller reporting company

☐

						Page
PART I
Item 1.			Business			3
Item 1A.			Risk Factors			36
Item 1B.			Unresolved Staff Comments			82
Item 2.			Properties			82
Item 3.			Legal Proceedings			82
Item 4.			Mine Safety Disclosures			82
PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			83
Item 6.			Selected Financial Data			84
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			85
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			104
Item 8.			Financial Statements and Supplementary Data			105
Item 9.			Changes in and Disagreements With Accountants on Accounting and Financial Disclosure			140
Item 9A.			Controls and Procedures			140
Item 9B.			Other Information			140
PART III
Item 10.			Directors, Executive Officers and Corporate Governance			141
Item 11.			Executive Compensation			141
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			141
Item 13.			Certain Relationships and Related Transactions, and Director Independence			141
Item 14.			Principal Accounting Fees and Services			141
PART IV
Item 15.			Exhibits, Financial Statement Schedules			142
Item 16.			Form 10-K Summary			149
			Signatures			150

•Our success depends on our ability to effectively commercialize our products. If we and our collaborators are unable to effectively commercialize our products and to expand their utilization, our ability to generate significant revenue and our prospects for profitability will be adversely affected.

•Our success also depends on our ability to obtain regulatory approvals for our product candidates and for our current products in additional territories, as well as our ability to expand the labeled indications of use for our current products, and, if the requisite approvals are obtained, our ability to successfully launch and commercialize our products in their approved indications. Our inability to do so could have a material adverse effect on our business, financial condition, results of operations and growth prospects.

•Reports of adverse events or safety concerns involving our products or product candidates could delay or prevent us from obtaining or maintaining regulatory approvals or could negatively impact sales of our products or the prospects for our product candidates.

•Clinical trials are expensive and time consuming, may take longer than we expect or may not be completed at all, and their outcome is uncertain.

•The successful commercialization of our products and our product candidates will depend on a variety of factors, including the extent to which governmental authorities and health insurers establish adequate coverage and reimbursement levels and pricing policies, and the acceptance of our products by the medical community and patients.

•Our product candidates are in various stages of development, and it is possible that none of our product candidates will ever become commercial products.

•Any failures or setbacks in our antibody-drug conjugate, or ADC, development program or our other platform technologies could negatively affect our business and financial position.

•We face intense competition and rapid technological change, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.

•Even if we and our collaborators obtain regulatory approvals to market our current and any future approved products, we and our collaborators will remain subject to extensive ongoing regulatory obligations and oversight, including post-approval requirements, that could result in significant additional expense and could negatively impact our and our collaborators’ ability to commercialize our current and any future approved products.

•Healthcare law and policy changes may have a material adverse effect on us.

•We are subject to various state and federal and foreign laws and regulations, including healthcare, data protection and privacy laws and regulations, that may impact our business and could subject us to significant fines and penalties or other negative consequences.

•We depend on collaborative relationships with other companies to assist in the development and commercialization of our products and some of our product candidates and for the development and commercialization of other product candidates utilizing or incorporating our technologies. If we are not able to locate suitable collaborators or if our collaborators do not perform as expected, this may negatively affect our ability to commercialize our products, develop and commercialize our product candidates and/or generate revenues through technology licensing, or may otherwise negatively affect our business.

•We currently rely on third-party manufacturers and other third parties for production of our drug products and our dependence on these manufacturers may impair the continued development and commercialization of our products and product candidates.

•If we are unable to enforce our intellectual property rights or if we fail to sustain and further procure additional intellectual property rights, we may not be able to successfully commercialize our products or any future products and competitors may be able to develop competing therapies.

•We have been and may in the future be subject to litigation, which could result in substantial damages and may divert management’s time and attention from our business.

•We and our collaborators rely on license agreements for certain aspects of our products and product candidates and technologies such as our ADC technology. Failure to maintain these license agreements or to secure any required new licenses could prevent us from continuing to develop and commercialize our products and product candidates.

•If we are unable to manage our growth, our business, financial condition, results of operations and prospects may be adversely affected.

•Risks associated with our expanding operations in foreign countries could materially adversely affect our business.

•Our operating results are difficult to predict and may fluctuate. If our operating results are below the expectations of securities analysts or investors, the trading price of our stock could decline.

•We have a history of net losses. We expect to continue to incur net losses and may not achieve future sustained profitability for some time, if at all.

•Our stock price is volatile and our shares may suffer a decline in value.

•Our existing stockholders have significant control of our management and affairs.

Product*			Therapeutic Area			U.S. Approved Indication
			Hodgkin Lymphoma			Previously untreated Stage III/IV classical Hodgkin lymphoma, or cHL, in combination with doxorubicin, vinblastine and dacarbazine
						cHL at high risk of relapse or progression as post-autologous hematopoietic stem cell transplantation, or auto-HSCT, consolidation
						cHL after failure of auto-HSCT or after failure of at least two prior multi-agent chemotherapy regimens in patients who are not auto-HSCT candidates
			T-cell Lymphoma			Previously untreated sALCL or other CD30-expressing PTCL, including angioimmunoblastic T-cell lymphoma and PTCL not otherwise specified, in combination with cyclophosphamide, doxorubicin and prednisone
						sALCL after failure of at least one prior multi-agent chemotherapy regimen
						Primary cutaneous anaplastic large cell lymphoma, or pcALCL, or CD30-expressing mycosis fungoides who have received prior systemic therapy
			Urothelial Cancer			Locally advanced or metastatic urothelial cancer who have previously received a PD-1 or PD-L1 inhibitor and a platinum-containing chemotherapy before (neoadjuvant) or after (adjuvant) surgery in a locally advanced or metastatic setting.
			Breast Cancer			In combination with trastuzumab and capecitabine for the treatment of adult patients with advanced unresectable or metastatic HER2-positive breast cancer, including patients with brain metastases, who have received one or more prior anti-HER2-based regimens in the metastatic setting.
•*ADCETRIS, PADCEV and TUKYSA are only indicated for adults.

Product or Product Candidate

Tumor Type

Setting

Trial Name / Description

Development Status

ADCETRIS (brentuximab vedotin)

Diffuse large B-cell lymphoma

R/R

In combination with lenalidomide and rituximab

Phase 3*

Hodgkin lymphoma

1L

In combination with nivolumab, doxorubicin and dacarbazine

Phase 2

Hodgkin lymphoma or Peripheral T-cell lymphoma, unfit for chemotherapy

1L

Monotherapy

Phase 2

Hodgkin lymphoma (pediatrics)

R/R

CheckMate 744: In combination with nivolumab1

Phase 2

Peripheral T-cell lymphoma (< 10% CD30 expression)

1L

In combination with cyclophosphamide, doxorubicin and prednisone

Phase 2

Metastatic solid tumors

R/R

In combination with pembrolizumab | post PD-1 inhibitor treatment

Phase 2

PADCEV (enfortumab vedotin-ejfv)2

Locally advanced or metastatic urothelial cancer

1L

EV-302: In combination with pembrolizumab vs chemotherapy alone

Phase 3*

2L/3L

EV-301: Monotherapy | post PD(L)-1 and post platinum chemotherapy

Phase 3*

2L

EV-201 Cohort 2: Monotherapy | post PD(L)-1, platinum naive and cisplatin ineligible

Phase 2*

1L/2L

EV-103: Monotherapy and in combination with pembrolizumab

Phase 2*

Muscle invasive bladder cancer

1L

EV-303/KEYNOTE-905: In combination with pembrolizumab | cisplatin-ineligible

Phase 3*

1L

EV-304/KEYNOTE-B15: In combination with pembrolizumab | cisplatin-eligible

Phase 3*

1L

EV-103: Monotherapy and in combination with pembrolizumab

Phase 2

Locally advanced or metastatic solid tumors

R/R

EV-202: Monotherapy

Phase 2

TUKYSA (tucatinib)

HER2+ metastatic breast cancer

1L/2L

HER2CLIMB-02: In combination with T-DM1

Phase 3*

High risk HER2+ breast cancer

ADJ

COMPASSHER2 RD5: In combination with T-DM1

Phase 3*

HER2+ metastatic breast cancer

HER2CLIMB-04: In combination with trastuzumab deruxtecan

Phase 2

HER2+ metastatic colorectal cancer

R/R

MOUNTAINEER: In combination with trastuzumab

Phase 2*

HER2+ gastroesophogeal cancer

2L

MOUNTAINEER-02: In combination trastuzumab, ramucirumab and chemotherapy

Phase 2*

Metastatic solid tumors HER2 alterations

In combination trastuzumab with or without fulvestrant

Phase 2

HER2+ gastric cancer

1L

In combination with trastuzumab and oxaliplatin

Phase 1

Tisotumab Vedotin3

Recurrent/metastatic cervical cancer

2L/3L

innovaTV 301: Monotherapy

Phase 3*

2L/3L

innovaTV 204: Monotherapy

Phase 2*

1L/2L

innovaTV 205: In combination with other ant-cancer agents

Phase 1/2

Locally advanced solid tumors

innovaTV 206: (Japan only)

Phase 2

Metastatic solid tumors

R/R

innovaTV 207: Monotherapy

Phase 2

Platinum-resistant ovarian cancer

2L

innovaTV 208: Monotherapy

Phase 2

Ladiratuzumab Vedotin4

Metastatic triple-negative breast cancer

1L

In combination with pembrolizumab

Phase 2

Metastatic solid tumors

R/R

Monotherapy

Phase 2

Metastatic breast cancer (HR+/HER2-)

R/R

In combination with trastuzumab

Phase 2

1L: front/first-line 2L:second-line R/R:relapsed or refractory ADJ = adjuvant * indicates registrational intent

1.Clinical collaboration with Bristol-Myers Squibb 2.50:50 co-development and commercial collaboration with Astellas 3.50:50 co-development and commercial collaboration with Genmab 4.50:50 co-development and commercial collaboration with Merck 5.Conducted in collaboration with Alliance for Clinical Trials in Oncology and National Cancer Institute (NCI)

New Tumor Cell-Killing Agents. We continue to identify and study new agents with anti-tumor mechanisms of action that will provide pipeline diversity and complement the auristatins that we currently use in our ADC technology. We also seek to develop new drugs that are designed to activate the host immune system by targeting key immune stimulatory pathways that can mediate innate or adaptive anti-tumor immune responses.

New Drug Linkers. We are conducting research with the intent to develop new ADC linkers that are designed to provide the appropriate stability in the bloodstream and drug release characteristics to effectively target cancer cells and improved cancer cell selectivity and tolerability.

Novel Monoclonal Antibodies and Antigen Targets. We are actively engaged in internal efforts to identify and develop monoclonal antibodies, and other therapeutic molecules, to target tumor antigens and important tumor or immune pathways. For ADCs, we focus on drug targets that are highly expressed on the surface of cancer cells that have the appropriate expression, distribution and internalization properties that make them desirable as monoclonal antibody or ADC targets. We may then create and screen panels of cancer-reactive monoclonal antibodies in our laboratories to identify those with the desired specificity and optimized drug delivery properties. Additionally, we identify targets that play key roles in anti-tumor innate or adaptive immune responses and identify antibodies and other therapeutic molecules to stimulate an anti-tumor immune response. We supplement these internal efforts by evaluating opportunities to in-license targets and antibodies from academic groups and other biotechnology and pharmaceutical companies, such as our ongoing collaborations with Astellas and Genmab.

Antibody Engineering. We have substantial internal expertise in antibody engineering including humanization, binding affinity optimization, enhancement of immunological function by blocking fucosylation, as well as engineering antibodies to improve drug linkage sites for use with our ADC technology. By modifying the number and type of drug-linkage sites found on our antibodies, we believe that we can improve ADC drug properties and the cost-effectiveness of our manufacturing processes for conjugation of ADCs.

•In the U.S., we and Astellas jointly promote PADCEV. We record sales of PADCEV in the U.S. and are responsible for all U.S. distribution activities. The companies each bear the costs of their own sales organizations in the U.S., equally share certain other costs associated with commercializing PADCEV in the U.S., and equally share in any profits realized in the U.S.

•Outside the U.S., we have commercialization rights in all countries in North and South America, and Astellas has commercialization rights in the rest of the world, including Europe, Asia, Australia and Africa. The agreement is intended to provide that we and Astellas will effectively equally share in costs incurred and any profits realized in all of these markets. Cost and profit sharing in Canada, the United Kingdom, Germany, France, Spain and Italy will be based on product sales and costs of commercialization. In the remaining markets, the commercializing party will bear costs and will pay the other party a royalty rate applied to net sales of the product based on a rate intended to approximate an equal profit share for both parties.

•In the U.S., we and Genmab will co-promote tisotumab vedotin. We will record sales of tisotumab vedotin in the U.S. and will be responsible for leading U.S. distribution activities. The companies will each hire and maintain 50% of the sales representatives and medical science liaisons, equally share those and certain other costs associated with commercializing tisotumab vedotin in the U.S., and equally share in any profits realized in the U.S.

•Outside the U.S., we have commercialization rights in the rest of the world except for Japan, where Genmab has commercialization rights. In Europe, China, and Japan, we and Genmab will equally share 50% of the costs associated with commercializing tisotumab vedotin as well as any profits realized in these markets. In markets outside the U.S. other than Europe, China, and Japan, aside from certain costs enumerated in the agreement, we will be solely responsible for all costs associated with commercializing tisotumab vedotin, and will pay Genmab a royalty based on a percentage of aggregate net sales ranging from the mid-teens to mid-twenties.

In 2019, Genentech received accelerated approval from the FDA for PolivyTM (polatuzumab vedotin-piic), an ADC that uses our technology, to treat patients with relapsed or refractory diffuse large B-cell lymphoma. In August 2020, GlaxoSmithKline plc, or GSK, received accelerated approval from the FDA and conditional marketing authorization from the EC for Blenrep™ (belantamab mafodotin-blmf), an ADC developed by GSK that uses our technology, for treatment of patients with relapsed or refractory multiple myeloma who have received at least four prior therapies including an anti-CD38 monoclonal antibody, a proteasome inhibitor and an immunomodulatory agent. Under our ADC license agreements with Genentech and GSK, these events triggered milestone payments to us and we are also entitled receive royalties on net sales of Polivy and Blenrep worldwide. The product candidates being developed under our other ADC license agreements are at various stages of clinical and preclinical development. Our ability to generate meaningful future revenues from our other ADC license agreements will largely depend on products that incorporate our technologies entering late-stage clinical development, and receiving marketing approval from the FDA and subsequently being commercialized, if any.

•Bristol-Myers Squibb License. In 1998, we obtained rights to some of our technologies and product candidates, portions of which are exclusive, through a license agreement with BMS. Through this license, we secured rights to use various targeting technologies. Under the terms of the license agreement, we are required to pay royalties in the low single digits on net sales of products, including ADCETRIS, which incorporate various technologies owned by BMS. Our obligation to pay royalties on ADCETRIS under the agreement expires in August 2021. The term of the license agreement expires on a country-by-country and product-by-product basis upon the later of the expiration of the last valid claim covering the applicable product within that country or either ten or twelve years depending on the particular patents applicable to the product after the first commercial sale of the applicable product within that country. We and BMS each have the right to terminate the license agreement prior to its expiration for insolvency or material breach, subject to cure and dispute resolution provisions. In addition, the license agreement will terminate automatically in the event that we fail to maintain certain required insurance.

•University of Miami License. In 1999, we entered into an exclusive license agreement with the University of Miami, Florida, covering an anti-CD30 monoclonal antibody that is the basis for the antibody component of ADCETRIS. Under the terms of this license, we made an upfront payment and progress-dependent milestone payments. We are required to pay annual maintenance fees and royalties in the low single digits on net sales of products, including ADCETRIS, incorporating technology licensed from the University of Miami. The term of the license agreement expires ten years after the first commercial sale of ADCETRIS or on August 21, 2021, upon which we will have in perpetuity a fully paid-up, royalty free, nonexclusive, sublicensable license. We and the University of Miami each have the right to terminate the license agreement prior to its expiration for insolvency or material breach, subject to cure provisions.

•Array BioPharma, Inc. We are a party to a license agreement with Array, which was acquired by Pfizer in July 2019. Pursuant to the license agreement, Array has granted us an exclusive license to develop, manufacture and commercialize TUKYSA. We will pay Array a portion of any non-royalty payments received from sublicensing TUKSYA rights, including non-royalty payments received from Merck pursuant to the TUKYSA Agreement. Array is also entitled to receive a low double-digit royalty based on net sales of TUKYSA by us and a single-digit royalty based on any net sales of TUKYSA by our sublicensees, including Merck. The term of the license agreement expires on a country-by-country basis upon the later of the expiration of the last valid claim covering TUKYSA within that country or 10 years after the first commercial sale of TUKYSA within that country. We and Array each have the right to terminate the license agreement prior to its expiration for insolvency or material breach, subject to cure and dispute resolution provisions.

•Other Licenses. Under the terms of in-license agreements related to our pipeline programs, we would potentially owe development, regulatory, and sales-based milestones, and royalties on net sales of certain approved products.

•For ADCETRIS and our related ADC technology, we own twelve patents in the United States and Europe that will expire between 2021 and 2031.

•For PADCEV and our related ADC technology, we own, co-own or have licensed rights to thirteen patents in the United States and Europe that will expire between 2022 and 2031. Of these patents, we own or co-own eleven patents and have licensed rights to two patents.

•For TUKYSA, we have licensed rights to nine patents in the United States and Europe that will expire between 2024 and 2033.

•For tisotumab vedotin and our related ADC technology, we own, co-own or have licensed rights to eleven patents in the United States and Europe that will expire between 2022 and 2036. Of these patents, we own or co-own five patents and have licensed rights to six patents.

•For LV and our related ADC technology, we own, co-own or have licensed rights to nine patents in the United States and Europe that will expire between 2022 and 2032. Of these patents, we own or co-own eight patents and have licensed rights to one patent.

•preclinical in vitro and in vivo tests, some of which must comply with Good Laboratory Practices, or GLP;

•submission to the FDA of an IND which must become effective before clinical trials may commence, and which must be updated periodically as new information is obtained and at least annually with a report on development;

•development of a drug formulation and manufacture of the drug for clinical trials, and commercial sale, if approved;

•completion of adequate and well controlled human clinical trials to establish the safety and efficacy of the product candidate for its intended use;

•submission to the FDA of a BLA or NDA which must be accompanied by a substantial user fee unless the fee is waived;

•FDA pre-approval inspection of manufacturing facilities for current Good Manufacturing Practices, or GMP, compliance and FDA inspection of select clinical trial sites and/or trial sponsors for Good Clinical Practice, or GCP, compliance; and

•FDA review and approval of the BLA or NDA, which includes the product prescribing information, prior to any commercial sale.

As described above in "Coverage and Reimbursement", federal and state legislatures, governments in countries outside the U.S., health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory changes and increasing pressure from social sources are likely to further influence the manner in which our products are priced, prescribed, purchased and reimbursed. For example, the Trump administration put forth a number of proposals aimed at containing prescription drug prices and announced several Executive Orders that sought to implement a number of his administration’s proposals. As a result of the Executive Orders issued by the Trump Administration, the FDA released a final rule, effective November 30, 2020, that cleared a path for importation of some Canadian drugs into the U.S. Biological products were excluded from the rule’s definition of “eligible prescription drug,” however TUKYSA may be subject to importation from Canada under this rule, which could negatively affect TUKYSA sales in the U.S. The Biden administration is likely to similarly pursue and implement measures aimed at reducing pharmaceutical drug pricing and containing the cost of healthcare.

•advance our technology platforms;

•license additional technology;

•complete clinical trials which position our products for regulatory and commercial success;

•maintain a proprietary position in our technologies and products;

•obtain required government and other public and private approvals on a timely basis;

•attract and retain key personnel;

•commercialize effectively;

•obtain reimbursement for our products in approved indications;

•comply with applicable laws, regulations and regulatory requirements and restrictions with respect to the commercialization of our products, including with respect to any changed or increased regulatory restrictions; and

•enter into additional collaborations to advance the development and commercialization of our product candidates.

AbbVie Biotechnology. In 2004, we entered into a development and supply agreement with AbbVie (formerly a part of Abbott Laboratories) to manufacture developmental, clinical and commercial quantities of anti-CD30 monoclonal antibody, which is a component of ADCETRIS. The agreement generally provides for the supply by AbbVie and the purchase by us of such anti-CD30 monoclonal antibody. Under terms of the supply agreement, we may purchase a portion of our required anti-CD30 monoclonal antibody from a second source third-party supplier. We are required to make a minimum annual purchase. The anti-CD30 monoclonal antibody is purchased by us based upon a rolling forecast. The supply agreement will continue until 2025 with an automatic one-year term extension unless either party provides written termination notice to the other party. Either party has the right to terminate the supply agreement if the other party materially breaches its obligations thereunder.

Sterling. We have a commercial supply agreement with Sterling to manufacture starting materials for TUKYSA. The agreement provides that we will purchase starting materials pursuant to rolling forecasts and will purchase a minimum percentage of our requirements for the starting materials from Sterling. The agreement will remain in effect until 2025, after which it will continue automatically for up to two additional years subject to termination by either party giving written notice to the other party. Either party has the right to terminate the agreement if the other party commits any breach of the agreement and does not remedy, make a bona fide attempt to remedy or enter into negotiations to resolve, the breach after notice to do so, if capable of remedy.

Esteve Quimica. Our commercial supply agreement with Esteve provides that we will order the active pharmaceutical agreement for TUKYSA pursuant to rolling forecasts. The agreement will remain in effect until 2025, after which it will automatically renew subject to termination by us by giving written notice to Esteve. Either party has the right to terminate the agreement if the other party fails to cure a material breach.

Corden. We have a commercial supply agreement with Corden to produce TUKYSA tablets. The agreement provides that we will order pursuant to rolling forecasts and will purchase a minimum percentage of our requirements from Corden. The agreement will remain in effect until 2025, after which it will be renewed if not terminated with written notice prior to the expiration of the term. Either party has the right to terminate the agreement if the other party commits a breach and does not cure or commence and diligently continue actions to cure such default.

We were incorporated in Delaware on July 15, 1997, as Seattle Genetics, Inc. In October 2020, we changed our corporate name from Seattle Genetics, Inc. to Seagen Inc., reflecting the global expansion of our operations. Our principal executive offices are located at 21823 30th Drive SE, Bothell, Washington 98021. Our telephone number is (425) 527-4000, and our website address is www.seagen.com. Seagen®, ADCETRIS®, PADCEV®, and TUKYSA® are our registered trademarks in the United States. All other trademarks, tradenames and service marks included in this Annual Report on Form 10-K are the property of their respective owners.

•we and our collaborators may be unable to effectively commercialize our products, including in any new markets or in any new indications for which we receive marketing approval;

•we may not be able to establish or demonstrate in the medical community the safety, efficacy or value of our products and their potential advantages compared to existing and future therapeutics in their approved indications, including, with respect to ADCETRIS, in the newly diagnosed, previously untreated Stage III and IV classical Hodgkin lymphoma indication, or the frontline Hodgkin lymphoma indication;

•we and our collaborators may not be able to obtain and maintain regulatory and other required governmental approvals to market our products for their currently approved indications in any additional territories or for any additional indications, including any additional approvals for PADCEV or TUKYSA, which would limit the sales and commercial potential of the applicable product;

•new competitive therapies in ADCETRIS’ approved indications, including immuno-oncology agents such as PD-1 inhibitors (e.g., pembrolizumab and nivolumab) and other novel agents (e.g., mogamulizumab), in PADCEV’s approved indication, including antibody drug conjugates (e.g., sacituzumab govitecan) and other targeted agents (e.g., erdafitinib for patients with select fibroblast growth factor receptor, or FGFR, genetic alterations), and in TUKYSA’s approved indication, including HER2-targeting agents (e.g., fam-trastuzumab deruxtecan-nxki, neratinib, margetuximab and SYD985), have been approved by regulatory authorities or may be submitted in the near term to regulatory authorities for approval, and these competitive products could negatively impact commercial sales of ADCETRIS, PADCEV or TUKYSA, respectively;

•there may be changes to the labeling for our products, including ADCETRIS, PADCEV or TUKYSA, that further restrict how we market and sell our products, including as a result of data collected from any of the clinical trials that we and our collaborators are conducting or may in the future conduct for our products, or from investigator-sponsored studies of our products, and/or as a result of the use of our products in their approved indications;

•the estimated incidence rate of new patients or the duration of therapy in the approved indications for our products may be lower than our projections;

•there may continue to be adverse results or events reported in connection with the use of our products or product candidates, including in any of the clinical trials that we or our collaborators are conducting, or may conduct in the future, for our products or product candidates;

•the negative impacts to our commercialization efforts, and those of our collaborators, resulting from the risks and evolving effects of the COVID-19 pandemic may increase or become more severe;

•in the case of PADCEV, our joint commercialization efforts in the U.S. under our collaboration with an affiliate of Astellas Pharma Inc., or Astellas, may be unsuccessful or we may encounter challenges in joint decision making and joint execution that adversely affect PADCEV product sales;

•our products may be impacted by adverse reimbursement and coverage policies from government and private payors such as Medicare, Medicaid, insurance companies, health maintenance organizations and other plan administrators, or may be subject to pricing pressures enacted by industry organizations or state and federal governments, including as a result of increased scrutiny over pharmaceutical pricing or otherwise;

•the relative price of our products may be higher than alternative treatment options, and therefore their reimbursement may be limited by private and governmental insurers;

•physicians may be reluctant to prescribe our products due to side effects associated with their use or until longer term efficacy and safety data exist;

•there may be changed or increased regulatory restrictions;

•we may not have adequate financial or other resources to effectively commercialize our products; and

•we may not be able to obtain adequate commercial supplies of our products to meet demand or at an acceptable cost.

While we anticipate that sales of ADCETRIS will increase in 2021 as compared to 2020, we have experienced and expect continued impacts associated with the COVID-19 pandemic, which appear to be reducing the rate of Hodgkin lymphoma diagnoses, and an increase in gross-to-net deductions that we believe is due to a shift in the locations where ADCETRIS is administered, which has increased the proportion of ADCETRIS sales through the federal 340B drug discount program. We expect that, going forward, our ability to maintain or continue to grow our ADCETRIS sales, if at all, will depend primarily on our ability to establish or demonstrate to the medical community the value of ADCETRIS and its potential advantages compared to existing and future therapeutics in its approved indications, including in the frontline Hodgkin lymphoma indication, and the extent to which physicians make prescribing decisions with respect to ADCETRIS. Other important factors affecting our ADCETRIS sales include the incidence flow of patients eligible for treatment in ADCETRIS’ approved indications, the extent to which coverage and adequate levels of reimbursement for ADCETRIS are available from governments and other third-party payors, the impact of any healthcare reform measures that may be upheld, or adopted in the future, including measures that could result in more rigorous coverage criteria or reduce the price that we receive for ADCETRIS, increasing competition from competing therapies including pembrolizumab in multiple indications, including in the relapsed or refractory classical Hodgkin lymphoma indication, impacts resulting from the evolving effects of the COVID-19 pandemic including lower diagnosis rates, and the potential future approval of ADCETRIS in any additional indications. For these reasons, we cannot assure you that ADCETRIS sales will continue to grow or that we can maintain sales of ADCETRIS at or near current levels. In addition, as a result of these and other factors, our future ADCETRIS product sales can be difficult to accurately predict from period to period.

•ADCETRIS, PADCEV, TUKYSA or the applicable product candidate may have unforeseen safety issues or adverse side effects, including fatalities, or a determination may be made that a clinical trial presents unacceptable health risks;

•deficiencies in the conduct of the clinical trial, including failure to conduct the clinical trial in accordance with regulatory requirements, GCP, clinical protocols or regulations relating to data protection;

•problems, errors or other deficiencies with respect to data collection, data processing and analysis;

•deficiencies in the clinical trial operations or trial sites resulting in the imposition of a clinical hold;

•the time required to determine whether ADCETRIS, PADCEV, TUKYSA or the applicable product candidate is effective may be longer than expected;

•fatalities or other adverse events arising during a clinical trial due to medical problems that may not be related to clinical trial treatments;

•ADCETRIS, PADCEV, TUKYSA or the applicable product candidate may not appear to be more effective than current therapies;

•the quality or stability of ADCETRIS, PADCEV, TUKYSA or the applicable product candidate may fall below acceptable standards;

•our inability and the inability of our collaborators to produce or obtain sufficient quantities of ADCETRIS, PADCEV, TUKYSA or the applicable product candidate to complete the trials;

•our inability and the inability of our collaborators to reach agreement on acceptable terms with prospective trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different trial sites;

•our inability and the inability of our collaborators to obtain IRB or Ethics Committee approval to conduct a clinical trial at a prospective site;

•changes in governmental regulations or administrative actions that adversely affect our ability and the ability of our collaborators to continue to conduct or to complete clinical trials;

•lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional trials and studies and increased expenses associated with the services of our clinical research organizations and other third parties;

•our inability and the inability of our collaborators to recruit and enroll patients to participate in clinical trials for reasons including competition from other clinical trial programs for the same or similar indications;

•our inability and the inability of our collaborators to retain patients who have initiated a clinical trial but may be prone to withdraw due to side effects from the therapy, lack of efficacy or personal issues, or who are lost to further follow-up;

•our inability and the inability of our collaborators to ensure adequate statistical power to detect statistically significant treatment effects, whether through our inability to enroll or retain patients in trials or because the specified number of events designated for a completed trial have not occurred; or

•the risks and evolving effects of the COVID-19 pandemic.

The degree of market acceptance among patients, physicians, and third-party payors is also important to our ability to successfully commercialize our current and any future approved products. The degree of acceptance will depend on a number of factors including the clinical benefits of our products, effectiveness of our marketing, sales and distribution strategy and operations, the acceptance of our product by patients, physicians and third-party payors, the perceived advantages and relative cost, safety and efficacy of alternative treatments, and the acceptance and degree of adoption of our products by institutional treatment pathways and institutional, local, and national clinical guidelines such as the National Comprehensive Cancer Networks® Clinical Practice Guidelines in Oncology, or the NCCN Guidelines, or other country-specific guidelines. In the U.S., many oncology practices and healthcare providers rely on the NCCN Guidelines or other institutional practice pathways in decisions related to treatment of patients and utilization of medicines. To the extent that our current or any future approved products are not included or positioned favorably in such treatment guidelines and pathways, the full utilization potential of our products may not be reached, which may harm our ability to successfully commercialize our current or any future approved products. For example, in the ADCETRIS frontline Hodgkin lymphoma indication, the NCCN Guidelines have been interpreted as being more restrictive than our labeled indication and since these guidelines and related interpretations have been translated into treatment pathways for many institutions, our ability to maintain or increase sales of ADCETRIS may be materially harmed or future ADCETRIS sales may otherwise be negatively affected.

•issuance of Form FDA 483 notices or Warning Letters by the FDA or other regulatory agencies;

•imposition of fines and other civil penalties;

•criminal prosecutions;

•injunctions, suspensions or revocations of regulatory approvals;

•suspension of any ongoing clinical trials;

•total or partial suspension of manufacturing;

•delays in commercialization;

•refusal by the FDA to approve pending applications or supplements to approved applications submitted by us;

•refusals to permit drugs to be imported into or exported from the U.S.;

•restrictions on operations, including costly new manufacturing requirements; and

•product recalls or seizures.

We are subject to evolving privacy and security laws, and our failure to comply could result in penalties and reputational damage.

In addition, in the U.S., HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, governs certain types of individuals and entities with respect to the conduct of certain electronic healthcare transactions and imposes certain obligations on covered entities, including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective business associates that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, and their subcontractors that use, disclose, access, or otherwise process individually identifiable health information, with respect to the security, privacy and transmission of individually identifiable health information. HIPAA applies to certain aspects of our business and failure to comply with its requirements could result in the imposition of fines and penalties, and additional negative consequences.

•we are not able to control the amount and timing of resources that our collaborators and licensees devote to the development or commercialization of products and product candidates under a collaboration or license agreement, including ADCETRIS, PADCEV, TUKYSA and tisotumab vedotin;

•disputes may arise between us and our collaborators or licensees that result in the delay or termination of the research, development or commercialization of the applicable products and product candidates or that result in costly litigation or arbitration that diverts management’s attention and resources;

•with respect to collaborations under which we have an active role, we may have differing opinions, processes or priorities than our collaborators, or we may encounter challenges in joint decision making and joint execution, including with respect to any joint development or commercialization plans or co-promotion activities, which may delay or otherwise harm the research, development, launch or commercialization of the applicable products and product candidates, including ADCETRIS, PADCEV, TUKYSA and tisotumab vedotin;

•our current and potential future collaborators and licensees may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials, use standards or processes for conducting clinical trials that differ from ours or require a new formulation of a product candidate for clinical testing;

•significant delays in the development of product candidates by current and potential collaborators and licensees could allow competitors to bring products to market before product candidates utilizing or incorporating our technologies are approved and impair the ability of current and potential future collaborators and licensees to effectively commercialize these product candidates;

•our relationships with our collaborators and licensees may divert significant time and effort of our scientific staff and management team and require the effective allocation of our resources to multiple internal collaborative projects;

•our current and potential future collaborators and licensees may not pursue regulatory approvals in a timely manner, may not be successful in their efforts to obtain regulatory approvals, or may not launch or commercialize a product in their territories in a timely manner;

•our current and potential future collaborators and licensees may receive regulatory sanctions relating to other aspects of their business, or could take actions with respect to our jointly-developed product, that could adversely affect the development, approval or commercialization of the applicable products or product candidates or our reputation with regulatory agencies;

•our current and potential future collaborators and licensees may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation;

•business combinations or significant changes in a collaborator’s or licensee’s business strategy may adversely affect such party’s willingness or ability to complete its obligations under any arrangement;

•a collaborator or licensee could independently move forward with competing products, therapeutic approaches or technologies to develop treatments for the diseases targeted by us or our collaborators that are developed by such collaborator or licensee either independently or in collaboration with others, including our competitors;

•our current and potential future collaborators and licensees may experience financial difficulties; and

•our collaboration or license agreements may be terminated, breached or allowed to expire, or our collaborators or licensees may reduce the scope of our agreements with them, which could have a material adverse effect on our financial position by reducing or eliminating the potential for us to receive technology access and license fees, milestones and royalties, and/or reimbursement of development costs, and which could require us to devote additional efforts and to incur the additional costs associated with pursuing internal development and commercialization of the applicable products and product candidates.

•the increased complexity and costs inherent in managing international operations, including in geographically disparate locations;

•diverse regulatory, drug safety, drug supply, financial and legal requirements, and any future changes to such requirements, in one or more countries where we are located or do business;

•differing payor reimbursement regimes, governmental payors or patient self-pay systems and price controls;

•adverse tax consequences, including changes in applicable tax laws and regulations;

•applicable trade laws, tariffs, export quotas, custom duties or other trade restrictions, and any changes to them;

•economic weakness, including inflation, or political or economic instability in particular economies and markets outside the U.S.;

•compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

•currency fluctuations, which could result in increased operating expenses or reduced revenues, and other obligations incident to doing business or operating in another country;

•liabilities for activities of, or related to, our international operations;

•challenges inherent in efficiently managing employees in diverse geographies, including the need to adapt systems, policies, benefits and compliance programs to differing labor and other regulations and different languages;

•reliance on vendors who are located far from our headquarters and with whom we have not worked previously;

•workforce uncertainty in countries where labor unrest is more common than in the U.S.; and

•laws and regulations relating to data security and the unauthorized use of, or access to, commercial and personal information.

•risks associated with satisfying the closing conditions relating to such transactions and realizing their anticipated benefits;

•increased operating expenses and cash requirements;

•difficulty integrating acquired technologies, products, operations, and personnel with our existing business;

•the potential disruption of our historical core business;

•diversion of management’s attention in connection with both negotiating the acquisition or license and integrating the business, technology or product;

•retention of key employees;

•difficulties in assimilating employees and corporate cultures of any acquired companies;

•uncertainties in our ability to maintain key business relationships of any acquired companies;

•strain on managerial and operational resources;

•difficulty implementing and maintaining effective internal control over financial reporting at businesses that we acquire, particularly if they are not located near our existing operations;

•exposure to unanticipated liabilities of acquired companies or companies in which we invest;

•the potential need to write down assets or recognize impairment charges; and

•potential costly and time-consuming litigation, including stockholder lawsuits.

•customer ordering patterns for our products, which may vary significantly from period to period;

•the overall level of demand for our products, including the impact of any competitive or biosimilar products and the duration of therapy for patients treated with our products;

•the extent to which coverage and reimbursement for our products is available from government and health administration authorities, private health insurers, managed care programs and other third-party payors;

•our ability to establish or demonstrate in the medical community the safety, efficacy or value of our products and their potential advantages compared to existing and future therapies in their approved indications, including in ADCETRIS’ frontline Hodgkin lymphoma and frontline PTCL indications, PADCEV’s FDA approved indication and TUKYSA’s FDA approved indication;

•changes in the amount of deductions from gross sales, including government-mandated rebates, chargebacks and discounts that can vary because of changes to the government discount percentage, including increases in the government discount percentage resulting from price increases we have taken or may take in the future, or due to different levels of utilization by entities entitled to government rebates and discounts and changes in patient demographics;

•increases in the scope of eligibility for customers to purchase our products at the discounted government price or to obtain government-mandated rebates on purchases of our products;

•changes in our cost of sales due to potential new product launches, royalties owed under technology license agreements or write-offs of inventory;

•the incidence rate of new patients in the approved indications for our products;

•the evolving effects of the COVID-19 pandemic, including those leading to current and potential future reductions in the rate of cancer diagnoses;

•the timing, cost and level of investment in our sales and marketing efforts to support our products sales;

•the timing, cost and level of investment in our research and development, pre-commercialization and other activities involving ADCETRIS, PADCEV, TUKYSA, tisotumab vedotin and our other product candidates by us or our collaborators; and

•expenditures we will or may incur to develop and/or commercialize any additional products, product candidates, or technologies that we may develop, in-license, or acquire.

•the level of sales and market acceptance of ADCETRIS, PADCEV, TUKYSA or of any future approved products;

•the time and costs involved in obtaining regulatory approvals of our products in additional indications or territories, if any, and potentially of any of our other product candidates;

•the size, complexity, timing, progress and number of our clinical programs and our collaborations;

•the timing, receipt and amount of milestone-based payments or other revenue from our collaborations or license arrangements, including royalty revenue generated from commercial sales of ADCETRIS by Takeda, revenue generated under our collaboration with Astellas and anticipated royalty revenue generated by commercial sales of TUKYSA by Merck;

•the cost of establishing and maintaining clinical supplies of our products and product candidates and commercial supplies of our current and any future approved products;

•the extent of our investment in development, manufacturing and commercialization outside the U.S.;

•the costs associated with acquisitions or licenses of additional technologies, products, or companies as well as licenses we may need to commercialize our current or any future approved products;

•the terms and timing of any future collaborative, licensing and other arrangements that we may establish;

•expenses associated with future securities class action or derivative lawsuits, as well as any other potential litigation;

•the potential costs associated with international, state and federal taxes; and

•competing technological and market developments.

•the levels of ADCETRIS, PADCEV and TUKYSA product sales;

•announcements of FDA or other regulatory approval or non-approval of our products, including TUKYSA, or any of our product candidates or specific label indications for or restrictions, warnings or limitations in its use, or delays in the regulatory review or approval process;

•announcements regarding the results of discovery efforts and preclinical, clinical and commercial activities by us, or those of our competitors;

•announcements regarding the results of the clinical trials we and our collaborators are conducting or may in the future conduct for our products and product candidates;

•announcements regarding, or negative publicity concerning, adverse events or safety concerns associated with the use of ADCETRIS, PADCEV, TUKYSA or our product candidates;

•issuance of new or changed analysts’ reports and recommendations regarding us or our competitors;

•termination of or changes in our existing collaborations or licensing arrangements, or establishment of new collaborations or licensing arrangements;

•our failure to achieve the perceived benefits of our strategic transactions as rapidly or to the extent anticipated by financial analysts or investors;

•our entry into additional material strategic transactions including licensing or acquisition of products, businesses or technologies;

•actions taken by regulatory authorities with respect to our product candidates, our clinical trials or our regulatory filings;

•our raising of additional capital and the terms upon which we may raise any additional capital;

•market conditions for equity investments in general, or the biotechnology or pharmaceutical industries in particular;

•developments or disputes concerning our proprietary rights, including with respect to our disputes with Daiichi Sankyo;

•developments regarding any future purported securities class action lawsuits, as well as any other potential litigation;

•share price and volume fluctuations attributable to inconsistent trading volume levels of our shares;

•changes in government regulations; and

•economic or other external factors.

						December 31,
						2015						2016						2017						2018						2019						2020
Seagen Inc.						$	100.00					$	117.58					$	119.21					$	126.25					$	254.59					$	390.24
Nasdaq Composite						100.00						108.87						141.13						137.12						187.44						271.64
Nasdaq Biotechnology						100.00						78.65						95.67						87.19						109.08						137.90

Item 6. Selected Financial Data

						Years ended December 31,
						2020						2019						2018						2017						2016
						(a)						(b)						(c)
						(in thousands, except for per share amounts)
Consolidated Statements of Comprehensive Income (Loss) Data:
Revenues:
Net product sales						$	1,000,598					$	627,977					$	476,903					$	307,562					$	265,766
Royalty revenues						126,756						138,491						83,440						66,056						67,455
Collaboration and license agreement revenues						1,048,182						150,245						94,357						108,632						84,926
Total revenues						2,175,536						916,713						654,700						482,250						418,147
Costs and expenses:
Cost of sales						217,720						43,952						88,293						54,118						42,317
Research and development						827,129						719,374						565,309						456,700						379,308
Selling, general and administrative						533,835						373,932						261,096						167,233						139,247
Total costs and expenses						1,578,684						1,137,258						914,698						678,051						560,872
Income (loss) from operations						596,852						(220,545)						(259,998)						(195,801)						(142,725)
Investment and other income, net						18,849						61,895						13,652						36,914						2,614
Income (loss) before income taxes						615,701						(158,650)						(246,346)						(158,887)						(140,111)
Income tax benefit (expense)						(2,031)						—						23,653						33,357						—
Net income (loss)						$	613,670					$	(158,650)					$	(222,693)					$	(125,530)					$	(140,111)
Net income (loss) per share - basic						$	3.51					$	(0.96)					$	(1.41)					$	(0.88)					$	(1.00)
Net income (loss) per share - diluted						$	3.37					$	(0.96)					$	(1.41)					$	(0.88)					$	(1.00)
Shares used in computation of per share amounts - basic						174,834						165,498						157,655						143,174						140,746
Shares used in computation of per share amounts - diluted						182,287						165,498						157,655						143,174						140,746

						December 31,
						2020						2019						2018						2017						2016
						(a)						(b)						(c)
						(in thousands)
Consolidated Balance Sheet Data:
Cash, cash equivalents and investments						$	2,660,250					$	868,338					$	459,866					$	413,171					$	618,974
Working capital						2,674,246						917,284						428,523						409,932						586,132
Total assets						4,000,906						2,205,866						1,503,329						877,949						838,396
Stockholders’ equity						3,488,100						1,876,287						1,273,943						677,569						634,087

(a)In October 2020, we closed the sale of the shares pursuant to the Purchase Agreement, and issued 5,000,000 shares of our common stock to Merck at a purchase price of $200 per share, for proceeds of $1.0 billion. As a result, we recorded $749.9 million in stockholders’ equity on our consolidated balance sheet and recognized the $250.1 million premium attributed to the Purchase Agreement in collaboration and license agreement revenues for the year ended December 31, 2020.

(b)In July 2019, we completed an underwritten public offering of 8,214,286 shares of our common stock at a public offering price of $70.00 per share. The offering resulted in net proceeds to us of $548.7 million.

(c)In March 2018, we acquired Cascadian Therapeutics, Inc., or Cascadian, for a total purchase price of approximately $614.1 million. Cascadian was included in our results of operations, along with the estimated fair values of the assets acquired and liabilities assumed in the acquisition, as of the acquisition date.

We recognize revenue from ADCETRIS product sales in the U.S. and Canada, and PADCEV and TUKYSA products sales in the U.S. While we anticipate that sales of ADCETRIS will increase in 2021 as compared to 2020, we have experienced and expect continued impacts associated with the COVID-19 pandemic, which appear to be reducing the rate of Hodgkin lymphoma diagnoses, and an increase in gross-to-net deductions that we believe is due to a shift in the locations where ADCETRIS is administered, which has increased the proportion of ADCETRIS sales through the federal 340B drug discount program. We expect that, going forward, our ability to maintain or continue to grow our ADCETRIS sales, if at all, will depend primarily on our ability to establish or demonstrate to the medical community the value of ADCETRIS and its potential advantages compared to existing and future therapeutics in its approved indications, including in the frontline Hodgkin lymphoma indication, and the extent to which physicians make prescribing decisions with respect to ADCETRIS. Other important factors affecting our ADCETRIS sales include the incidence flow of patients eligible for treatment in ADCETRIS’ approved indications, the extent to which coverage and adequate levels of reimbursement for ADCETRIS are available from governments and other third-party payors, the impact of any healthcare reform measures that may be upheld, or adopted in the future, including measures that could result in more rigorous coverage criteria or reduce the price that we receive for ADCETRIS, increasing competition from competing therapies including pembrolizumab in multiple indications, including in the relapsed or refractory classical Hodgkin lymphoma indication, impacts resulting from the evolving effects of the COVID-19 pandemic including lower diagnosis rates, and the potential future approval of ADCETRIS in any additional indications. For these reasons, we cannot assure you that ADCETRIS sales will continue to grow or that we can maintain sales of ADCETRIS at or near current levels. In addition, as a result of these and other factors, our future ADCETRIS product sales can be difficult to accurately predict from period to period.

For 2020, our total revenues increased to $2.2 billion, compared to $916.7 million in 2019. This growth was driven by $975.2 million collaboration and license agreement revenues recognized related to the agreements we entered into with Merck during 2020, the U.S. launches of PADCEV beginning in December 2019 and TUKYSA in April 2020, respectively, as well as higher ADCETRIS net product sales.

For 2020, total costs and expenses increased to $1.6 billion, compared to $1.1 billion in 2019. This primarily reflected higher cost of sales, higher selling, general and administrative expenses, and higher research and development expenses.

•Net product sales - sales deductions related to government-mandated rebates and chargebacks, such as for the Medicaid and 340B programs

•Collaboration and license agreement revenues - assessing the probability of future reversal of variable consideration and evaluating whether contractual obligations represent distinct performance obligations

•Royalty revenues - estimating Takeda's net sales of ADCETRIS to the extent actual information is not available

Government-mandated rebates and chargebacks: We have entered into a Medicaid Drug Rebate Agreement, or MDRA, with the Centers for Medicare & Medicaid Services. This agreement provides for a rebate based on covered purchases of our products. Medicaid rebates are invoiced to us by the various state Medicaid programs. We estimate Medicaid rebates using the expected value approach, based on a variety of factors, including payor mix and our experience to-date.

Business combinations, including acquired in-process research and development and goodwill. We account for business combinations using the acquisition method, recording the acquisition-date fair value of total consideration over the acquisition-date fair value of net assets acquired as goodwill.

																								Percentage change
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018
ADCETRIS						$	658,577					$	627,733					$	476,903					5		%				32		%
PADCEV						222,436						244						—						NM						NM
TUKYSA						119,585						—						—						NM						NM
Net product sales						$	1,000,598					$	627,977					$	476,903					59		%				32		%
NM: No amount in comparable period or not a meaningful comparison.

Our net product sales grew 59% during 2020 as compared to 2019, primarily driven by recent product launches of PADCEV and TUKYSA. We began commercializing PADCEV and TUKYSA following FDA approvals in December 2019 and April 2020, respectively. ADCETRIS net product sales increased in 2020 from 2019 due to higher sales volumes and the effect of price increases during the current year period.

We expect growth in net product sales in 2021 from 2020 to be primarily driven by sales growth of TUKYSA and PADCEV, and to a lesser extent, ADCETRIS.

						December 31, 2020																		December 31, 2019																		December 31, 2018
(in thousands)						Rebates and chargebacks						Distribution fees, product returns and other						Total						Rebates and chargebacks						Distribution fees, product returns and other						Total						Rebates and chargebacks						Distribution fees, product returns and other						Total
Balance, beginning of year						$	38,084					$	7,519					$	45,603					$	26,968					$	5,604					$	32,572					$	14,374					$	3,521					$	17,895
Provision related to current year sales						358,238						28,724						386,962						253,702						15,298						269,000						179,394						11,717						191,111
Adjustments for prior period sales						(1,341)						—						(1,341)						(392)						(464)						(856)						440						(478)						(38)
Payments/credits for current year sales						(319,444)						(18,886)						(338,330)						(217,905)						(11,349)						(229,254)						(155,581)						(8,248)						(163,829)
Payments/credits for prior year sales						(31,344)						(1,668)						(33,012)						(24,289)						(1,570)						(25,859)						(11,659)						(908)						(12,567)
Balance, end of year						$	44,193					$	15,689					$	59,882					$	38,084					$	7,519					$	45,603					$	26,968					$	5,604					$	32,572

Government-mandated rebates and chargebacks are the most significant component of our total gross-to-net deductions and the discount percentage has been increasing. These discount percentages increased during 2020 and 2019 as a result of price increases for ADCETRIS that we instituted that exceeded the rate of inflation. The most significant portion of our gross-to-net accrual balances as of December 31, 2020 and 2019 was for ADCETRIS Medicaid rebates. We expect future gross-to-net deductions to fluctuate based on the volume of purchases eligible for government mandated discounts and rebates, as well as changes in the discount percentage which is impacted by potential future price increases, the rate of inflation, and other factors. We expect gross-to-net deductions to increase in 2021 as compared to 2020, driven by anticipated growth in our gross product sales.

																								Percentage change
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018
Royalty revenues						$	126,756					$	138,491					$	83,440					(8)		%				66		%

																								Percentage change
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018
Merck						$	975,150					$	—					$	—					NM						NM
Takeda						32,107						108,175						58,605						(70)		%				85		%
Other						40,925						42,070						35,752						(3)		%				18		%
Collaboration and license agreement revenues						$	1,048,182					$	150,245					$	94,357					598		%				59		%
NM: No amount in comparable period or not a meaningful comparison.

Collaboration and license agreement revenues from Merck included license revenues of $725.0 million related to the collaboration agreements for LV and TUKYSA that were entered into in 2020, as well as a stock purchase premium paid by Merck of $250.1 million. Refer to Note 11 of the Notes to Consolidated Financial Statements included in Part II Item 8 for additional information.

We expect our collaboration and license agreement revenues in 2021 to significantly decrease compared to 2020, driven by the amounts recognized related to the Merck Agreements in 2020. Our collaboration and license agreement revenues are impacted by the term and duration of those agreements and by progress-dependent milestones, annual maintenance fees, and reimbursement of materials and support services. Collaboration and license agreement revenues may vary substantially from year to year and quarter to quarter depending on the progress made by our collaborators with their product candidates, the level of support we provide to our collaborators, specifically to Takeda under our ADCETRIS collaboration, the timing of milestones achieved and our ability to enter into potential additional collaboration and license agreements.

																								Percentage change
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018
Cost of sales						$	217,720					$	43,952					$	88,293					395		%				(50)		%

																								Percentage change
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018
Research and clinical development						$	581,496					$	497,986					$	397,429					17		%				25		%
Process sciences and manufacturing						245,633						221,388						167,880						11		%				32		%
Total research and development						$	827,129					$	719,374					$	565,309					15		%				27		%
Certain prior year balances have been reclassified within research and development expenses to conform to current year presentation.

Research and clinical development expenses include personnel, occupancy and laboratory expenses, technology access fees, preclinical translational biology and in vitro and in vivo studies, IND-enabling pharmacology and toxicology studies, and external clinical trial costs including costs for clinical sites, clinical research organizations, contractors and regulatory activities associated with conducting human clinical trials. The increase in 2020 as compared to 2019 primarily reflected higher employee-related costs and external development costs mainly to support our early- and late-stage pipeline of product candidates.

																								Percentage change												5 years ended
(dollars in thousands)						2020						2019						2018						2020/2019						2019/2018						December 31, 2020
ADCETRIS (brentuximab vedotin)						$	55,530					$	45,151					$	40,435					23		%				12		%				$	294,082
TUKYSA (tucatinib)						73,142						84,276						40,739						(13)		%