Seagen (SGEN) 10-Q 2001 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

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

                For the quarterly period ended September 30, 2001

OR

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

                For the transition period from _____ to _____

Commission file number 0-32405

SEATTLE GENETICS, INC. (Exact name of registrant as specified in its charter)
Delaware (State or other jurisdiction of incorporation or organization)	91-1874389 (I.R.S. Employer Identification No.)
21823 30th Drive SE Bothell, Washington 98021 (Address of principal executive offices, including zip code)
(425) 527-4000 (Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ý   No  o

As of October 31, 2001, there were 29,317,524 shares of the registrant’s Common Stock outstanding.

Seattle Genetics, Inc.

		INDEX
PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Balance Sheets as of September 30, 2001 (unaudited) and December 31, 2000
	Statements of Operations (unaudited) for the three and nine months ended September 30, 2001 and 2000 and cumulative from inception (January 1, 1998) to September 30, 2001
	Statements of Cash Flows (unaudited) for the nine months ended September 30, 2001 and 2000 and cumulative from inception (January 1, 1998) to September 30, 2001
	Notes to Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 2.	Changes in Securities and Use of Proceeds
Item 4.	Submission of Matters to a Vote of Security Holders
Item 6.	Exhibits and Reports on Form 8-K
SIGNATURES
INDEX TO EXHIBITS

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements.

Seattle Genetics, Inc.

(a development stage company)

Balance Sheets

Assets	September 30, 2001			December 31, 2000
	(Unaudited)
Current assets
Cash and cash equivalents	$	5,169,624		$	2,618,986
Short-term investments	30,601,054			21,711,460
Interest receivable	940,408			279,070
Prepaid expenses	599,266			759,339
Total current assets	37,310,352			25,368,855
Property and equipment, net	5,808,906			894,304
Restricted investments	1,000,687			3,421,247
Long-term investments	23,893,125			-
Other assets	891			189,419
Total assets	$	68,013,961		$	29,873,825
Liabilities, Mandatorily Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current liabilities
Accounts payable	$	780,291		$	141,992
Accrued liabilities	2,123,884			668,698
Deferred revenue	141,667			-
Total current liabilities	3,045,842			810,690
Deferred rent	61,173			-
Deferred revenue, net of current portion	236,111			-
Total long-term liabilities	297,284			-
Commitments and contingencies
Mandatorily redeemable convertible preferred stock, $0.001 par value, 17,450,000 (2000) shares authorized:
Series A convertible preferred stock, 7,000,000 shares designated, 6,950,000 shares issued and oustanding (liquidation preference of $6,950,000)	-			6,924,550
Series B convertible preferred stock, 10,437,072 shares issued and outstanding (liquidation preference of $30,684,992)	-			30,631,457
Stockholders' equity (deficit)
Preferred stock, $0.001 par value, 5,000,000 shares authorized, no shares issued	-			-
Common stock, $0.001 par value, 100,000,000 shares authorized, 29,301,064 and 4,581,077 issued and oustanding, respectively	29,301			4,581
Additional paid-in capital	98,497,221			14,798,044
Notes receivable from stockholders	(387,133		)	(408,384		)
Deferred stock compensation	(5,732,937		)	(10,193,778		)
Accumulated other comprehensive income	618,891			69,196
Deficit accumulated during the development stage	(28,354,508		)	(12,762,531		)
Total stockholders' equity (deficit)	64,670,835			(8,492,872		)
Total liabilities, mandatorily redeemable convertible preferred stock and stockholders' equity (deficit)	$	68,013,961		$	29,873,825
The accompanying notes are an integral part of these financial statements

Seattle Genetics, Inc.

(a development stage company)

Statements of Operations

(Unaudited)

	Three months ended						Nine months ended						Cumulative from inception (January 1, 1998) to
	September 30,						September 30,						September 30,
	2001			2000			2001			2000			2001
Revenues
License agreements	$	59,307		$	-		$	93,891		$	-		$	1,093,891
Government grants	11,024			27,202			11,024			83,422			109,656
Total revenues	70,331			27,202			104,915			83,422			1,203,547
Expenses
Research and development (excludes non-cash stock-based compensation expense of $409,938, $223,205, $1,439,969, $440,982 and $2,878,899, respectively)	5,093,631			1,296,285			11,468,735			3,058,533			20,216,188
General and administrative (excludes non-cash stock-based compensation expense of $815,732, $747,889, $2,707,783, $1,266,213 and $5,479,692, respectively)	787,105			459,140			2,344,606			1,077,238			5,746,917
Non-cash stock-based compensation expense	1,225,670			971,094			4,147,752			1,707,195			8,358,591
Total operating expenses	7,106,406			2,726,519			17,961,093			5,842,966			34,321,696
Loss from operations	(7,036,075		)	(2,699,317		)	(17,856,178		)	(5,759,544		)	(33,118,149		)
Investment income, net	800,372			504,024			2,264,201			1,459,583			4,763,641
Net loss	(6,235,703		)	(2,195,293		)	(15,591,977		)	(4,299,961		)	$	(28,354,508	)
Deemed dividend upon issuance of Series B mandatorily redeemable preferred stock	-			-			-			(484,386		)
Accretion on mandatorily redeemable preferred stock	-			(4,942		)	(3,295		)	(14,578		)
Net loss attributable to common stockholders	$	(6,235,703	)	$	(2,200,235	)	$	(15,595,272	)	$	(4,798,925	)
Basic and diluted net loss per share	$	(0.22	)	$	(0.66	)	$	(0.70	)	$	(1.50	)
Weighted-average shares used in computing basic and diluted net loss per share	28,781,416			3,317,887			22,300,257			3,190,685
The accompanying notes are an integral part of these financial statements

Seattle Genetics, Inc.

(a development stage company)

Statements of Cash Flows

(Unaudited)

							Cumulative
							from inception
	Nine months ended						(January 1,
	September 30,						1998) to
	2001			2000			September 30, 2001
Cash flows from operating activities
Net loss	$	(15,591,977	)	$	(4,299,961	)	$	(28,354,508	)
Adjustments to reconcile net loss to net cash used in operating activities
Amortization of deferred compensation	4,147,752			1,707,195			8,311,571
Depreciation and amortization	334,020			116,359			679,728
Gain on disposal of fixed assets	(38,534		)	-			(38,534		)
Realized loss on sale of securities	22,214			8,023			28,961
Amortization/ accretion on investments	351,235			(28,491		)	301,521
Common stock bonus provided to employees							47,020
Deferred rent	61,173			-			61,173
Changes in operating assets and liabilities
Interest receivable	(661,338		)	(352,539		)	(940,408		)
Prepaid expenses and other assets	(208,162		)	(76,604		)	(600,156		)
Accounts payable	638,299			93,647			780,291
Accrued liabilities	1,020,262			46,707			1,688,960
Deferred revenue	377,778			-			377,778
Net cash used in operating activities	(9,547,278		)	(2,785,664		)	(17,656,603		)
Cash flows from investing activities
Purchases of investments	(51,276,956		)	(26,695,445		)	(81,385,915		)
Proceeds from sale and maturities of investments	21,091,043			571,728			26,179,457
Purchase of property and equipment	(4,850,164		)	(566,469		)	(6,090,176		)
Proceeds from disposal of fixed assets	75,000			-			75,000
Net cash used in investing activities	(34,961,077		)	(26,690,186		)	(61,221,634		)
Cash flows from financing activities
Net proceeds from issuance of common stock	47,037,742			1,851			46,501,258
Net proceeds from issuance of Series A preferred stock	-			-			6,907,052
Proceeds from subscription receivable	-			2,545,001			2,545,001
Collection of notes receivable	21,251			-			21,251
Net proceeds from issuance of Series B preferred stock	-			500,364			28,073,299
Book overdraft	-			91,506			-
Net cash provided by financing activities	47,058,993			3,138,722			84,047,861
Net increase (decrease) in cash and cash equivalents	2,550,638			(26,337,128		)	5,169,624
Cash and cash equivalents, at beginning of period	2,618,986			30,362,568			-
Cash and cash equivalents, at end of period	$	5,169,624		$	4,025,440		$	5,169,624
Supplemental disclosure of cash information
Non-cash investing and financing activities
Issuance of common stock in exchange for notes receivable	$	-		$	-		$	408,384
Issuance of Series B preferred stock for subscription notes receivable	$	-		$	-		$	2,545,001
Conversion of preferred stock to common stock	$	37,559,302		$	-		$	37,559,302
Building construction costs accrued	$	434,924		$	-		$	434,924
The accompanying notes are an integral part of these financial statements

Seattle Genetics, Inc.

(a development stage company)

Notes to Financial Statements

(Unaudited)

1.  Basis of Presentation

The accompanying unaudited financial statements of Seattle Genetics, Inc. (“Seattle Genetics” or the “Company") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the results for the periods shown. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The results of operations for such periods are not necessarily indicative of the results expected for the full fiscal year or for any future period.

The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's Registration Statement on Form S-1 (File No. 333-50266) as filed with the Securities and Exchange Commission and the related prospectus dated March 6, 2001.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2.  Agreements and Research Grant

During August 2001, Seattle Genetics and ICOS Corporation entered into an agreement for the development and manufacture of the monoclonal antibody component of its lead antibody-drug conjugate SGN-15.  Under the terms of the agreement, ICOS will perform process development, scale-up and Good Manufacturing Practice (GMP) manufacturing.  SGN-15 is presently being tested in phase II trials for the treatment of breast, colon, prostate and lung cancers.

During September 2001, Seattle Genetics was awarded a research grant by the National Institutes of Health (NIH) to support the Company’s development of monoclonal antibody-drug conjugates for the treatment of cancer.  The grant was awarded under Phase I of the Small Business Innovation Research (SBIR) Program of the NIH. The grant will support potent monoclonal antibody drug-conjugates research.

3.  Net Loss per Share

Net loss per share has been computed using the weighted–average number of shares of common stock outstanding during the period, less the weighted–average number of restricted shares of common stock issued that are subject to repurchase. The Company has excluded all outstanding options to purchase common stock and restricted shares of common stock subject to repurchase from the calculation of diluted net loss per share, as such securities are antidilutive for all periods presented.

The following table presents the calculation of basic and diluted net loss per share:

	Three months ended						Nine months ended
	September 30,						September 30,
	(Unaudited)						(Unaudited)
	2001			2000			2001			2000
Net loss attributable to common stockholders	$	(6,235,703	)	$	(2,200,235	)	$	(15,595,272	)	$	(4,798,925	)
Basic and diluted
Weighted-average shares used in computing basic and diluted net loss per share	28,781,416			3,317,887			22,300,257			3,190,685
Basic and diluted net loss per share	$	(0.22	)	$	(0.66	)	$	(0.70	)	$	(1.50	)
Antidilutive securities not included in net loss per share calculation
Options to purchase common stock	2,660,213			665,000			2,660,213			665,000
Restricted shares of common stock subject to repurchase	447,867			892,084			447,867			892,084
Total	3,108,080			1,557,084			3,108,080			1,557,084

4.  Comprehensive Loss

Comprehensive loss includes certain changes in equity that are excluded from net loss.  Specifically, unrealized holding gains  in available for sale investments, which were reported separately in stockholders’ equity, are included in accumulated other comprehensive loss.  Comprehensive loss and its components were as follows:

													Cumulative
													from inception
	Three months ended						Nine months ended						(January 1,
	September 30,						September 30,						1998) to
	(Unaudited)						(Unaudited)						September 30,
	2001			2000			2001			2000			2001
Net loss	$	(6,235,703	)	$	(2,195,293	)	$	(15,591,977	)	$	(4,299,961	)	$	(28,354,508	)
Unrealized gain on securities available for sale	426,996			28,500			549,695			34,292			618,891
Total	$	(5,808,707	)	$	(2,166,793	)	$	(15,042,282	)	$	(4,265,669	)	$	(27,735,617	)

5.  Investments

Investments consist of the following:

	Fair Value September 30, 2001		Fair Value December 31, 2000
	(Unaudited)
U.S. corporate obligations	$	40,058,514	$	7,931,527
U.S. government and agencies	8,334,740		8,547,762
Mortgage-backed securities	6,531,662		8,653,418
Taxable municipal bonds	569,950		-
Total	$	55,494,866	$	25,132,707
Reported as:
Short-term investments	$	30,601,054	$	21,711,460
Long-term investments	23,893,125		-
Restricted investments	1,000,687		3,421,247
Total	$	55,494,866	$	25,132,707

6.  Property and equipment

Property and equipment consists of the following:

	September 30, 2001			December 31, 2000
	(Unaudited)
Tenant improvements	$	3,544,586		$	20,686
Laboratory equipment	1,587,607			799,486
Furniture and fixtures	720,821			64,650
Computers and office equipment	589,224			355,190
	6,442,238			1,240,012
Accumulated depreciation and amortization	(633,332		)	(345,708		)
Total	$	5,808,906		$	894,304

7.  Accrued liabilities

Accrued liabilities consists of the following:

	September 30, 2001		December 31, 2000
	(Unaudited)
Contract manufacturing agreement	$	743,056	$	200,000
Building construction costs	434,924		-
Clinical trial costs	289,406		125,746
Compensation and benefits	209,681		53,038
Professional services	266,688		258,394
Other	180,129		31,520
Total	$	2,123,884	$	668,698

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward–Looking Statements

                The following discussion of our financial condition and results of operations contains forward–looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward–looking statements by terminology such as may, will, should, expect, plan, anticipate, believe, estimate, predict, potential or continue, the negative of terms like these or other comparable terminology. These statements are only predictions. Actual events or results may differ materially. All forward–looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward–looking statements. In evaluating these statements, you should specifically consider various factors, including the risks outlined under the caption "Important Factors That May Affect Our Business, Results of Operations and Our Stock Price" set forth at the end of this Item 2 and those contained from time-to-time in our other filings with the SEC. We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

Overview

We focus on the discovery and development of monoclonal antibody-based drugs to treat cancer and related diseases.  Our objective is to utilize our expertise in cancer and in monoclonal antibody-based technologies to advance our product pipeline and discover new product candidates.  Since our inception, we have incurred substantial losses.  As of September 30, 2001, we had an accumulated deficit of $28.4 million.  These losses and accumulated deficit have resulted from the significant costs incurred in the development of our monoclonal antibody-based technologies, clinical trial costs of SGN-15 and SGN-10, manufacturing expenses of preclinical materials, and general and administrative costs.  We expect that our losses will increase for the foreseeable future as we continue to expand our research, development, clinical trial activities and to build additional infrastructure.

We do not currently have any commercial products for sale.  To date, we have generated revenues of $1.2 million from our license agreements and Small Business Innovative Research grants.  In the future, we believe our revenues will consist of milestone payments, technology licensing fees and sponsored research fees under existing and future collaborative arrangements, royalties from collaborations with current and future strategic partners and commercial product sales.  Because a substantial portion of our revenues for the foreseeable future will depend on achieving development and clinical milestones, our results of operations may vary substantially from year-to-year and even quarter-to-quarter.

Results of Operations

Three months ended September 30, 2001 and 2000

 Revenues.  Revenues increased to $70,000 for the three months ended September 30, 2001 from $27,000 for the three months ended September 30, 2000.  Revenues were derived from service and reagent fees and the earned portion of a technology-licensing fee from Eos Biotechnology and from a new Small Business Innovative Research grant for the three months ended September 30, 2001.    For the three months ended September 30, 2000, revenues were derived from an unrelated and separately awarded Small Business Innovative Research grant.

 Research and development expenses.  Research and development expenses, excluding non-cash stock–based compensation expenses, increased 293% to $5.1 million for the three months ended September 30, 2001 from $1.3 million for the three months ended September 30, 2000. This increase was principally due to contract manufacturing expenses of approximately $2.3 million, increases in rent and occupancy costs related to our new headquarters and operations facility of approximately $752,000, increases in personnel expenses and the proportionate increased usage of laboratory materials and supplies. The number of research and development personnel increased to 47 at September 30, 2001 from 32 at September 30, 2000.  We anticipate that research and development expenses will continue to grow in the foreseeable future as we expand our research, development, contract manufacturing and clinical trial activities and incur the annualized costs related to our new headquarters and operations facility.

 General and administrative expenses.  General and administrative expenses, excluding non-cash stock–based compensation expenses, increased 71% to $787,000 for the three months ended September 30, 2001 from $459,000 for the three months ended September 30, 2000.  This increase was primarily due to additional administrative personnel and other increases attributable to being a public company, including provisions for investor relations programs and directors’ and officers’ insurance. The number of general and administrative personnel increased to 14 at September 30, 2001 from 8 at September 30, 2000.  We anticipate that general and administrative expenses will increase in the foreseeable future as the Company expands and incurs the annualized costs related to being a public company and the annualized costs related to our new headquarters and operations facility.

 Non-cash stock–based compensation expense.  Non-cash stock–based compensation expense increased 26% to $1.2 million for the three months ended September 30, 2001 from $971,000 for the three months ended September 30, 2000.  The increase is attributable to higher levels of stock option grants, the difference between the deemed fair values as compared to the related exercise prices and reduced by a year-to-date adjustment attributable to options subject to variable accounting.

 Investment income, net.  Investment income increased 59% to $800,000 for the three months ended September 30, 2001 from $504,000 for the three months ended September 30, 2000. The increase was due to higher average balances of cash and cash equivalents, short-term and long-term investments and restricted investments primarily from the net proceeds of our initial public offering on March 6, 2001.

Nine months ended September 30, 2001 and 2000

 Revenues.  Revenues increased to $105,000 for the nine months ended September 30, 2001 from $83,000 for the nine months ended September 30, 2000.  Revenues were derived from service and reagent fees and the earned portion of a technology-licensing fee from Eos Biotechnology and a new Small Business Innovation Research grant for the nine months ended September 30, 2001.  For the nine months ended September 30, 2000, revenues were derived from an unrelated and separately awarded Small Business Innovative Research grant.

 Research and development expenses.  Research and development expenses, excluding non-cash stock–based compensation expenses, increased 275% to $11.5 million for the nine months ended September 30, 2001 from $3.1 million for the nine months ended September 30, 2000. The increase was principally due to contract manufacturing expenses of approximately $4.8 million, increases in personnel expenses and the proportionate increased usage of laboratory materials and supplies of approximately $1.7 million,  increased facility and occupancy costs of our new headquarters and operations facility and increased clinical trial expenses. We anticipate that research and development expenses will continue to grow in the foreseeable future as we expand our research, development, contract manufacturing and clinical trial activities and incur the costs related to our new headquarters and operations facility.

 General and administrative expenses.  General and administrative expenses, excluding non-cash stock–based compensation expenses, increased 118% to $2.3 million for the nine months ended September 30, 2001 from $1.1 million for the nine months ended September 30, 2000.  This increase was primarily due to additional administrative personnel, increases in professional service fees and other increases attributable to being a public company, including provisions for investor relations programs and directors’ and officers’ insurance. We anticipate that general and administrative expenses will increase in the foreseeable future as the Company expands and incurs annualized costs related to being a public company and the annualized costs related to our new headquarters and operations facility.

 Non-cash stock-based compensation expense.  Non-cash stock-based compensation expenses increased 143% to $4.1 million for the nine months ended September 30, 2001 from $1.7 million for the nine months ended September 30, 2000.  The increase is attributable to higher levels of stock option grants, the difference between the deemed fair values as compared to the related exercise prices and reduced by a year-to-date adjustment attributable to options subject to variable accounting.

 Investment income, net.  Investment income increased 55% to $2.3 million for the nine months ended September 30, 2001 from $1.5 million for the nine months ended September 30, 2000.  The increase was due to higher average balances of cash and cash equivalents, short-term and long-term investments and restricted investments primarily from the net proceeds of our initial public offering on March 6, 2001.

Liquidity and Capital Resources

From inception through September 30, 2001, we have funded our operations with the net proceeds of $46.4 million from our initial public offering on March 6, 2001 and concurrent private placement, $37.5 million from private equity financings, $1.6 million from license agreements and government grants and approximately $4.2 million from investment income, net. At September 30, 2001, cash, cash equivalents, short-term and long-term investments totaled $59.7 million and restricted investments amounted to $1.0 million. Our cash, cash equivalents, short term and long-term investments and restricted investments are held in a variety of interest–bearing instruments, consisting of U.S. government and agency securities, high-grade U.S. corporate bonds, taxable municipal bonds, mortgage–backed securities, commercial paper and money market accounts.

Net cash used in operating activities for the nine months ended September 30, 2001 was $9.5 million compared to $2.8 million for the nine months ended September 30, 2000.  Our net losses of $15.6 million for the nine months ended September 30, 2001 and $4.3 million for the nine months ended September 30, 2000 were adjusted for non-cash charges which were primarily related to amortization of deferred stock compensation and changes in operating assets and liabilities.  Accrued liabilities as of September 30, 2001 increased primarily due to contract manufacturing obligations.  We expect cash used in operating activities to increase in the future as we increase our staff headcount, expand our contract manufacturing initiatives and increase the patient enrollments of our clinical trials.

Net cash provided by investing activities for the nine months ended September 30, 2001 was $35.0 million compared to $26.7 million for the nine months ended September 30, 2000.  Purchases of property and equipment were $4.9 million for the nine months ended September 30, 2001 compared to $566,000 for the nine months ended September 30, 2000.  Capital expenditures for the nine months ended September 30, 2001 included leasehold improvements of approximately $3.1 million, equipment of approximately $1.1 million and furniture and fixtures of approximately $718,000 all in connection with our new headquarters and operations facility, which we moved to during August 2001.  We expect that our level of capital expenditures will decrease as we are nearing completion of the final portion of our facility construction.

Net cash provided by financing activities was $47.1 million for the nine months ended September 30, 2001 compared to $3.1 million for the nine months ended September 30, 2000.  Financing activities during the nine months ended September 30, 2001 included net proceeds of $44.4 million from our initial public offering and $2.0 million from our concurrent private placement.  Financing activities during the nine months ended September 30, 2000 consisted primarily of $2.5 million from the collection of subscriptions receivable and $500,000 from the sale of additional Series B convertible preferred stock.

We expect to incur substantial costs as we continue to develop and commercialize our product candidates. We anticipate that our rate of spending will accelerate as the result of the increased costs and expenses associated with clinical trials, regulatory approvals and commercialization of our product candidates.

We believe that our current cash and investment balances will be sufficient to enable us to meet our anticipated expenditures and operating requirements for at least the next 24 months.  However, we may need to sell additional equity or debt securities or obtain additional credit arrangements prior to that time. Additional financing may not be available on favorable terms or at all. If we are unable to raise additional funds should we need them, we may be required to delay, reduce or eliminate some of our development programs and some of our clinical trials, which may adversely affect our business and operations.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Financial Instruments and for Hedging Activities” (SFAS No. 133), which provides a comprehensive and consistent standard for the recognition and measurement for derivatives and hedging activities. SFAS No. 133 became effective for fiscal years beginning after June 15, 2000. The adoption of SFAS No. 133 did not have a material impact on the Company's financial position or results of operations.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 141, “Business Combinations” (SFAS No. 141). SFAS No. 141 addresses financial accounting and reporting for business combinations and supersedes APB Opinion No. 16, “Business Combinations” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” SFAS No. 141 requires that all business combinations be accounted for by the purchase method. The provisions of this Statement apply to all business combinations initiated after June 30, 2001.  Management believes the adoption of this Statement will not impact the Company’s financial position or results of operations.

In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS No. 142). SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and supersedes APB Opinion No. 17, “Intangible Assets.” SFAS No. 142 addresses how intangible assets that are acquired individually or with a group of other assets should be accounted for in the financial statements upon their acquisition. The Statement also addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The provisions of this Statement are required to be applied starting with fiscal years beginning after December 15, 2001. Management believes the adoption of this Statement will not impact the Company’s financial position or results of operations.

In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement Obligations” (SFAS No. 143). SFAS No.143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development, and (or) the normal operation of a long-lived asset, except for certain obligations of lessees. The provisions of SFAS No. 143 will be effective for fiscal years beginning after June 15, 2002, however early application is permitted. Management believes the adoption of this Statement will not impact the Company’s financial position or results of operations.

In August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS No. 144). This Statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets.  This Statement supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting the Results of Operations—Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for the disposal of a segment of a business.  The provisions of SFAS No.144 will be effective for fiscal years beginning after December 15, 2001. Management believes the adoption of this Statement will not impact the Company’s financial position or results of operations.

Important Factors That May Affect Our Business, Results of Operations and Our Stock Price

You should carefully consider the risks described below, together with all of the other information included in this quarterly report on Form 10-Q and the information incorporated by reference herein. If we do not effectively address the risks we face, our business will suffer and we may never achieve or sustain profitability. See "Management's Discussion and Analysis of Financial Condition and Results of Operations."

This quarterly report on Form 10-Q also contains forward–looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward looking statements as a result of factors that are described below and elsewhere in this quarterly report on Form 10-Q.

We have a history of net losses. We expect to continue to incur net losses and may not achieve or maintain profitability for some time. Our limited operating history may make it difficult to evaluate our business and an investment in our common stock.

We are a development stage company incorporated in July 1997 and have a limited operating history upon which an investor may evaluate our operations and future prospects. We have incurred net losses since our inception, including net losses of approximately $7.8 million for the year ended December 31, 2000 and approximately $15.6 million for the nine months ended September 30, 2001. As of September 30, 2001, we had an accumulated deficit of approximately $28.4 million. We expect to make substantial expenditures to further develop and commercialize our product candidates and expect that our rate of spending will accelerate as the result of the increased costs and expenses associated with clinical trials, regulatory approvals and commercialization of our potential products. In the near term, we expect revenues to be derived from milestone payments and sponsored research fees under existing and possible future collaborative arrangements and National Institutes of Health grants. However, our revenue and profit potential is unproven and our limited operating history makes our future operating results difficult to predict.

Our product candidates are at an early stage of development and if we are not able to successfully develop and commercialize them, we may not generate sufficient revenues to continue our business operations.

                All of our product candidates are in early stages of development. Significant further research and development, financial resources and personnel will be required to develop commercially viable products and obtain regulatory approvals. Much of our efforts and expenditures over the next few years will be devoted to SGN-15, SGN-10, SGN-14, SGN-30, SGN-17/19, a novel BR96 monoclonal antibody-drug conjugate and a novel SGN-30 monoclonal antibody-drug conjugate. These are our only product candidates in preclinical development, clinical trials or in collaboration with others at the present time. We have no drugs that have received regulatory approval for commercial sale.

Our ability to commercialize our product candidates depends on first receiving FDA approval. The future commercial success of these product candidates will depend upon their acceptance by physicians, patients and other key decision–makers as therapeutic and cost-effective alternatives to currently available products. If we fail to gain approval from the FDA or to produce a commercially successful product, we may not be able to earn sufficient revenues to continue as a going concern.

We may continue to need significant amounts of additional capital which may not be available to us.

Since our inception, we have used approximately $17.7 million of cash in operating activities and approximately $6.1 million of cash to purchase property and equipment.  We expect capital outlays and operating expenditures to significantly increase over the next several years as we hire additional employees and expand our infrastructure and preclinical development and clinical trial activities. We believe that our existing cash and investment securities, milestone payments and research grants, will be sufficient to fund our operations for at least the next two years. However, changes in our business may occur that would consume available capital resources sooner than we expect. If adequate funds are not available to us, we will be required to delay, reduce the scope of or eliminate one or more of our development programs. We do not know whether additional financing will be available when needed, or that, if available, we will obtain financing on terms favorable to our stockholders or us. To the extent that we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. To the extent that we raise additional funds through collaboration and licensing arrangements, we may be required to relinquish some rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us.

Clinical trials for our product candidates are expensive, time consuming and their outcome is uncertain.

Before we can obtain regulatory approval for the commercial sale of any product candidate that we wish to develop, we are required to complete preclinical development and extensive clinical trials in humans to demonstrate its safety and efficacy. Each of these trials requires the investment of substantial expense and time. We are currently conducting a total of six clinical trials of our two most advanced product candidates, and expect to commence additional trials of these and other product candidates. There are numerous factors that could delay each of these clinical trials or prevent us from completing these trials successfully.

Success in preclinical and early clinical trials does not ensure that large-scale trials will be successful nor does it predict final results. Acceptable results in early trials may not be repeated in later trials. A number of companies in the biotechnology industry have suffered significant setbacks in advanced clinical trials, even after promising results in earlier trials. Negative or inconclusive results or adverse medical events during a clinical trial could cause it to be redone or terminated. In addition, failure to construct appropriate clinical trial protocols could result in the test or control group experiencing a disproportionate number of adverse events and could cause a clinical trial to be redone or terminated.

The length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by the FDA or another regulatory authority varies significantly. To date, we have limited clinical data and have seen evidence of gastrointestinal toxicity with SGN-15 and SGN-10.  Future trials may not show sufficient safety or efficacy to obtain the requisite regulatory approval for these product candidates or any other potential product candidates. Because SGN-15, SGN-10, SGN-14, SGN-30, SGN-17/19, a novel BR96 monoclonal antibody-drug conjugate and a novel SGN-30 monoclonal antibody-drug conjugate, are our only product candidates in clinical trials or preclinical development at the present time, any delays or difficulties we encounter may impact our ability to generate revenue and cause our stock price to decline significantly.

We may choose to, or may be required to, delay, suspend, repeat or terminate our clinical trials if patient enrollment cannot be achieved on a timely basis or if the trials are not conducted in accordance with regulatory requirements, the results are negative or inconclusive or the trials are not well designed.

Clinical trials must be conducted in accordance with the FDA's guidelines and are subject to oversight by the FDA and institutional review boards at the medical institutions where the clinical trials are conducted. In addition, clinical trials must be conducted with product candidates produced under the FDA's Good Manufacturing Practices, and may require large numbers of test patients. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments.  We depend on medical institutions to conduct our clinical trials and to the extent they fail to enroll a sufficient number of patients for our clinical trials or are delayed for a significant time in achieving full enrollment, we may be affected by increased costs, program delays or both, which may harm our business.

In addition, we or the FDA might delay or halt our clinical trials of a product candidate for various reasons, including: deficiencies in the conduct of the clinical trials; the product candidate may have unforeseen adverse side effects; the time required to determine whether the product candidate is effective may be longer than expected; fatalities arising during a clinical trial due to medical problems that may not be related to clinical trial treatments; the product candidate may not appear to be more effective than current therapies; insufficient patient enrollment in the clinical trials; the quality or stability of the product candidate may fall below acceptable standards; or we may not be able to produce sufficient quantities of the product candidate to complete the trials.

Furthermore, the process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive and uncertain. It can vary substantially, based on the type, complexity and novelty of the product involved. Accordingly, our current product candidates or any of our other future product candidates could take a significantly longer time to gain regulatory approval than we expect or may never gain approval, which could reduce or eliminate our revenue and delay or terminate the potential commercialization of our product candidates.

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

We do not currently have the ability to manufacture drug products that we need to conduct our clinical trials. For our two product candidates in clinical trials, SGN-10 and SGN-15, we rely on drug products that were produced and vialed by Bristol–Myers Squibb and contract manufacturers retained by Bristol–Myers Squibb. We have contracted with ICOS Corporation to develop cell lines expressing the SGN-30 product candidate, to manufacture preclinical and clinical supplies of SGN-30 and to manufacture clinical supplies of monoclonal antibody chimeric BR96, the monoclonal antibody used in the drug candidate SGN-15.  In addition, we rely on other third parties to perform additional steps in the manufacturing process, including vialing and storage of these product candidates.

For the foreseeable future, we will continue to rely on contract manufacturers and other third parties to produce, vial and store sufficient quantities of our product candidates for use in our clinical trials. If our contract manufacturers or other third parties fail to deliver our product candidates for clinical use on a timely basis, with sufficient quality, and at commercially reasonable prices, and we fail to find replacement manufacturers or to develop our own manufacturing capabilities, we may be unable to continue development and production of our product candidates.

Contract manufacturers have a limited number of facilities in which our product candidates can be produced. We currently rely on contract manufacturers to produce our product candidates under FDA Good Manufacturing Practices to meet acceptable standards for our clinical trials. Such standards may change, affecting the ability of contract manufacturers to produce our product candidates on the schedule we require for our clinical trials. Contract manufacturers may not perform or may discontinue their business for the time required by us to successfully produce and market our product candidates.

In some circumstances we rely on collaborators to assist in the research and development activities necessary for the commercialization of our product candidates. If we are not able to locate suitable collaborators or if our collaborators do not perform as expected, we may not be able to commercialize our product candidates.

We intend to continue to establish alliances with third party collaborators to develop and market our current and future product candidates. We may not be able to locate third party collaborators to develop and market other product candidates and we may lack the capital and resources necessary to develop all our product candidates alone. If our collaborators do not prioritize and commit substantial resources to programs associated with our product candidates, we may be unable to commercialize our product candidates, which would limit our ability to generate revenue and become profitable.

We have a license agreement with Genentech pursuant to which they are developing our lead CD40 targeted drug, SGN-14, to treat patients with hematologic malignancies or other types of cancer. Genentech is also responsible for gaining final approval through the required U.S. and international regulatory authorities to ultimately market the product. At any time, Genentech may terminate the agreement for any reason and return the rights to the CD40 program to us. If Genentech decides not to proceed and we fail to locate a substitute partner, we may not have sufficient capital resources to continue funding the project.

If we are unable to protect our proprietary technology, trade secrets or know-how, we may not be able to operate our business profitably. Similarly, if we fail to sustain and further build our intellectual property rights, competitors may be able to develop competing therapies.

Our success depends, in part, on our ability to maintain protection for our products and technologies under the patent laws or other intellectual property laws of the United States, France, Germany, Japan, United Kingdom and Italy, as well as other countries. We have filed several patent applications with the U.S. Patent and Trademark Office for our technologies which are currently pending. We also have exclusive rights to certain issued U.S. patents, and foreign counterpart patents and patent applications in the countries listed above, relating to our monoclonal antibody–based technology. Our rights to these patents are derived from worldwide licenses from Bristol–Myers Squibb, Arizona State University, National Institutes of Health and Enzon, among others. In addition, we have licensed or optioned rights to pending U.S. patent applications and foreign counterpart patents and patent applications to third parties. The standards which the U.S. Patent and Trademark Office uses to grant patents are not always applied predictably or uniformly and can change. Consequently, the pending patent applications may not be allowed; and if allowed, may not contain the type and extent of patent claims that will be adequate to conduct our business as planned. Additionally, any issued patents may not contain claims that will permit us to stop competitors from using similar technology. Similarly, the standards that courts use to interpret patents are not always applied predictably or uniformly and can change, particularly as new technologies develop. As a result, the protection, if any, given by our patents if we attempt to enforce them or if they are challenged in court is uncertain. In addition, we rely on certain proprietary trade secrets and know-how. We have taken measures to protect our unpatented trade secrets and know-how, including the use of confidentiality and assignment of inventions agreements with our employees, consultants and certain contractors. It is possible, however, that these persons may breach the agreements or that our competitors may independently develop or otherwise discover our trade secrets.

We may incur substantial costs and lose important rights as a result of litigation or other proceedings relating to patent and other intellectual property rights.

The defense and prosecution of intellectual property rights, U.S. Patent and Trademark Office interference proceedings and related legal and administrative proceedings in the United States and elsewhere involve complex legal and factual questions. These proceedings are costly and time-consuming.

If we become involved in any litigation, interference or other administrative proceedings, we will incur substantial expense and it will divert the efforts of our technical and management personnel. An adverse determination may subject us to significant liabilities or require us to seek licenses that may not be available from third parties on commercially reasonable terms, if at all. We may be restricted or prevented from developing and commercializing our product candidates in the event of an adverse determination in a judicial or administrative proceeding, or if we fail to obtain necessary licenses.

If we lose our key personnel or are unable to attract and retain additional qualified personnel, our future growth and ability to compete would suffer.

                We are highly dependent on the efforts and abilities of the principal members of our managerial and scientific staff, particularly Dr. H. Perry Fell our Chief Executive Officer and Dr. Clay B. Siegall our President and Chief Scientific Officer.  We have key person insurance in the amount of $1.0 million each, however, the sum recovered under such insurance policies may not fully compensate us for any loss of their services.  Additionally, we have several scientific personnel with significant and unique expertise in monoclonal antibodies and related technologies.  The loss of the services of principal members of our managerial or scientific staff may prevent us from achieving our business objectives.

                The competition for qualified personnel in the biotechnology field is intense, and we rely heavily on our ability to attract and retain qualified scientific, technical and managerial personnel. Our future success depends upon our ability to attract, retain and motivate highly skilled employees. In order to commercialize our products successfully, we will be required to expand our workforce, particularly in the areas of manufacturing, clinical trials management, regulatory affairs, business development and sales and marketing. These activities will require the addition of new personnel, including management, and the development of additional expertise by existing management personnel. We face intense competition for qualified individuals from numerous pharmaceutical, biopharmaceutical and biotechnology companies, as well as academic and other research institutions. To the extent we are not able to attract and retain these individuals on favorable terms, our business may be harmed.

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.

The biotechnology and pharmaceutical industries are highly competitive and subject to significant and rapid technological change. We are aware of several pharmaceutical and biotechnology companies that are actively engaged in research and development in areas related to antibody therapy. Some of these companies have commenced clinical trials of antibody products or have successfully commercialized antibody products. Many of these companies are developing products for the same disease indications as we are. Some of these competitors have received regulatory approval or are developing or testing product candidates that do or may in the future compete directly with our product candidates. For example, Genentech, IDEC Pharmaceuticals and American Home Products  market products that may compete with ours. Other potential competitors include large, fully integrated pharmaceutical companies and more established biotechnology companies, which have significant resources and expertise in research and development, manufacturing, testing, obtaining regulatory approvals and marketing. Also, academic institutions, government agencies and other public and private research organizations conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and marketing. It is possible that these competitors will succeed in developing technologies that are more effective than those being developed by us or that would render our technology obsolete or noncompetitive.

If our competitors develop superior products, manufacturing capability or marketing expertise, our business may fail.

Our business may fail because we face intense competition from major pharmaceutical companies and specialized biotechnology companies engaged in the development of other products directed at cancer. Many of our competitors have greater financial and human resources expertise and more experience in the commercialization of product candidates. Our competitors may, among other things: develop safer or more effective products; implement more effective approaches to sales and marketing; develop less costly products; obtain quicker regulatory approval; have access to more manufacturing capacity; form more advantageous strategic alliances; or establish superior proprietary positions.

In addition, if we receive regulatory approvals, we may compete with well-established, FDA approved therapies that have generated substantial sales over a number of years. We anticipate that we will face increased competition in the future as new companies enter our market and scientific developments surrounding other cancer therapies continue to accelerate.

We have no experience in commercializing products on our own and to the extent we do not develop this ability or contract with a third–party to assist us, we may not be able to successfully sell our product candidates. Additionally, if the market does not accept our products or if reform in the healthcare industry does not provide adequate reimbursement for our products, we may not be able to generate sufficient revenues to maintain our business.

We do not have a sales and marketing force and may not be able to develop this capacity. If we are unable to establish sales and marketing capabilities, we will need to enter into sales and marketing agreements to market our products in the United States. For sales outside the United States, we plan to enter into third–party arrangements. In these foreign markets, if we are unable to establish successful distribution relationships with pharmaceutical companies, we may fail to realize the full sales potential of our product candidates.

Additionally, our product candidates may not gain market acceptance among physicians, patients, healthcare payors and the medical community. The degree of market acceptance of any approved product candidate will depend on a number of factors, including: establishment and demonstration of clinical efficacy and safety; cost-effectiveness of a product; its potential advantage over alternative treatment methods; and marketing and distribution support for the product.

In addition, government health administrative authorities, private health insurers and other organizations are increasingly challenging both the need for and the price of new medical products and services. Consequently, uncertainty exists as to the reimbursement status of newly approved therapeutics and diagnostics. For these and other reasons, physicians, patients, third–party payors and the medical community may not accept and utilize any product candidates that we develop and even if they do, reimbursement may not be available for our products to enable us to maintain price levels sufficient to realize an appropriate return on our investment in research and product development.

We face product liability risks and may not be able to obtain adequate insurance to protect us against losses.

We currently have no products that are available for commercial sale. However, the current use of any of our product candidates in clinical trials, and the sale of any approved products in the future, may expose us to liability claims. These claims might be made directly by consumers and healthcare providers or indirectly by pharmaceutical companies, our corporate collaborators or others selling such products. We may experience financial losses in the future due to product liability claims. We have obtained limited product liability insurance coverage for our clinical trials. We intend to expand our insurance coverage to include the sale of commercial products if marketing approval is obtained for product candidates in development. However, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses. If a successful product liability claim or series of claims is brought against us for uninsured liabilities or in excess of insured liabilities, our assets may not be sufficient to cover such claims and our business operations could be impaired.

Our existing stockholders have significant control of our management and affairs, which they could exercise against your best interests.

Our executive officers and directors and greater than 5% stockholders, together with entities that may be deemed affiliates of or related to such persons or entities, beneficially own approximately 70% of our outstanding common stock. As a result, these stockholders, acting together, may be able to control our management and affairs and matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, such as mergers, consolidations or the sale of substantially all of our assets. Consequently, this concentration of ownership may have the effect of delaying, deferring or preventing a change in control, including a merger, consolidation, takeover or other business combination involving us or discourage a potential acquiror from making a tender offer or otherwise attempting to obtain control, which might affect the market price of our common stock.

We may engage in future acquisitions that dilute our stockholders, cause us to incur debt or assume contingent liabilities and subject us to other risks.

We may make additional acquisitions of businesses, products or technologies in the future. No assurance can be given as to our ability to successfully integrate additional businesses, products, technologies or personnel that might have been acquired or may be acquired in the future, and our failure to do so could significantly affect our business and operating results. Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow as quickly as possible or obtain access to technology or products that may be important to the development of our business.

Anti-takeover provisions could make it more difficult for a third party to acquire us.

                Our Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares without any further vote or action by the stockholders. The rights of the holders of common stock may be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change of control of Seattle Genetics without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock. Further, certain provisions of our charter documents, including provisions eliminating the ability of stockholders to take action by written consent and limiting the ability of stockholders to raise matters at a meeting of stockholders without giving advance notice, may have the effect of delaying or preventing changes in control or management of Seattle Genetics, which could have an adverse effect on the market price of our stock. In addition, our charter documents provide for a classified board, which may make it more difficult for a third party to gain control of our Board of Directors. Similarly, state anti-takeover laws in Washington related to corporate takeovers may prevent or delay a change of control of Seattle Genetics.

Item 3.  Quantitative and Qualitative Disclosure of Market Risk

In accordance with our policy, we do not use derivative financial instruments in our investment portfolio.  We invest in high quality interest-bearing instruments, consisting of U.S. government and agency securities, high-grade U.S. corporate bonds, taxable municipal bonds, mortgage-backed securities, commercial paper and money market accounts.  Such securities are subject to interest rate risk and will rise and fall in value if market interest rates change, however, we do not expect any material loss from such interest rate changes and therefore believe that our potential interest rate exposure is not material.

PART II.  OTHER INFORMATION

Item 1. Legal Proceedings.

                None.

Item 2. Changes in Securities.

                None.

(d)  Use of Proceeds from Sale of Registered Securities

The Company’s Registration Statement under the Securities Act of 1933 (File No. 333-50266) was declared effective by the SEC on March 6, 2001.  All 7,000,000 shares of common stock offered in the final prospectus were sold at a price per share of $7.00.  The aggregate gross proceeds of the shares offered and sold were $49.0 million which resulted in net proceeds to Seattle Genetics of approximately $44.4 million after deducting underwriting discounts and commissions and other offering expenses of $4.6 million.  From the effective date of the offering through September 30, 2001, Seattle Genetics has used approximately $12.7 million of the proceeds in preclinical research and development activities, clinical trials, contract manufacturing, purchase of property and equipment and general corporate purposes.  The remainder of the net proceeds from the offering are invested in a variety of high quality interest-bearing instruments, consisting of U.S. government and agency securities, high-grade U.S. corporate bonds, taxable municipal bonds, mortgage-backed securities, commercial paper and money market accounts in investments.

Item 4.    Submission of Matters to a Vote of Security Holders.

                None.

Item 6.                    Exhibits and Reports on Form 8-K.

(a)           Exhibits:

Exhibit Number

3.1*   Amended and Restated Certificate of Incorporation of the Registrant

3.2*   Bylaws of the Registrant

4.1*   Form of Stock Certificate

4.2*   Amended and Restated Investors Rights Agreement dated December 22, 2000 by and among the Registrant and certain holders of the Registrant’s capital stock.

10.1† Contract Manufacturing Agreement dated August 1, 2001 between Seattle Genetics, Inc. and ICOS Corporation.

10.2   Seattle Genetics, Inc. 2001 Executive Performance Plan

* Previously filed as an exhibit to Registrant's registration statement on Form S-1, File No. 333-50266, originally filed with the Securities and Exchange Commission on November 20, 2000, as subsequently amended, and incorporated herein by reference.

†        Confidential treatment requested.

(b)           Reports on Form 8-K:

The Company did not file any reports on Form 8-K during the three months ended September 30, 2001.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

.	Seattle Genetics, Inc
	By:	/s/  TIM CARROLL
		Tim Carroll Chief Financial Officer (Principal Financial Officer and Authorized Officer)

Date:  November 9, 2001

INDEX TO EXHIBITS

Exhibit Number

3.1*   Amended and Restated Certificate of Incorporation of the Registrant

3.2*   Bylaws of the Registrant

4.1*   Form of Stock Certificate

4.2*   Amended and Restated Investors Rights Agreement dated December 22, 2000 by and among the Registrant and certain holders of the Registrant’s capital stock.

10.1† Contract Manufacturing Agreement dated August 1, 2001 between Seattle Genetics, Inc. and ICOS Corporation.

10.2   Seattle Genetics, Inc. 2001 Executive Performance Plan

* Previously filed as an exhibit to Registrant's registration statement on Form S-1, File No. 333-50266, originally filed with the Commission on November 20, 2000, as subsequently amended, and incorporated herein by reference.

†        Confidential treatment requested.