Stealth Stock Alert: Seattle Genetics Inc. (SGEN)

Every once in a while I find a stock that has ninja-like stealth qualities. Seattle Genetics, Inc.  (Public, NASDAQ:SGEN) is a Small Cap that has been flying under the radar for some time. Chances are, you’ve never even heard of it.

Seattle Genetics, Inc. is a clinical-stage biotechnology company developing monoclonal antibody-based therapies for the treatment of cancer and autoimmune disease. The Company has a worldwide collaboration agreement with Genentech, Inc. to develop and commercialize the product candidate SGN-40. It also has two other product candidates in clinical trials, SGN-33 and SGN-35, and several lead preclinical product candidates including SGN-70, SGN-75 and an anti-CD19 antibody-drug conjugate (ADC).

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In addition to its internal pipeline, the Company has ADC license agreements with a number of biotechnology and pharmaceutical companies including Genentech, Bayer Pharmaceuticals Corporation, CuraGen Corporation, Progenics Pharmaceuticals, Inc. and MedImmune Inc., a wholly owned subsidiary of AstraZeneca PLC, as well as an ADC co-development agreement with Agensys Inc., a wholly owned subsidiary of Astellas Pharma.

SGEN 1 year Chart:

What makes SGEN a potentially lucrative investment is its licensing agreements. Seattle Genetics is letting Daiichi Sankyo take advantage of its antibody-drug conjugate technology, which is designed to help build more potent and focused anti-cancer compounds. Other drugmakers, like Progenics Pharmaceuticals (PGNX) and AstraZeneca (AZN), have also signed deals with Seattle Genetics to get access to this platform technology, although no drug candidates using this tech are near approval.

What's appealing about a platform technology in the biopharmaceutical space is that if it's effective, multiple drugmakers could sign partnership deals to get access to it. If everything works out and drugs using the platform technology gain approval, the technology developer can reap years and sometimes hundreds of millions of dollars' worth of royalties (before its patent on the technology expires, at least).

Biotech is a hot commodity right now - there has been a lot of raised guidance among most leading companies as a sign of sector resiliency amid challenges in the U.S. economy. Once more investors find out about SGEN, it could be off to the races.