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, might, will, should, expect, plan, anticipate, project, believe, estimate, predict, potential, intend or continue, the negative of terms like these or other comparable terminology, and other words or terms of similar meaning in connection with any discussion of future operating or financial performance. These statements are only predictions. 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. Any or all of our forward-looking statements in this document may turn out to be wrong. Actual events or results may differ materially. Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. In evaluating these statements, you should specifically consider various factors, including the risks outlined under the caption "Risk Factors" set forth in Item 1A. of Part I of our Form 10-K for the fiscal year ended December 31, 2007, as well as 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

Seattle Genetics is a clinical-stage biotechnology company developing monoclonal antibody-based therapies for the treatment of cancer and autoimmune disease. Our business strategy is focused on advancing our portfolio of product candidates in diseases with unmet medical need and significant market potential. We have a worldwide collaboration agreement with Genentech to develop and commercialize our product candidate SGN-40. In addition, we currently have two other proprietary product candidates in ongoing clinical trials, SGN-33 and SGN-35, as well as several lead preclinical product candidates, including SGN-70, SGN-75 and an anti-CD19 antibody-drug conjugate. Our pipeline of product candidates is based upon two technologies: engineered monoclonal antibodies and monoclonal antibody-drug conjugates, or ADCs. These technologies enable us to develop monoclonal antibodies that can kill target cells on their own as well as to increase the potency of monoclonal antibodies by linking them to a cell-killing payload to form an ADC. In addition to our internal pipeline, we have ADC license agreements with a number of leading biotechnology and pharmaceutical companies, including Genentech, Inc., 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.

We do not currently have any commercial products for sale. All of our product candidates are in relatively early stages of development and significant further research and development, financial resources and personnel will be required to develop commercially viable products and obtain regulatory approvals. As of March 31, 2008, we had an accumulated deficit of $245.6 million. Over the next several years, we expect to incur substantial expenses as we continue to invest in research, development and manufacturing and move towards commercialization of our product candidates. Our commitment of resources to research and the continued development and potential commercialization of our product candidates will require substantial additional funds and resources. Our operating expenses will also likely increase as we invest in research or acquire additional technologies, as additional product candidates are selected for clinical development and as some of our earlier stage product candidates move into later stage clinical development. In addition, we may incur significant milestone payment obligations as our product candidates progress through clinical trials towards commercialization. We expect that a substantial portion of our revenues for the next several years will be the result of amortization of payments already received and expected to be received from Genentech under our SGN-40 collaboration agreement. Our revenues for the foreseeable future will also depend on achieving development and clinical milestones under our existing collaboration and license agreements, particularly our SGN-40 collaboration with Genentech, as well as entering into new collaboration and license agreements. Our results of operations may vary substantially from year to year and from quarter to quarter and, as a result, we believe that period to period comparisons of our operating results may not be meaningful and you should not rely on them as indicative of our future performance.

Financial summary

To date, we have generated revenues principally from our collaboration and license agreements. These revenues include upfront technology access fees, milestone payments and reimbursement for support and materials supplied to our collaborators. Revenues increased 63% to $7.1 million for the three months ended March 31, 2008, compared to $4.3 million for the same period in 2007. Operating expenses increased 78% to $26.1 million, compared to $14.6 million for the same period in 2007. Our net loss for the three month period ended March 31, 2008 was $17.1 million, or $0.22 per share, compared to $8.8 million, or $0.16 per share, for the same period in 2007. As of March 31, 2008, we had $216.1 million in cash, cash equivalents, short-term and long-term investments and $138.1 million in total stockholders' equity.

Results of Operations

Three months ended March 31, 2008 and 2007

Revenues.

Total collaboration and license agreement revenues increased 63% to $7.1 million in the first quarter of 2008 from the comparable period in 2007. These increases were primarily due to amounts earned under our SGN-40 collaboration agreement with Genentech established in January 2007. Revenues are summarized by collaborator as follows:

Collaboration and license agreement revenues ($ in thousands)        Three months ended March 31,
                                                                    2008          2007       % change
Genentech                                                        $    6,367    $    2,732         133 %
MedImmune                                                               418           264          58 %
Progenics                                                               164           758         -78 %
Bayer                                                                    31           420         -93 %
CuraGen                                                                  25            25           0 %
Other Collaborations                                                     80           137         -42 %

Total                                                            $    7,085    $    4,336          63 %

Genentech revenues increased 133% to $6.4 million in the first quarter of 2008 from the comparable period in 2007. This increase is primarily the result of revenues earned under the SGN-40 collaboration agreement with Genentech entered into in January 2007. Under the terms of the agreement, we perform research and development activities over the six year development period of the agreement, the costs of which are reimbursed by Genentech. The $60 million upfront payment and all reimbursement and milestone payments received within the first six years of the agreement will be deferred and recognized as revenue over this development period using a time-based method. In January 2008, Genentech initiated a phase Ib clinical trial of SGN-40 in combination with Rituxan for patients with relapsed follicular or marginal zone non-Hodgkin lymphoma. Initiation of this clinical trial triggered a $4 million milestone payment to the Company under its collaboration with Genentech. Revenues earned under our MedImmune collaboration increased 58% to $418,000 in the first quarter of 2008 from the comparable period in 2007 primarily due to MedImmune paying us a license fee to exercise an option to an exclusive license to a second antigen target in October 2007. Revenues earned under our Progenics collaboration decreased 78% to $164,000 in the first quarter of 2008 from the comparable period in 2007 primarily due to a preclinical milestone earned during the first quarter of 2007. Revenues earned under our Bayer collaboration decreased 93% to $31,000 in the first quarter of 2008 from the comparable period in 2007 due to the completion of the amortization of the upfront technology access fee over the research program term which ended in September 2007.

We anticipate that revenues in 2008 will increase compared to 2007 as a result of amounts earned under our SGN-40 collaboration with Genentech. In addition, we may receive progress-dependent milestones, annual maintenance fees and support fees as our collaborators advance their ADC product candidates through the development process. We expect that future revenues will vary from quarter to quarter depending on the progress made by our collaborators with their product candidates, the level of support we provide our partners, the timing of milestones achieved and our ability to enter into additional collaboration agreements.

Research and development.

Research and development expenses increased 88% to $22.2 million in the first quarter of 2008 from the comparable period in 2007. Our research and development expenses are summarized as follows:

                                                   Three months ended March 31,
    Research and development ($ in thousands)      2008         2007      % change
    Research                                    $    3,951    $   3,465         14 %
    Development and contract manufacturing           8,141        4,840         68 %
    Clinical                                         8,658        2,519        244 %
    Share-based compensation expense                 1,402          981         43 %

    Total                                       $   22,152    $  11,805         88 %

Research expenses increased 14% to $4.0 million in the first quarter of 2008 from the comparable period in 2007 primarily due to compensation expenses related to higher staffing levels. Development and contract manufacturing costs increased 68% to $8.1 million in the first quarter of 2008 from the comparable period in 2007 due to higher compensation expenses related to increased staffing levels and the purchase of additional SGN-40 clinical supply from Abbott Laboratories during the quarter. Clinical costs increased 244% to $8.7 million in the first quarter of 2008 from the comparable period in 2007 reflecting expanded SGN-40, SGN-33 and SGN-35 clinical trial activities and increased compensation and recruiting costs related to increased staffing levels. Share-based compensation expense increased 43% to $1.4 million during the first quarter of 2008 from the comparable period in 2007 reflecting the increase in the number of options outstanding associated with increased staffing levels and a higher per share value of options granted due to an increase in our common stock price.

The following table shows expenses incurred for preclinical study support, contract manufacturing for clinical supplies and clinical trial services provided by third parties as well as milestone payments for in-licensed technology for each of our product candidates. The table also presents unallocated costs which consist of personnel, facilities and other costs not directly allocable to development programs:

                                            Three months ended     Five years ended
                                                March 31,              March 31,
    Product Candidates ($ in thousands)      2008         2007           2008
    SGN-40                                $     4,936   $    690   $          20,567
    SGN-33                                      2,141      1,048              13,685
    SGN-35                                      1,648        384              12,006
    SGN-70                                        230      1,044               7,825
    SGN-75                                        489        126               1,223

    Total third party costs                     9,444      3,292              55,306
    Unallocated costs and overhead             11,306      7,532             149,608
    Share-based compensation expense            1,402        981              10,514

    Total research and development        $    22,152   $ 11,805   $         215,428

Our third party costs for SGN-40 in the first quarter of 2008 increased due to phase I and II clinical trial costs and the purchase of additional clinical material from Abbott Laboratories. We expect third party costs associated with manufacturing and clinical trials of SGN-40 to increase as we continue to expand our SGN-40 phase I and II clinical trials. Under our SGN-40 collaboration agreement, Genentech reimburses us for development activities that we perform under the agreement. Expenses that we incur under the SGN-40 collaboration are included in our research and development expense, while reimbursements of those expenses by Genentech are recognized as revenue over the six year development period of the agreement. Our third party costs for SGN-33 in the first quarter of 2008 reflect costs associated with our phase I and II clinical studies. We expect our third party costs for SGN-33 to increase from amounts incurred in 2007 as clinical activities expand and as a manufacturing resupply campaign begins later in the year at Laureate Pharma. SGN-35 third party costs in the first quarter of 2008 are primarily attributable to our phase I clinical trial and contract manufacturing activities. We expect third party costs for SGN-35 to increase as we expand our clinical trials and initiate contract manufacturing activities for additional clinical supply. Our third party costs for SGN-70 in the first quarter of 2008 decreased primarily due to manufacturing activities conducted by Laureate Pharma during the first quarter of 2007 to perform scale-up and GMP manufacturing of drug product to support clinical trials. We expect third party costs for SGN-70 to decrease from amounts

incurred in 2007 as manufacturing and pharmacology/toxicology activities lessen and initial clinical trials begin. SGN-75 third party costs in the first quarter of 2008 primarily reflect pharmacology/toxicology study costs. We expect third party costs for SGN-75 to increase during 2008 compared to 2007 as a result of higher pharmacology/toxicology and manufacturing costs incurred to enable an IND submission.

Our expenditures on current and future preclinical and clinical development programs are subject to numerous uncertainties in timing and cost to completion. In order to advance our product candidates toward commercialization, the product candidates are tested in numerous preclinical safety, toxicology and efficacy studies. We then conduct clinical trials for those product candidates that may take several years or more to complete. The length of time varies substantially based upon the type, complexity, novelty and intended use of a product candidate. The cost of clinical trials may vary significantly over the life of a project as a result of a variety of factors, including:

• The number of patients who participate in the trials;

• The length of time required to enroll trial participants;

• The number of sites included in the trials;

• The costs of producing supplies of the product candidates needed for clinical trials and regulatory submissions;

• The safety and efficacy profile of the product candidate;

• The use of clinical research organizations to assist with the management of the trials; and

• The costs and timing of, and the ability to secure, regulatory approvals.

Furthermore, our strategy may include entering into collaborations with third parties to participate in the development and commercialization of some of our product candidates. In these situations, the preclinical development or clinical trial process for a product candidate and the estimated completion date may largely be under the control of that third party and not under our control. We cannot forecast with any degree of certainty which of our product candidates will be subject to future collaborations or how such arrangements would affect our development plans or capital requirements.

We anticipate that our research, development, contract manufacturing and clinical expenses will continue to grow in the foreseeable future as we expand our discovery and preclinical activities and advance new product candidates into clinical trials. These expenses will fluctuate based upon many factors including the degree of collaborative activities, timing of manufacturing campaigns, numbers of patients enrolled in our clinical trials and the outcome of each clinical trial event.

The risks and uncertainties associated with our research and development projects are discussed more fully in the section entitled "Risk Factors" that appears in our periodic reports filed with the SEC. As a result of the uncertainties discussed above, we are unable to determine with any degree of certainty the anticipated completion dates or completion costs of our research and development projects or when and to what extent we will receive cash inflows from the commercialization and sale of a product candidate.

General and administrative.

   General and administrative ($ in thousands)      Three months ended March 31,
                                                    2008          2007      % change
   General and administrative                    $    3,110    $    2,427         28 %
   Share-based compensation expense                     825           393        110 %

   Total                                         $    3,935    $    2,820         40 %

General and administrative expenses increased 40% to $3.9 million in the first quarter of 2008 from the comparable period in 2007. General and administrative expenses, excluding share-based compensation expense, increased 28% in the first quarter of 2008 from the comparable period in 2007 primarily due to compensation expenses related to higher staffing levels. Share-based compensation expense increased 110% to $825,000 during the first quarter of 2008 from the comparable period in 2007 reflecting additional stock option awards related to employee additions and higher per share value of options granted due to an increase in our common stock price. We anticipate that general and administrative expenses will continue to increase in 2008 as a result of increased costs related to adding personnel in support of the growth of our operations.

Investment income, net.

Investment income increased 29% to $1.9 million in the first quarter of 2008 from the comparable period in 2007. This increase is primarily the result of higher cash and investment balances due to receiving net proceeds of $97.6 million from our common stock offering in January 2008.

Liquidity and capital resources.

                                                      March 31,       December 31,
   Liquidity and capital resources ($ in thousands)      2008             2007
   Cash, cash equivalents and investments             $  216,057     $      129,584
   Working capital                                    $  147,645     $       90,003
   Stockholders' equity                               $  138,062     $       53,986

                                                           Three months ended
                                                                March 31,
                                                         2008             2007
   Cash provided by (used in ):
   Operating activities                               $  (11,299 )   $       53,396
   Investing activities                               $  (31,997 )   $      (45,901 )
   Financing activities                               $   98,775     $          876

We have financed the majority of our operations through the issuance of equity securities, supplemented by funding received from our collaboration and license agreements. To a lesser degree, we have also financed our operations through interest earned on cash, cash equivalents and investments. These financing sources have historically allowed us to maintain adequate levels of cash and investments.

Our combined cash, cash equivalents and investment securities increased to $216.1 million at March 31, 2008, compared to $129.6 million at December 31, 2007. This increase reflects cash provided by financing activities, which included net proceeds of $97.6 million from our common stock offering in January 2008. Our working capital was $147.6 million at March 31, 2008, compared to $90.0 million at December 31, 2007. We have structured our investment portfolio to align scheduled maturities of investment securities with our working capital needs. Our cash, cash equivalents and investments are held in a variety of interest-bearing instruments and subject to investment guidelines allowing for investments in U.S. government and agency securities, high-grade U.S. corporate bonds, taxable municipal bonds, mortgage-backed securities, auction-rate securities, commercial paper and money market accounts. We currently hold auction-rate securities valued at $14.5 million that have failed at auction and are currently illiquid. Liquidity of these investments is subject to either a successful auction process, redemption of the investment, or a sale of the security in a secondary market. As of March 31, 2008, the failed auction-rate securities carry "AAA" ratings and continue to pay interest according to the stated terms. Based on our available cash, expected operating cash requirements, our belief that our holdings in auction-rate securities can be liquidated within one year through a successful auction or redemption at par and our ability and intent to hold such investments until liquidation, we believe that the current illiquidity of these investments is temporary. However, we will reassess this conclusion in future reporting periods based on several factors, including the continued failure of future auctions, failure of the investment to be redeemed, deterioration of the credit rating of the investment, market risk and other factors. Such a reassessment may change the classification to long-term investments or result in a conclusion that these investments are more than temporarily impaired and result in a write down in the fair value of these investments.

Included in cash provided by or used in investing activities are capital expenditures of $1.1 million in 2008 primarily related to leasehold improvements, furniture and fixtures in support of our expansion into our new building which we began occupying in December 2007. In addition, in 2008 lab equipment was purchased in support of our research and development activities. Capital expenditures of $886,000 in 2007 consisted primarily of lab equipment and tenant improvements in support of our research and development activities. We expect that our 2008 capital expenditures will decrease compared to 2007, reflecting lower leasehold improvements.

At our currently planned spending rate, we believe our current financial resources in addition to the expected fees and milestone payments earned under the SGN-40 collaboration agreement with Genentech and other existing collaboration and license agreements will be sufficient to fund our operations into 2010. However, changes in our spending rate may occur that would consume available capital resources sooner, such as increased manufacturing and clinical trial expenses preceding commercialization of a product candidate. We may seek additional funding through some or all of the following methods: corporate collaborations, licensing arrangements, public or private equity or debt financings. We do not know whether

additional capital will be available when needed, or that, if available, we will obtain financing on terms favorable to our stockholders or us. 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, which may adversely affect our business and operations.

In 2008, we expect our revenues to range from $30 million to $33 million, which reflects the earned portion of the deferred revenue and milestone payments and funded research payments expected to be received from Genentech, as well as revenues expected to be earned under our existing ADC collaborations. We anticipate that our research, development, contract manufacturing and clinical expenses will continue to grow in the foreseeable future as we expand our discovery and preclinical activities and advance new product candidates into clinical trials. In 2008, we expect our operating expenses to range from $125 million to $140 million. In particular, we expect that clinical trial costs and manufacturing costs for SGN-40, SGN-33 and SGN-35 will increase in 2008 compared to 2007. Expenses will fluctuate based upon many factors including the degree of collaborative activities, timing of manufacturing campaigns, numbers of patients enrolled in our clinical trials and the outcome of each clinical trial. We expect that non-cash expenses in 2008 will be in the $12 million to $15 million range, the majority of which relates to share-based compensation expense. This estimate is based on a number of assumptions, including future stock prices and the number and timing of option grants, and may therefore change. We expect that net cash used to fund our operating activities in 2008 will be in the range of $75 million to $85 million. We expect to end 2008 with more than $140 million in cash and investments. Certain external factors may influence our cash spending including the cost of filing and enforcing patent claims and other intellectual property rights, competing technological and market developments and the progress of our collaborators.

Fair Value Inputs

We adopted SFAS No. 157, Fair Value Measurements on January 1, 2008. Fair value measurements reflect the assumptions that market participants would use in pricing an asset or liability based on the best information available. See Note 2 and Note 9 to the Condensed Consolidated Financial Statements.

We value our available-for-sale securities by using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The types of instruments valued based on quoted market prices in active markets include most U.S. government and agency securities. The types of instruments valued based on quoted prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include investment-grade corporate bonds, taxable municipal obligations, commercial paper and auction-rate securities. Management assesses the inputs of the pricing in order to categorize . . .