U.S. regulators on Tuesday approved Seattle Genetics Inc.'s Adcetris as part of a chemotherapy cocktail to treat advanced Hodgkin's lymphoma in newly diagnosed patients, making it the first new treatment in over 40 years.

The widely expected approval opens up a key market for Seattle Genetics, which expects the drug to bring in $1 billion in sales within the next few years.

"We're 100 percent launch-ready," Chief Executive Clay Siegall said in an interview ahead of the decision.

The company has hired 30 new sales representatives to market the drug to doctors in community health centers who can prescribe Adcetris as an outpatient medicine, Siegall added.

Importantly, the Adcetris cocktail substitutes a chemotherapy drug in the current standard-of-care combination that has been tied to potentially fatal lung toxicity.

"There's a safety benefit as well as an efficacy benefit," RBC Capital Markets analyst Kennen MacKay said ahead of the regulatory decision.

Many investors were hoping for a broader label for Adcetris that would have allowed the drug to be used by advanced cancer patients and brought in more prescriptions, analysts said earlier this month.

Seattle Genetics' stock fell 1.5 percent on Tuesday afternoon after the decision, which gave Adcetris approval only for patients with Stage III or IV of the disease.

"This is not an easy-to-make drug and ... the existing standard of care was pretty good as it is. Whoever comes after Adcetris will have that much of a tougher hurdle to beat," Guggenheim Securities analyst Adnan Butt said earlier this month.

About 8,500 cases of Hodgkin's lymphoma, a type of blood cancer, will be diagnosed in the United States this year, according to the American Cancer Society.

About half of all newly diagnosed patients have Stage III or IV disease, Seattle Genetics said.

RBC's MacKay expects Adcetris to bring in $1.45 billion in peak sales in 2030, assuming some two-thirds of patients use the drug and its price keeps increasing each year.

The drug already has approval in the U.S. to treat other forms of blood cancer as well as patients with Hodgkin's lymphoma who have already received a stem cell transplant or two chemotherapy treatments.

Adcetris had sales of $307.6 million from the U.S. and Canada last year.

Adcetris is also being tested in previously untreated patients with T-cell lymphoma and in combination with Bristol-Myers Squibb's blockbuster cancer drug Opdivo.