ADC Therapeutics Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 11 speakers on the call.

Operator

Welcome to the ADC Therapeutics Third Quarter 2023 Financial Results Conference Call. My name is Kathy, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. During the question and answer session, if you have a question, please press star then 11 on your touch tone phone.

Operator

I'll now turn the call over to Eugenia Litz, Vice President of Investor Relations and Corporate Communications. Eugenia, you may now begin.

Speaker 1

Thank you, operator. This morning, we issued a press release announcing This release is available on the ADCP website at ir.adctherapeutics.com under the Press Releases section. On today's call, Amit Malik, Chief Executive Officer Kristin Harrington Smith, Chief Commercial Officer Mohammad Zaki, Chief Medical Officer and Pepe Carmona, Chief Financial Officer, We'll discuss recent business highlights and review our Q3 2023 financial results before opening the call for questions. Before we begin, I would like to remind listeners that some of the statements made during this conference call will contain forward looking statements within the meaning of the Safe Harbor provisions of the U. S.

Speaker 1

Private Securities Litigation Reform Act of 1995. Examples of forward looking statements include those related to our future financial and operating results, the impact of our updated strategic path forward, including our commercial field strategy, portfolio prioritization and capital allocation and restructuring plan, Our ability to achieve our guidance for 2023 operating expenses as well as our future cash requirement projections, future revenue growth, Market acceptance, competition and volume growth for our products, product launches and market share for our products, Either alone or through our foreign partners, timing and results of ongoing and future development programs and clinical trials for our products, Either alone or in combination with our partner product, FDA and foreign regulatory authorities' actions and potential regulatory approval for our products, either alone or in combination with our strategic partners products, future strategic partnerships and business development efforts, These forward looking statements are subject to certain risks and uncertainties, and actual results could differ materially. They are identified and described in today's press release, in the company's slide presentation on Slide 2 and in the company's filings with the SEC on Form 20 F and as updated in ADCT's recent periodic filings on Form 6 ks.

Speaker 1

ADCT is providing this information as of the date of today's conference call and does not undertake Any obligation to update any forward looking statements contained in this conference call as a result of new information, future events or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward looking statements. Today's presentation also includes non IFRS financial measures. These non IFRS measures Have limitations as financial measures and should be considered in addition to and not in isolation or as a substitute for The information prepared in accordance with IFRS. You should refer to the information contained in the company's 3rd quarter earnings release For definitional information and reconciliations of historical non IFRS measures to the comparable IFRS financial measures, It is now my pleasure to pass the call over to our CEO, Amit Malik.

Speaker 1

Amit?

Speaker 2

Thanks, Eugene, and thank you all for joining us. Starting with ZINNOSA, we had a challenging quarter with net sales of $14,300,000 down 33% year over year. The decline was attributable to the extended disruption following the field force restructuring and increasing competitive environment and higher gross to net deductions. We continue to believe that restructuring the commercial model was necessary to fully capture the longer term value of XERMATA And we expect to see progressive growth in the coming quarters. Kristen will provide further detail shortly.

Speaker 2

Turning to our clinical development program for ZEMONTA. Enrollment in our ongoing Phase 3 LOTUS-five confirmatory trial in combination with rituximab And second line plus DLBCL is progressing well. In September, we shared updated safety run-in results from LOTUS-five at the SoHo Congress, Which showed signs of durable responses and importantly no new safety signals. In Japan, our partner Mitsubishi Tanabe has now joined the LOTUS Enrollment continues to progress as planned in our Phase 2 LOTUS-seven clinical trial of ZEMATA In combination with bispecifics for the treatment of DLBCL, follicular lymphoma and marginal zone lymphoma, we now expect We also look forward to expanding the clinical evidence base for ZEMONTA with upcoming data from several ongoing investigator initiated trials. These include the oral presentation from the University of Miami of a study exploring ZENMATA in combination with rituximab in follicular lymphoma at ASH in December.

Speaker 2

We also expect monotherapy data from an investigator initiated trial in marginal zone lymphoma next year. Overall, these anticipated data updates are especially exciting as we see the current approved indication in third line plus DLBCL As a stepping stone to expanding the potential of XERMATA to earlier lines of therapy in combination in DLBCL and across other lymphomas. Turning to the remainder of our pipeline, we continue to strategically invest in our higher priority portfolio programs. We look forward to several potential value creating data readouts in the first half of twenty twenty four. In particular, We expect to share initial Phase 1 data from ADCT-six zero one targeting Axle and from ADCT-nine zero one targeting CAG-one.

Speaker 2

We also expect additional Phase 1 data to be shared from ADCT602 targeting CD22. Lastly, I want to highlight our continued progress in increasing operating efficiencies throughout the organization. This resulted in a 23% year over year decrease in operating expenses in the quarter. Going forward, we will continue pursuing approach in our capital allocation to ensure that we maintain our expected cash runway to mid-twenty 25. To summarize, we're confident that we have the right team and strategy in place to progressively drive Zimonta growth.

Speaker 2

Our pipeline has several potential meaningful catalysts over the next 12 months and we believe our expected cash runway provides us with the ability to execute our business plan. The team has a clear roadmap for execution and I remain confident that we are on track To unlock the tremendous value in the company. With that, I'd like to turn the call over to Kristin for a commercial update. Kristen?

Speaker 3

Thanks, Amit. 3rd quarter net sales of ZINLANTA decreased by 33% year over year, Impacted by disruption from the field force restructuring and the evolving competitive environment, particularly with the launch of bispecifics, We also faced gross to net headwinds from the Medicare Part B discarded drug policy. We continue to believe That restructuring our commercial model was critical to fully capture the longer term value of ZEMLANTA. In particular, with our realigned field force, I am confident that we are now set up to most effectively reach treaters in the community where increasing awareness and trial is a top priority. While there was significant disruption during this period as around half of the field force was either entirely new or in new roles, I am happy to report that we are now fully ramped up and seeing strong customer engagement.

Speaker 3

This is an important component of our strategy to keep Zlanz at top of mind in the crowded DLBCL market. As you see on this chart, call volume has recovered to pre restructuring levels with an approximate 40% increase in August September compared to the prior 4 months. Call volumes are one of the key leading indicators with the commercial impact typically lagging by a couple of months. This explains why we felt the brunt of the restructuring in the 3rd quarter And also why we expect to see a return to growth over the coming quarters, particularly as we look into 2024. The pace of that growth will also depend on the evolving competitive dynamics.

Speaker 3

Despite the evolving competitive landscape, we believe XENLANTA has a clear role to play in the treatment of relapsed refractory CLBCL today and over the long term. This is a highly fragmented market with no standard of care in the 3rd line, 3rd line plus setting and with different dynamics between the academic setting and the larger community opportunity. Biospecifics have seen early adoption in the academic setting. However, we are confident that ZINLANTA will continue to play a role for patients who are either not suitable candidates for bispecifics or CAR T or for patients who have progressed on these complex therapies. We believe maintaining a strong presence in this setting is vital as the experts in the academic centers are critical in recommending ZENLANTA to the community treaters who patients are unwilling or unable to access complicated therapies Like CAR T and bispecifics.

Speaker 3

In addition, we have seen increased use of polotuzumab All lines of DLBCL following their first line approval. However, as it becomes more embedded as a frontline treatment, Over time, we believe this should open up further opportunity for Zimnata in the later lines. While it's important we maintain a solid base And influence in the academic setting, we continue to see the majority of the growth opportunity for XINLASA in the community and we are focusing our resources and efforts accordingly. For physicians in the community setting, Xelantra represents a One of the major obstacles we face is that prescribing behavior in the community is slow to change due to the entrenchment of older and or less effective agents. We understand the challenges and I am confident that we have the right team and the right strategy in place to effectively position XINLANTA now as a monotherapy and in the future as we look to move to earlier lines of therapy in combination.

Speaker 3

With that, I'll turn the call over to Mohamad.

Speaker 4

Thank you, Christen. It is my pleasure to share an update on the pipeline. We continue to focus our efforts and resources on the programs, which we believe have the highest potential to drive value. Enrollment in the Phase III LUTASIFE study is progressing well. As a reminder, this trial examines the combination of ZENLONTA And dituximab in second line plus DLBCL patients not eligible for transplant.

Speaker 4

At the SOHO Congress in September, updated safety lead in data from LUTAS-five demonstrated an overall response rate of 80%, A complete response rate of 50% and a median duration response of 8 months with no new safety signals. This study includes patients that are difficult to treat, Double hit, triple hit, primary refractory, refractory to the last treatment, which represents the real world patient demographic. While encouraging, we recognize that these data are from 20 patients cohort Out of the total, planned 3 50 patients. Moving to LUTUS-seven, This is our study to explore novel combinations of ZENLONTA with Roche's bispecific glufitumab or musentuzumab In relapsed or refractory non Hodgkin lymphoma, including DLBCL, Follicular lymphoma and Marginal Zone Lymphoma. There is a tremendous amount of interest In this study from physician community.

Speaker 4

And if successful, we believe this novel combination Could change the non Hodgkin lymphoma treatment paradigm. We look forward to sharing initial data in the first half of next year. I would like to highlight that beyond our own clinical studies, we are encouraged

Speaker 5

to see

Speaker 4

Substantial interest in the investigator community to explore XENLONTA in novel combinations And across multiple types of B cell malignancies. We believe this will be important in identifying new routes Optimizing the potential of Zalanda. Of note, I would like to highlight an ASH abstract published last from University of Miami investigator initiated trial exploring ZENLONTA in combination with lipoximab In high risk relapsed or refractory follicular lymphoma, the combination was well tolerated With a 95% overall response rate at week 12 and at week 21, And 86% metabolic complete response rate. This is very encouraging, And we look forward to additional details in the oral presentation. Turning to the rest of the pipeline beyond Zalanta, starting with ADCT-six zero one targeting axles.

Speaker 4

Dose escalation is proceeding in patients with non small cell lung cancer and sarcoma. Importantly, the maximum tolerated dose has not yet been reached. Based on preclinical data, we are adding a pancreatic cancer cohort with an enriched patient population. In parallel, we are working towards finalizing the immunohistochemistry assay for a possible biomarker approach. We continue to expect to share initial data from this prioritized Phase 1 trial in the first half of twenty twenty four.

Speaker 4

Turning to the ADCT-nine zero one targeting KAG-one, Dose escalation is also proceeding. As with 601, We are completing validation of the immunohistochemistry assay, and we expect to share initial data in the first half of twenty twenty four. Finally, dose escalation and expansion are proceeding in the Phase I trial of ADCT-six zero two targeting CD22 in patients with relapsed or refractory ALL In collaboration with MDNC Cancer Center. New clinical trial sites are being added to help accelerate enrollment. We expect additional data from the trial to be shared in the first half of twenty twenty four.

Speaker 4

I look forward to providing further updates on the progress of our pipeline over the coming months. And with that, I will turn the call over to Pepe to give a financial update. Pepe?

Speaker 6

Thank you, Mohammed. Before I get into the financials, I would like to reiterate our continued progress in achieving operational efficiencies throughout the business. We're confident in keeping operational expenses in both 2023 2024 below 2022 levels. This is crucial to funding the development of our key pipeline programs and maintaining our cash runway into mid-twenty 25. As for Q3 performance, starting with our balance sheet, as of September 30, we had cash and cash equivalents $310,000,000 representing a $37,000,000 decrease from our position at the end of the second quarter.

Speaker 6

Moving to the P and L. As you already heard, Zimlonta net sales were $14,300,000 in the 3rd quarter. Moving down the P and L, our combined operating expenses on a non IFRS basis, which This mainly reflected the operating efficiencies I referred to earlier. Together with reduced R and D expenditures due to focused In our clinical studies and lower selling and marketing expense. You can find the reconciliation of IFRS measures to non IFRS measures Moving to the bottom of the P and L.

Speaker 6

On an IFRS basis, we reported a net loss of 40 $7,800,000 for the 3rd quarter or $0.58 per basic and diluted shares. Finally, this slide highlights the potential value driving milestones, which we expect in 2024. We're looking forward to a catalyst rich year ahead with initial data from several key programs in the first half, More mature data in the second half of the year and completion of LOTUS-five enrollment during the year. We're also actively pursuing partnership opportunities, and we'll continue to drive our productivity initiatives to enable capital allocation toward the most Promising nearer term value drivers. The potential catalyst in 2024 will shape the company's future to further serve patients and be able to create additional value.

Speaker 6

With that, I will turn the call back to Amit for closing remarks. Amit?

Speaker 2

Thank you, Kristen, Mohammed and Pepe. To conclude, we are confident we have a clear roadmap as well as the capabilities to execute on strategy to drive future value creation for all our stakeholders. We are excited about the future and look forward to keeping you updated on our progress. Now the team will be available for questions.

Operator

Operator? Yes. Thank you. We will now begin the question and answer session. If you wish to be removed from the queue, please press star 11 again.

Operator

If you're using a speakerphone, you may need to pick up the handset first before pressing

Speaker 7

the numbers.

Operator

Gregory Renza from RBC Capital Markets is on the line with a question.

Speaker 8

Hi. Thank you so much for I guess the first question I have is On Selanta, I'm just I noted that you mentioned that you expect growth to return over the next few quarters. Just curious if you can get to More on the granularity, like how in terms of the quarters or which point in 2024 you see as a potential inflection? And to which point that you do you anticipate to provide guidance on ZULRANTA again? And then I have a follow-up.

Speaker 2

Yes. Thanks for the question. Yes, I think as you can see, there are three reasons for the performance in Q3. One was, of course, the disruption. As we had mentioned before, the time and depth of which we disrupted the field force to get to the right commercial model It was longer and so we expected and saw a disruption happen in Q3.

Speaker 2

We also saw it at a time of increasing competitiveness from new product entrants. And then finally, we had higher gross to net, especially when you look year over year, there's quite a bit higher gross to net in this quarter versus the prior year. So those are the three factors for the performance. Also, as you know, we adjusted the commercial model knowing that Biospecifics and other new entrants would play a bigger role in the academic setting that the real opportunity of Biospecifics and

Speaker 9

other new entrants would play a bigger role in the academic setting that the real opportunity for Zonta to

Speaker 2

grow if we're going to be in the community. And so we reoriented the model To be able to win in the community. The field force is now back up and running. As of August, our call lines have returned back to normal. There's always a lag between activity and getting a new team and a new model up and running and when you see the impact, but we believe we will steadily see the impact And drive growth over the coming quarters.

Speaker 2

At this time, we're not providing any further guidance.

Speaker 8

Got it, understood. And then my second question is on LOTUS 7. I was wondering if you can remind us In terms of the synergy with bispecific, do you anticipate to see that more on the response rate On the durability side and then what's the internal bar for advancing this program and Would we get the clarity with the data that you will share in the first half next year? Thank you.

Speaker 4

Yes. Thanks for your question, Greg. And actually, we see the potential of XENONTA to be The combination of agent storage is like a backbone therapy. With the combination with bispecific, each one separately have With distinct mechanism of action and no one overlapping toxicities. The combination seems to be very interesting.

Speaker 4

The study of BRUTUS-seven is progressing very well. We have not seen Safety issues for the patients' dose so far is a dose escalation. We're continuing to dose escalate. And hopefully, next year, we'll be able by mid next year approximately to share More information on the dose escalation and possible some expansions. The uniqueness of this is that it could be The transformation of combination in the landscape of non Hodgkin lymphoma as a whole because the study includes 3 different types of diseases, DLBCL, follicular and Marginal Zone Lymphoma.

Speaker 4

So Investigators are very excited about it. We received interest and Request to be part of the study almost on weekly basis. In addition, we believe we could Make a major change in the course, as I mentioned, the landscape of LTCL with this combination.

Speaker 2

Yes. And then to get your question around what does it look like, obviously, the fact that they can combine safely, yes, the first and foremost thing that we're testing is I know with efficacy, you want to see higher response rates than you would see with either agent alone. I think they're both highly active, so to get to See our rates that are higher than hedgerowin and with durable response.

Speaker 8

Got it. Thank you so much.

Operator

Thank you. One moment for our next question. Boris Peaker with TD Cohen is on the line with a question.

Speaker 9

Great. Thanks for taking our question. This is Nick on for Boris. So my first one is, can you provide a little more color on the new commercial strategy and how Like what changes you've made to focus more on the community setting rather than on the academic setting? And then the second question is on gross to net, Was it a higher gross to net for the year, like the highest gross to net that you've had for the year?

Speaker 9

And do you expect this gross to net to continue moving on like years to come, quarters to come? Thanks.

Speaker 3

Hi, Nick. Thanks for the question. So I'll start with the changes to the commercial model. And like Amit said, we absolutely believe that changing how we go to market was essential, particularly with the new competitive environment. Some of the key changes that we made were really adapting our model to local healthcare ecosystem.

Speaker 3

One of the key advantages that we have with this new model is that we have one well that is fully dedicated to driving demand in the community. These teams work together at the local level to make sure that they are aligned with how the referral patterns work. In the academic setting to the community treaters, so essentially who these community treaters turn to for advice Or where they would generally send their patients. So making sure that we can leverage that advocacy from the academic center to the community treaters is essential in this model. And we also overall improved the collaboration between the teams.

Speaker 3

And with that, I can hand it over to Pepe.

Speaker 6

Yes. Thanks for the question. So on gross to net, we communicated at the beginning of the year that there were 2 elements that were going to impact gross to net in 2023. Compared to 2022, one was the GPA contracting and that would be in the 2 to 3 percentage points year over year. And the second one is in Medicare Part B Disrupted Drug Policy, which we said it would be between mid to high single digits.

Speaker 6

Those two elements are going to impact every quarter and have impacted the year to date numbers as well as Q3 numbers. So there's going to be always fluctuation from quarter to quarter, but those are the key drivers. I cannot comment on the specific quarter. We don't disclose that data, but that's the main driver of the increase versus prior year.

Speaker 2

Yes. And

Speaker 9

the one

Speaker 2

thing I'd just add to what Christian said about the commercial model is, Before we had people that were sort of working independently, and you have systems of care that cut across territories. And when you're working independently, Very tough to penetrate a more rare disease like third line fluff DLBCL if you're working in isolation. Now we have small focused teams That cut across academic and community, you do a lot of the pull through that she was talking about. So those teams only got up and running in August. You don't see the results in the 1st 2 months completely, but I believe they're really hitting their stride right now, and we'll start seeing the impact over time.

Speaker 9

Understood. Thanks very much.

Operator

Thank you. One moment for our next question. Noreen Quipio From Capital One Securities is on the line with the question.

Speaker 7

Hi, good morning. Thanks for taking my question. I guess the first one that I have is either for Amit or Mohammad. So you have that ASH presentation, oral Presentation from the IST study of ZINLANTA with rituximab and follicular lymphoma, so seeing yearly results, are you considering a move into that Setting now or is it too early?

Speaker 4

Thanks, Irene. The population of this study, I want to highlight that is Very difficult to treat patient population in lymphoma, which we call POD24 high risk patients. So The data we observed in this study is really considered to be outstanding in the field of follicular lymphoma, Specifically in LAPZIPRACUCI, when you're talking about 95% overall response rate And 86% complete response, it doesn't get any better than that in the spatial population. We are very excited, and we are actually the investigators who are doing this study We are very excited about the data and encouraged by it. We will expand the study to confirm the signal, And also, we plan to share this information with several investigators, not just the people who did it, others after ASH and during ASH.

Speaker 4

And based on that, we will determine the plans to move forward, and we will definitely inform the market. But no matter what the plan is, We will be doing it in the context of the disciplined capital allocation strategy. And also want to remind you that this is a Step towards LUTUS-seven, which actually in combination with another CD20, which about this time is much more And the follicular lymphoma is also included in lutacifin. So it's a good initial strategy to See what the data looks like in combination with rituximab and then hopefully, it will transition into lutuximab. Yes.

Speaker 2

And I think if you take a step back, Yes. Right now, we're playing with ZENONTA in almost a small setting. We're playing a 3rd line plus DLBCL. With LOTUS V and LOTUS VII, we're to earlier lines in DLBCL, but also with some of these studies, like you saw the follicular study now with IIT and with LOTUS-seven, we're expanding to other endolymphomas like follicular and marginal So we're in the smallest part of this. And we keep getting encouraged by the positive data that we start seeing in combinations in these other settings.

Speaker 2

And I think that's going to open up the much bigger opportunity that we see for XERMATA.

Speaker 7

All right. That's really helpful. Thank you. And I guess one more and this is probably for Mohammed. This is on the 601.

Speaker 7

You mentioned today in your prepared remarks that You're now including a pancreatic cohort. So, can you just talk about what you've seen that got you excited to include that now?

Speaker 4

Yes. As you might expect, we continue to develop our bioassay and patient selection strategies. And as we're testing more tissues and more things, we observed that a high expression in pancreatic cancer. And based on our overall strategy to maximize and prioritize areas of potential success, we made the decision to increase the number of cohorts and expand to another therapeutic area, such as pancreatic cancer with a patient Englishman's strategy, and hopefully that's in addition to sarcoma and osmosis lung cancer.

Speaker 7

Okay, great. That's all for me. Thank you.

Operator

Thank you. One moment for our next question. Kelly Shi from Jefferies is on the line with the question.

Speaker 10

Hi, good morning. This is Yun for Kelly. Thanks very much for taking questions. So The first question is on the LOTUS-seven data in first half twenty twenty four. Is it reasonable to expect that The number of patients, the amount of data will be similar to what you reported from LOTUS-five?

Speaker 10

And the second question is, Sorry, if I missed it, but did you say that data in first half of twenty twenty four from 601-nine zero one will potentially have biomarker Information included. Thank you.

Speaker 4

Regarding GLUTUS-seven, as you know, there's a dose escalation And we, at this point, not sharing a specific number of patients. However, when we share the data, we'll be giving context around it, And we'll be very well explaining it. In terms of other earlier programs like Axo and CAG, We continue to do ESKELITE, and we are hoping to be able to see maybe a possible retrospective Analysis in terms of bioassays or expression, but the validation of the immunoskemency assay in both programs is And we are not yet pre selecting. We're doing retrospective analysis in the current available assay. Yes.

Speaker 4

And then just

Speaker 2

one thing to add to LOTUS-seven, just to give you some context on numbers. If you think about it, each dose cohort, there's 3 different dose cohorts, Assuming again safety thresholds are met. At each dose cohort, we're doing 6 patients because in LOTUS-seven, we're studying the combination with both MOSUN and GLOFIT. So there's 3 patients in each. So theoretically, if you get through all three doses, that could be up to 18 patients, right, if we get through all three dose cohorts.

Speaker 2

We believe we'll be through dose escalation and potentially, into expansion in the first half of the year. So just to give you a context of Obviously, as the year goes on, we're going to keep getting more and more patients and more and more follow-up in terms of the data. So we're going to have meaningful data in the first half of the year and probably even more meaningful data as you get into the second half of the year. Great. Thank you.

Operator

Thank you. One moment for our last question. Brian Chang with JPMorgan is on the line with a question.

Speaker 5

Hey, guys. Good morning. Thanks for taking my question. My first one is on just the trajectory of Zolanda. Can you quantify or give us a qualitative view on how much of the disruption is due to competition versus Restructuring of the commercial organization.

Speaker 5

How should we think of the underlying demand for Solanta? And is the trajectory normalizing? And How do you feel about the next quarter or 2? And I have a follow-up. Thank you.

Speaker 3

Sure. So it's difficult to quantify the impact from each. What we do know is that the majority As the decline was due to the prolonged disruption from the field force restructuring, we feel that we felt the brunt of that in Q3. At the same time, the competitive environment intensifies, right? And as anticipated, bispecifics are playing a growing role in the academic setting.

Speaker 3

That is why our strategy is to focus on growing the opportunity in the community. That being said, ZINLANTA will continue to play a role in the academic And the good news is we are now set up with our model to capitalize on that opportunity in both settings. We feel that we've got the right strategy and the right team in place, and we'll see the impact of their impact strengthen in the coming quarters.

Speaker 5

And maybe just on competition. Can you talk about How the use of Salant has been changed since the entry of bispecific and also the increasing use of CD19 CAR T in the second line? And then just to follow-up on your comments related to academic versus community doctors. How do you see about The split of academic versus community doc change, the ratio between the two change Over the next couple of quarters, at what point do you think that you will be at a good time to a good point to guide The Street on where What the next year will look like for Solanta sales? Thank you.

Speaker 3

Sure. So, I'm going to break it down just a little bit. So, we've seen that bispecifics have had an increasing impact in the academic setting As their launch progresses, we see them as being used in the post CAR T Patient or in some cases where patients won't necessarily get to CAR T. So that's where we've seen their early use. And as We've seen the majority of these really in those academic settings because they are equipped to handle complex therapies like bispecifics.

Speaker 3

At the same time, we also know that not every patient will get to that academic center, Whether they don't have access to it or they are unwilling to travel and commit to Going to an academic center, whether it's for a CAR T or a bispecific, we see that pattern is very similar. And that is what opens up the opportunity for a product like ZENONTA in the community, where it is an off the shelf option that is accessible You had a question around CAR T in the second line, we do see an increase in the utilization of CAR T as it becomes standard of care in the second line. But again, while it is increasing, we also continue to hear from physicians that it is Still a challenge for patients to get access to these complex therapies. There are different stats that are shared, whether it's 25%, 35% Patients who will get access to them. And then the let's see,

Operator

the last question. When do we feel

Speaker 3

it would be a good point to give guidance on?

Speaker 2

Yes. I mean, at this point, we're not adding guidance. Brian, there's one more thing I just want to say about the bispecifics. One is not every patient could tolerate a biosimilar after a CAR T. I mean once you fail the CAR T, so see you're Pretty sick.

Speaker 2

Those patients are pretty sick at this point. So for those who get tolerated, I think they're likely going to get a bispecific in the academic center, but some patients can't. And A treatment like ZEMONTA with a cleaner safety profile and also very fast action, very fast time to assess response It's critical for those patients. But also, the majority of patients are going to progress post the bispecific. So also in the 4th line setting, that starts to open up As well.

Speaker 2

So there's clearly a place for ZENMATA in academic setting. It's going to be less than what it was before, and we knew that was going to happen, which is why our strategy has been to adjust the model to capitalize on a bigger opportunity, which is growth in the community.

Speaker 7

Great. Thank you so much.

Speaker 5

That was very helpful. Thank you.

Operator

Thank you. There are no further questions at this time, and I will now turn the call back to Amit.

Speaker 2

Well, I just want to thank everyone for joining. Thanks for your interest in the company, and thanks for joining the quarterly update. We look

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Key Takeaways

  • In Q3, ZINLANTA net sales fell 33% year-over-year to $14.3 million due to extended field-force restructuring, growing competition and higher gross-to-net deductions, but management expects growth to resume as the restructured commercial model fully ramps up in the coming quarters.
  • Phase 3 LOTUS-5 safety run-in data showed an 80% overall response rate and 50% complete response rate (median duration of response 8 months) in difficult-to-treat DLBCL patients with no new safety signals, and Phase 2 LOTUS-7 combining ZINLANTA with bispecifics is enrolling on schedule with initial data expected in H1 2024.
  • Key pipeline milestones in H1 2024 include initial Phase 1 data for ADCT-601 (AXL-targeting), ADCT-901 (CAG-1-targeting) and ADCT-602 (CD22-targeting), with ADCT-601 also adding a pancreatic cancer cohort and ongoing immunohistochemistry assay validation for potential biomarker-driven patient selection.
  • Operational efficiencies drove a 23% year-over-year reduction in operating expenses in Q3, and the company reconfirms that 2023–2024 operating expenses will remain below 2022 levels, underpinning a cash runway into mid-2025 with $310 million in cash and equivalents as of September 30.
  • The commercial strategy has been realigned to integrate academic and community teams, resulting in call volumes recovering to pre-restructuring levels (+40% in August–September) and positioning ZINLANTA for stronger uptake in the fragmented community oncology setting.
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ADC Therapeutics Q3 2023
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