ADC Therapeutics Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 13, 2024

There are 12 speakers on the call.

Operator

Thank you, operator. This morning, we issued a press release announcing our Q4 and full year 2023 financial results and business updates. This release is available on the ADCT website at ir. Adc therapeutics.com under the Press Releases section. On today's call, Amit Malik, Chief Executive Officer Kristen Harrington Smith, Chief Commercial Officer Mohammad Zaki, Chief Medical Officer Patrick Van Berckel, Chief Scientific Officer and Pepe Carmona, Chief Financial Officer, will discuss recent business highlights and review our 4th quarter and full year 2023 financial results before opening the call for questions.

Operator

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. Private Securities Litigation Reform Act of 1995. These forward looking statements are subject to certain known and unknown risks and uncertainties, and actual results, performance and achievements could differ materially. They are identified and described in today's press release, in the accompanying slide presentation on Slide 2 and in the company's filings with the SEC, including Form 10 ks, 10 Q and 8 ks.

Operator

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 GAAP financial measures. These non GAAP 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 GAAP. You should refer to the information contained in the company's Q4 earnings release for definitional information and reconciliations of historical non GAAP measures to the comparable GAAP financial measures.

Operator

It is now my pleasure to pass the call over to our CEO, Amit Malik.

Speaker 1

Amit? Thanks, Nicole, and thank you all for joining us today. 2023 was a year of prioritization and focus for the company. We made some tough decisions and firmly believe we are well positioned for success in 2024 and beyond. With enhanced talent in place, we implemented a new corporate and capital allocation strategy, focusing our resources and energy on our most advanced and highest potential clinical value drivers.

Speaker 1

As you can see here, we enhanced commercialization efforts, prioritized our pipeline, expanded our research platform and reduced organizational costs. This reset in 2023 was critical to enable our strategy moving forward. There are 2 core pillars to this strategy, which we believe will unlock the tremendous value we see in this company. Our first pillar and primary focus is hematology. Within this, we have a derisked asset in ZERLYNONTA, the key product in our prioritized portfolio, which we expect to carry the company through to profitability.

Speaker 1

We are deploying the majority of our capital to the ZENONTA franchise to commercialize our existing third line and third line plus DLBCL indication and to pursue the substantially larger potential opportunity in earlier lines of DLBCL therapy and indolent lymphomas. We believe these potential opportunities will help expand the ZENONTA franchise and have the potential to generate annual peak sales in excess of $500,000,000 The second pillar of our strategy is grounded in our emerging solid tumor pipeline. Our most advanced asset is ADCT-six zero one and behind this we have a number of exciting next generation antibody drug conjugates, which potentially address significant unmet patient needs. Driven by our novel platform, we see the potential to advance a broad portfolio of differentiated ADCs against solid tumor targets of interest. To capture this opportunity, our ambition is to progress multiple assets in parallel internally and externally supported by non dilutive funding from partners.

Speaker 1

Across each of our presenters today, you will hear about how we are putting this strategy into action whether through enhancing our commercial execution, prioritizing and accelerating our most promising pipeline assets, advancing high potential early stage research programs, or through our capital allocation strategy. Now I'd like to expand briefly on the substantially larger potential opportunity that I just mentioned for ZYNOLTA in earlier lines of DLBCL therapy and indolent lymphomas. Pending the results of the LOTUS-five and LOTUS-seven studies, our goal is to expand usage of ZERMONTA into second line and second line plus DLBCL. Furthermore, if data supports expansion into the second line and second line plus settings of follicular lymphoma and marginal zone lymphoma, we believe this would further increase the potential for this product. Now I'd like to share a snapshot of the business updates you'll hear about today.

Speaker 1

I'm pleased to confirm that XERMATA achieved double digit sequential sales growth in the Q4 with revenues of $16,600,000 Importantly, we saw a resumption of growth both in the community and in academic centers. We are also delighted to share positive pipeline news at the start of this year. For our LOTUS-seven study of ZENLANTA in combination with bispecifics, we shared early data from the 1st dosing cohort. Since that time, we have successfully cleared the 2nd dosing cohort in both arms with no dose limiting toxicities. We are encouraged by what we have observed with ADCT-six zero one, our novel actual targeting ADC in sarcoma and a recently initiated screening in pancreatic cancer patients.

Speaker 1

Lastly, we disclosed that we are advancing an early stage portfolio of investigational ADCs, which utilize a novel exotigen based platform. Turning to our financial position, we ended 2023 with close to $280,000,000 of cash. Together with our business plans and strict cost discipline, this provides us with an expected cash runway into Q4 2025, which will support us through multiple value generating catalysts this year and next. So taken together, we enter 2024 with great confidence having repositioned and refocused the company and with some encouraging early data emerging from our pipeline. With that, I would like to turn the call over to Kristin for a commercial update.

Speaker 1

Kristin?

Operator

Thanks, Amit. Today, our strategy is to grow ZYNOLTA in the community where the 3rd line, third line plus DLBCL setting continues to be fragmented with no standard of care and to maintain our position in the academic centers for patients who are not eligible for CAR T or bispecifics or who have progressed following treatment with these complex therapies. Our strategy is supported by real world data as presented at the recent tandem meeting, which demonstrated ZYNLANTA's efficacy pre and post CAR T. Execution against our strategy was a fundamental driver for our commercial restructuring and resulted in higher ZYNLANTA demand in November December, similar to the levels in the first half of twenty twenty three. We delivered a 17% increase in net revenue in Q4 compared to Q3, with growth in both the community and academic settings.

Operator

I am especially proud of our performance given the competitive dynamic with the recent approvals of 2 bispecifics in the same third line, third line plus setting as ZYNLANTA. We are confident we have the right team and the right strategy to maximize ZENLANTA in the current approved indication. Now I want to turn to the future market landscape and the important role we expect ZENLYNLA to play. Within the DLBCL market, a true standard of care only exists in the frontline with R CHOP and recently Polar R CHIP, as well as in the academic setting in the second line with CAR T and autologous stem cell transplant. However, accessibility to most patients treated in the community remains a challenge.

Operator

The market is evolving towards highly effective combinations with off the shelf agents as a cornerstone. As polatuzumab moves to the frontline, we expect this will create an unmet need in the market as retreatment in the relapsed refractory setting is unlikely. With our confirmatory Phase 3 trial LOTUS-five, our plan is to expand the ZYNOLTA label to the 2nd line second line flux. We have a tremendous opportunity to build share in this broader patient population if this study continues to deliver the competitive efficacy that we have already observed with ZELONTA in combination with rituximab in the 20 patient safety run ins. These data, coupled with the potential advantages of accessibility, ease of use and manageable tolerability lead us to believe the results from LOTUS-five will help to cement ZENLANTA as a standard of care in the second line, second line plus among community centers where R based regimens and third line, third line plus academic settings when an alternative to CAR T and or bispecifics is needed.

Operator

Moving to LOTUS-seven, our Phase 1b trial evaluating ZENLANTA in combination with bispecifics. As we progress this development program forward, our objective is to demonstrate that the combination can deliver enhanced efficacy compared to bispecifics alone, which could significantly expand ZENLANTA use. In addition, we hope to demonstrate that ZENLANTA when compared with bispecifics can reduce levels of CRF and eliminate the need for hospitalizations, expanding accessibility in the community. Ultimately, if successful, this combination has the potential to transform the treatment paradigm in the second line across both settings and substantially enhancing the patient and commercial opportunity for ZEMLANTA. And now, I would like to turn the call over to Mohamad for a clinical update.

Speaker 2

Thanks, Kristin. It's my pleasure to provide an update on our clinical stage pipeline. Starting with LUTUS-five, our Phase III confirmatory trial with ZENLONTA and rituximab, we significantly exercised the pace of enrollment in 2023, and we reported encouraging updated safety lesion results in September. While we have been pleased with the increase in patient enrollment, our clinical team recently observed higher than expected sensory in the trial, which was confirmed with the IDMC. As a result, we may need to expand enrollment beyond the planned 350 patients to achieve the required number of pre specified progression free survival events.

Speaker 2

Based on the current pace of enrollment, we do not expect this to affect our target to complete enrollment in 20 24. Importantly, the IDMC noted no safety concerns and recommended the study to proceed at its most recent meeting held on the 16th January 2024. Moving to LUTA-seven, this is our Phase 1b study to explore ZENONTA in novel combinations. We are focusing on the combination in 2 bispecific arm, Roche's gluketamab and musentuzumab. Enrollment started in each arm in July 2023.

Speaker 2

Part 1 is a 3 +3 dose escalation in 3rd line plus heavily pretreated patient with Zalanda doses starting at 90 micrograms per kilogram and then proceeding to 120 and 150 micrograms. As we discussed in January, we dosed the first three patients in each arm with the 90 microgram dose and cleared the dose limit to 60 period. Since that time, we have cleared the 120 microgram dose for both arms with no DLTs and we are currently enrolling the 150 microgram dose. Once dose escalation is complete, we plan to expand at the appropriate dose levels. After the first investigator assessment, we have seen evidence of antitumor activity among the majority of patients, those at the first two level with mixed histologies including DLBCL, follicular lymphoma and marginal zone lymphoma.

Speaker 2

We expect to share additional data once a larger and more mature data set is available. While we are excited, but what we have seen, we recognize that it is early and once those expansion in second line is complete and assuming data are promising, we plan to approach regulatory agencies to discuss our strategy and potential path forward. Beyond our older studies, there is significant amount of interest from investigators to explore ZULRESSELONTA in additional indications and combinations. At ASH in December 2023, there was an oral presentation from University of Miami on their investigator initiated Phase 2 study of ZELONTA and rituximab in patients with high risk relapsed or refractory follicular lymphoma. This is a unique population not served well by the current standard of care.

Speaker 2

Initial results from the 33 patients were very encouraging, including a best overall response rate of 96% and a complete response rate of 85%. In terms of safety, the majority of adverse events were primarily Grade 1 and manageable. The presentation was extremely well received by the physician community and the trial is now being expanded to other centers with a target enrollment of 100 patients. The University of Miami is also conducting another investigational Phase II study of ZENONTA in relapsedrefractorymarginal zone lymphoma, an indication with significant unmet need. The study is designed to enroll 50 patients and a futility analysis expected to be conducted in the Q2 of this year.

Speaker 2

We anticipate the investigators will present the data from both studies at upcoming medical meetings. If these immunosuppressive trials are positive, we would move quickly to determine regulatory and or compendia path forward. I want to turn now to our solid tumor candidate ADCT-six zero one targeting XL, which we are investigating in a Phase 1 study in sarcoma, pancreatic cancer and non small cell line cancer. While others have explored XL as a therapeutic target, we are especially excited by the potentially differentiated profile we see with the 601D2, its innovative design incorporating a PVD toxin. XL is expressed in multiple tumor types and it has been shown that high expression of XL is correlated towards patients' overall survival across many cancer types, including non small cell lung cancer, pancreatic and sarcoma.

Speaker 2

Our Phase 1 trial includes monotherapy as well as combination arms with gemcitabine in sarcoma and pancreatic cancer. Given the high level of AXA expression, sarcoma is serving as the proof of concept. In January, we disclosed that we reached the recommended dose of 13 milligram. In addition, we also share that ADCT-six zero one was well prorated at the doses tested and we have been encouraged by the early signs of anti tumor activity in both monotherapy and combination. The study is currently in Part 2, which includes dose optimization and expansion.

Speaker 2

We plan to share additional data from the trial in a presentation at other indications, I am pleased to report that we have initiated screening in the pancreatic cancer monotherapy R based on our inpatient patient population. We also plan to initiate dosing in the non small cell lung cancer preselected patients once we have optimized the assay for non small cell lung cancer. I am encouraged by the progress we are making with our pipeline and look forward to sharing more in the future. I would now like to hand over to Patrick.

Speaker 3

Thanks, Mohamed. It's a pleasure to update you all on our research activities. As we disclosed at the start of this year, as part of our broad toolbox, we're now developing ADCs utilizing a differentiated payload based on the topoisomerase 1 inhibitor exotecan together with a novel hydrophilic linker. Compared with commercially available toxins such as the DXZ platform, our innovative and proprietary approach has shown evidence in preclinical studies for greater potency, stronger bystander activity and excellent tolerability. Initially, we are conducting research utilizing our exotecan based platform against 4 highly attractive targets and indications with high unmet needs.

Speaker 3

The first is CLODON-six, which is a novel target that is highly expressed in ovarian, endometrial, testicular and non small cell lung cancer. The second target is NAPI 2b, a validated ADC target which is also highly expressed in ovarian, endometrial and non small cell lung cancer. The 3rd is PSMA, which is a validated ADC target highly expressed in metastatic castrate resistant prostate cancer. We intend to select the clinical candidate based on a novel optimized PSMA specific antibody. Lastly, we are applying this platform to an undisclosed target.

Speaker 3

What I can say is that the target is a novel transporter protein, which is highly expressed in multiple hematological and solid tumor malignancies. For Clodont VI, IIb and the undisclosed target, we have completed in vivo pharmacology and dose range finding studies in cynomolgus monkeys. In each case, we've seen strong antitumor activity with an attractive therapeutic index and no evidence of interstitial lung disease. Based on the encouraging initial data from these 3 investigational candidates, we believe we have a differentiated ADC platform that can be applied to multiple tumor targets of interest. In terms of next steps, we will share data for clodin6 and nappy2b at AACR next month.

Speaker 3

The abstracts are available on the AACR website and I would encourage you to review them. Following AACR, plan to share additional information on our differentiated Wishis platform at an investor event in the Q2. With that, I would like to hand over to Pepe.

Speaker 4

Thank you, Patrick. Before I get into the financials and upcoming Catalyst, I want to remind everyone of our corporate business development strategy. Hematology continues to be our primary focus and within this, our key objective is to drive the value of ZYNOLTA. We will achieve this by fully supporting our commercialization effort in the U. S.

Speaker 4

Directly and through our partnership ex U. S. In solid tumors, our aim is to pursue multiple ADC candidates in parallel and increase our shots on goal. We will determine on a case by case basis whether we wish to progress candidates internally or seek to partner in order to share the development and financial risk. Turning to our Q4 performance, we're now reporting our results under U.

Speaker 4

S. GAAP as we became a U. S. Domestic filer starting January 1, 2024. Starting with our balance sheet, as of December 31, we had cash and cash equivalents of approximately $278,600,000 or a $32,000,000 decrease from the end of Q3.

Speaker 4

Moving to the P and L, as you already heard, ZYNOLTA net sales were $16,600,000 in the quarter, a decrease of 16% versus prior year, primarily driven by higher gross to net due to discarded drug rebate and slightly lower volume, partially offset by higher gross price. Our total operating expenses on a non GAAP basis, which excludes stock based compensation, were down 24% compared to the Q4 of last year. This mainly reflected our focus on driving operating efficiencies, together with reduced R and D expenditure due to focused investment in our clinical studies and lower selling and marketing expenses. For 2024, we will continue to take a very disciplined approach to our operating expenses. This is crucial to funding the development of our key pipeline programs and maintaining our expected cash runway into the Q4 of 2025.

Speaker 4

You will find the reconciliation of GAAP measures to non GAAP measures in the companion financial tables of the press release issued earlier today and in the appendix of this presentation. Moving to the bottom of the P and L, on a GAAP basis, we reported a net loss of $85,000,000 for the quarter or a $1.03 per basic and diluted share. This took our full year 2023 net loss to $240,000,000 or 2.94 dollars per basic and diluted shares. My final slide highlights the multiple potential value driving milestones which we expect in 2024. With that, I will turn the call back to Amit.

Speaker 1

Thanks Pepe. To close, we enter 2024 with a clear strategic roadmap and the capabilities to drive value creation for all our stakeholders. My team and I are excited about the company's prospects and look forward to keeping you updated on our progress. Now we will be available for questions. Operator?

Speaker 5

Thank Our first question will come from the line of Naureen Quibert with Capital One Securities. Your line is now open.

Speaker 6

Hi, good morning. Thanks for taking my question and questions actually And congrats on the progress. So actually, I was just curious about LOTUS-seven. Can you talk about the safety data with bispecifics in combination to date and what's been seen with other therapies? And relative to that, can you speak to your expectation for LOTUS-seven, your level of confidence for this combination?

Speaker 6

And just on the same topic, you mentioned on the press release that you have a larger data set. You present when you have a larger data set. Can you just talk about sort of the size and scope of that data set that you would expect to release, is it after the 120 microgram data? Appreciate some granularity. Thank you.

Speaker 1

Thanks, Noreen. I really appreciated it. Maybe I'll turn it over to Mohamad to answer both those questions on the safety profile and what we're hoping for and what we've been seeing as well as on yes, so Mohammad, do you want to take it?

Speaker 4

Sure. Thanks, Anit. Thanks, Tien, for

Speaker 2

your question. With regard to LIFO-seven, as you know, it's a dose escalation study of combination of the LONTA plus 2 different bispecific agent, leptitumab and mocetozumab in 3 different disease types, marginal zone, DLBCL and follicular in 3rd line plus. We are very encouraged by the fact that we have cleared the first two dose levels, the 90 microgram per kg and the 120 microgram with no DLTs. And all we've seen so far is either no CRS or low grade CRS that resolve very quickly. We are very encouraged by the anti tumor activity we keep seeing in this study to date.

Speaker 2

It's an open label study and we see things live. However, it's early days and we would like to wait until we have more mature data to be able to share more mature cohorts later this year. I think that pretty much answers your question. I hope I didn't miss exactly kind of multiple points, Lorraine. So I hope I didn't miss anything.

Speaker 1

Yes. And maybe just one thing to add. Thanks, Mohamad. We're now currently dosing the 150 microgram per kilogram dose in both the glofitamab and the mosituzumab arm. Once those are cleared, we'll move right into the dose expansion in second line plus DLBCL with plofitamab.

Speaker 1

And that will be the focus. That's where I think we're going to get a better representation of efficacy when we have a broader number of patients, longer follow-up and in the single histology. And that's really focus of Part 2 of the study, which we will start as soon as we clear the dose escalation.

Speaker 6

Perfect. And I guess I have one for Kristen and then I'll hop back in the queue. Just curious in terms of the penetration levels for with the ZENONTA in the academic and community settings, what are those? Can you comment on that? Number 1.

Speaker 6

And number 2, can you talk about what you saw in terms of how were you able to increase growth in academic, just out of curiosity?

Operator

Sure. Thanks, Irene. So we don't share exact numbers of penetration. What I can tell you is that we had a strong foundation in the first couple of years of launch and within the academic setting. In 2023, starting in Q2, we really refined our strategy to focus more on the community.

Operator

Our strategy of driving adoption with the community played out well, and we started to see the impact of that in Q4 2023. So not only did we see more community sites at Simlasa, but actually we also saw an increase in volume in the academic centers as well post the entrance of 2 bispecifics. So we see this increased demand. And I would say, in November December, we started to see our demand levels come back to what we saw in the first half of twenty twenty three, and we look forward to driving progressive growth with SPINLANTA with this refined strategy.

Speaker 6

Great. Thank you so much. I'll hop back in the queue. Thanks.

Speaker 5

Thank you. One moment for our next question please. Our next question comes from the line of Brian Chin with JPMorgan. Your line is now open.

Speaker 7

Hey, guys. Thanks for taking our questions this morning. Just a couple. On LOTUS side, can you talk about a little bit more about the censoring that you mentioned on the call? Specifically, what is the reason for the higher than expected censoring in LOTUS V?

Speaker 7

And how much of that is due to safety related withdrawal? And I have a couple of questions left. Thanks.

Speaker 1

Thanks, Brian. Appreciate it. So, Mohammad, do you want to talk about LOTUS-five and Sensory?

Speaker 2

Yes. So thanks for your questions, Brian. And just want to highlight that it is not uncommon for initiate the need for increased enrollment in a global open label Phase III. It's also not uncommon to see a bit higher censoring when you are dealing with the less refractory diseases. The main reason we believe for the higher than ever surgery is the lack of convenience from physicians and patients with relation to the control arm possibly.

Speaker 2

And that's usually because the physicians don't want to be in the active arm, of course. So you can expect to see a little bit higher than usual. And there was no concern by the DMC that met in January with regard to any safety issue. This is not related any safety reason or anything related to do. But it is very important.

Speaker 2

This is simply replacing probably missing events to reach the required number of events, clear the statistic and as planned to reach the end of the study. So, it's a replacement procedure that many patients do in order to make sure they get that on time. The good news is that even with possible increase in the size of this trial, we do not anticipate to have a delay on finishing enrollment, which we have communicated to be within 2024. The reason for that is recently, we have observed an acceleration of enrollment and we've seen really a quite high number of enrollments per month compared to MAP before.

Speaker 7

Great. And then going back to your comment related to commercial brand profitability later this year, does that actually entail? Can you talk about the gross to net that we should expect in our model? And related to SG and A expenses, how should we model that for the rest of the year? Thanks.

Speaker 1

Okay. Yes. Thanks, Brian. Pepe, do you want to take that in terms of gross to net evolution? What brand what commercial brand profitability means and the evolution of SG and A?

Speaker 4

Yes. Thank you, Bryan, for the question. So on brand profitability, what we expect this year is that the revenues coming out of ZYNOLTA in the U. S. Will be able to pay for all the expenses, say, directly related to commercializing in long term, which means all the sales force, marketing team, medical finance liaison and all discretionary spending, which will include A and P, cost of goods, IIT and other related expenses.

Speaker 4

So basically, the from a capital allocation perspective, this is the commercial license in Lon Thai is not a uses of funds. It's more like sources of funds to start funding the pipeline. For modeling purposes, the gross to NAND, if you heard our message is from in 2023, from the first half to the second half of the year, our gross to net increased high single digit percentage points. We expect that 2024 will have a similar gross to net ratio that we have in the second half of twenty twenty three. So we don't expect further increases.

Speaker 4

But as you model it in the first half of twenty twenty four, we'll be cycling over higher gross to net than what we saw in the first half of twenty twenty three by that same percentage point. So high single digit increase in the first half of twenty twenty four compared to prior year, but it will be more even in the second half of twenty twenty four compared to the second half of twenty twenty three. From an expenses perspective, I we will continue to drive productivity measures. We're not providing exact guidance on all OpEx levels, but we will keep driving profitability across the board. Importantly, this year, the highest investment level that we have is in models 5, the cost of the trial force in Moncta, which we expect full enrollment this year.

Speaker 4

So as the full enrollment happens and then the tire winds down into 2025, we expect a decrease of R and D expenses due to a lot of style. All that depends, obviously, on the success of the enterprise. But that's the biggest driver of R and D expenses this year, which will decrease as we launch under 25. Do you have any other questions,

Speaker 5

And our next question

Speaker 8

Hey, good morning, Amit and team. Congrats on the progress. Thanks for the updates and for the questions. Maybe just building on the commercial strategy, Amit, it's helpful to hear the color of the pull through from the Q4. Just curious if the CD20 by specific competition was within those expectations and any factors that we should be thinking about going beyond what Kristen and Pepe had indicated on the dynamics of uptake for 2024?

Speaker 8

And maybe just related to that, if I may, as we think about the longer term opportunities for late line. Just curious if you have any updated thoughts on ZENLOP's positioning just relative to ADC based combinations in third line. I certainly saw the Echelon 3, ADCETRIS triplet meeting its OS endpoint improvement regardless of CD3rd expressions. I'm just curious if you had any updated thoughts on those evolving dynamics

Speaker 2

as well. Thanks so much.

Speaker 1

Yes. I'll start and then I'll pass it on to Chris and Mohammad in case they have additional comments. But yes, I would say, overall, bispecifics are definitely gaining ground in that third line setting post CAR T. You saw there was strong growth. While CAR Ts are basically kind of flattening out right now when you look at out of the sales of all the CAR T in Q4 versus Q3, it's kind of flattening out.

Speaker 1

Biospecifics continue to grow dynamically and the uptake, particularly in the academic setting, continues to grow. In the community setting, while they've been using more sophisticated centers, the uptake there is much more limited. I think what we found though is that there is a clear place for ZELANTA either for patients where a biopsy is not suitable, where a patient may need even faster responses for ones that progress post a biostook because it doesn't work for every patient. So I think academic physicians have sort of figured out how to best use the amount around a dynamic where there is a new competitor and when price checks are growing. So we saw a part of that rebound because I think in Q3 where there was a big push towards just buy specifics, in Q4, we saw that ZEMONTA continued to be used with those that progressed or those who are not as suitable as doctors sort of figure out the best patients to go to a bispecific to CAR T.

Speaker 1

And then in terms of the competitive landscape, I think the whole space is moving towards combinations. Think one of the advantages we have is that we're approved as a single agent and we have strong single agent activity. Not many drugs that have been approved as a single agent. In fact, bispecifics and ZYNOLTA are 2 of the only drugs, assets that have been approved as single agents. And so I think our combination strategy with both LOTUS-five and LOTUS-seven position us really well.

Speaker 1

I think we'll have competitive profiles with those two combinations. But in spite of an evolving landscape, will position us really well for growth, not only in the 3rd line setting where we are today, but also in the 2nd line setting where we will move with those trials. Kristen and Mohammad, is there anything else that I missed that you would add?

Speaker 4

The only

Operator

thing that I would add, Amit, two things. 1, just to add on to your evolving landscape, we see already with polatuzumab moving up to the frontline that it is creating a need for a different mechanism in the 2nd line and third line. So definitely carving out a space for XERMONTHA whether today or in combination once we get LOTUS-five and LOTUS-seven. The other question was around Echelon 3. We also saw that.

Operator

We've been tracking we always track our marketplace and the dynamics. And 1, it's nice to see a win for an ADC. It reinforces the efficacy of ADCs. But 2, we haven't seen any data on that trial other than the headline that Pfizer put out in terms of the overall survival win. R squared is used it's pretty uncommon use primarily in the community, but still, we'd love to see the data that Pfizer has on their triplet versus the doublet and look forward to that so that we can better put it into context and understand any impact in the market.

Speaker 2

And let me ask, Christian, also regarding the African story is that we need to see how the control arm in the trial actually did to be able to better evaluate the data and understand it better. Specifically, this is in 3rd line plus, if I understand the chart correctly. Our target is for LUTUS5 and potentially the facilities to go to second line plus. So it's not directly, but in a very minimal number of patients. And when we get to 3rd or first line, there may be some comment.

Speaker 2

However, we don't know whether that I have to give in details, of course, to be able to understand it better.

Speaker 8

That's really helpful. And maybe just a follow-up as Patrick has discussed the NextGen platform. Just wondering and we all look forward to an event later this year as you mentioned. Just wondering if you could elaborate a bit on just the rationale for selecting MAPI2b, Claude and PSMA just for the next gen ADC. And do you have a sense at this point which targets or target has the strongest rationale for internal versus the external partnerships that Pepe alluded to?

Speaker 8

Thanks again.

Speaker 1

Yes. So maybe Patrick, do you want to take the first part of the question? And then, Pepe, you could take the second part of the question partnering.

Speaker 9

Sure, Amit. Yes, thanks, Brian. So we've selected these targets because we think that they fulfill all the criteria for good ADC targets. If you look at what's known for them, it's clear that each and every target, there's a very good level of validation for targeted approach. Of course, as they're all expressed in indications with high unmet need.

Speaker 9

And we also very carefully looked at the competitive landscape for LEP2B, clonal CX, PSMA and the undisclosed targets. And we believe that in most cases, if not all, we're among the first 3 to 4 players studying those targets, but of course, with a differentiated approach using our novel exotecan based platform. So to us that means there are attractive targets to work on.

Speaker 4

And let me take the partnership discussion. So as we disclosed the net generation exotibian based pay loan and the target earlier this year, on January 4, we did an outreach with some of our companies, and we already started some discussions. These conversations and that potential partnership few quarters. So it's not something that you would do in a short turnaround. We do see the interest and we will continue to advance those conversations for potential partnerships this year.

Speaker 5

Our next question comes from the line of Kelly Hsieh with Jefferies. Your line is now open.

Speaker 10

Hi, good morning. Thank you very much for taking the question.

Speaker 11

This is Yun for Kelly. So first question, just wanted

Speaker 10

to confirm that is safety the only thing that you need to clear before moving into second line and when would you expect to have any data available from second line patient? And then secondly, for XL study, can you remind us if you enroll patient based on expression and we have that biomarker data available when the data is presented at AACR? Thank you.

Speaker 2

Thanks for the question. And yes, in terms of the expectation from GLUTOS-seven dose escalation is to clear the dose levels. And based on that, that third protocol, we are allowed to move directly to second line for expansion. We're expecting to share information focused on safety in the Q2 and more on the expansion of second line in DLBCL, specifically in later in 2024. In terms of Axle, so far, our enrollment is not with a preselection strategy.

Speaker 2

However, as of the pancreatic enrollment will be enrichment and for non small cell lung cancer, we will be pre selecting.

Speaker 4

Operator, any other questions?

Speaker 5

At this time, I'm showing no further questions. I'd like to hand the conference back over to Mr. Malik for closing remarks.

Speaker 4

Sorry, he's in another location. We're having troubles with connection.

Speaker 5

I'm showing no questions at this time.

Speaker 4

Yes. Thanks all for your attention and interest in ABC Therapeutics. Between now and our next earnings call, we expect to share some important updates on LOTTO-seven on the feasibility analysis and top line data of ZYNOLONTA as a single agent in margin of zone lymphoma and on data being presented at AACR, which we will follow-up with a research investor event. As such, we look forward to multiple interactions with you in the coming months. With that, I would like to close the call.

Speaker 4

Thank you all.

Speaker 5

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.

Powered by Quartr

Key Takeaways

  • 2023 strategic reset focused resources on hematology with ZYNOLTA as the derisked core asset, while expanding research capabilities in a differentiated solid tumor ADC pipeline and reducing organization costs.
  • ZYNOLTA net sales of $16.6 million in Q4 marked double-digit sequential growth across community and academic settings, and efforts are underway to gain label expansions into earlier lines of DLBCL and indolent lymphomas via LOTUS-5 and LOTUS-7.
  • In clinical development, the LOTUS-7 combination trial with bispecifics has cleared doses up to 120 µg/kg without DLTs and shown preliminary antitumor activity, while LOTUS-5 enrollment has accelerated despite higher-than-expected censoring.
  • ADCT-601, targeting XL, hit its recommended 13 mg/kg dose with manageable safety and early efficacy signals, and the broader exotecan-based ADC platform is advancing multiple preclinical candidates (CLDN6, NAPI2b, PSMA, undisclosed) with strong in vivo data ahead of AACR.
  • With ~$278.6 million in cash at year-end, non-GAAP operating expenses down 24% YoY, and a disciplined capital allocation plan, ADCT expects a cash runway into Q4 2025 and aims for brand-level profitability.
AI Generated. May Contain Errors.
Earnings Conference Call
ADC Therapeutics Q4 2023
00:00 / 00:00