ADC Therapeutics SA

Thank you for holding. Good morning and welcome to Therapeutics Third Quarter 2020 Financial and Operating Results Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open the call up for your questions. Please be advised that this call is being recorded at the company's request. At this time, I'd like to turn it over to Amanda Hamilton, Investor Relations Manager at ABC Therapeutics. Please proceed.

Thank you, operator. This morning, we issued a press release announcing our third quarter 2020 financial results and business updates. This release is available on the ADCT website at ir.adttherapeutics.com under the press releases section. On today's call, Chris Martin, Chief Executive Officer, Jay Feingold, Chief Medical Officer, and Jen Creel, Chief Financial Officer, will discuss recent business highlights and review our third quarter 2020 financial results. In addition, Jennifer Herron, our Chief Commercial Officer, will be available for questions. As a reminder, this conference call may contain statements that constitute forward-looking statements. All statements, other than statements of historical facts, are forward-looking statements. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors. We refer you to the section titled Cautionary Statements Regarding Forward-Looking Statements in Exhibit 99.2 of our report on Form 6-K filed with the U.S. Securities and Exchange Commission earlier today for further information on forward-looking statements. Such statements speak only as of the date of this conference call. We expressly disclaim any obligation or undertaking to update these forward-looking statements unless required to do so by applicable law. In addition, during today's call, we will be presenting certain non-IFRS financial information that management uses when monitoring and evaluating operational performance, generating future operating plans, and making strategic decisions regarding the allocation of capital. These non-IFRS measures have limitations with 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. We refer you to the section titled Use of Non-IFRS Financial Measures in Exhibit 99.3 of our report on Form 6K filed with the U.S. Securities and Exchange Commission earlier today for further information on non-IFRS financial measures, including reconciliation of IFRS to non-IFRS financial measures. It is now my pleasure to pass the call over to our CEO, Chris Martin. Chris?

Thanks, Amanda, and thank you all for joining us this morning. I'm pleased to be here today to share our recent corporate and clinical accomplishments. Our team has made tremendous progress over the past quarter as we prepare for the launch of our first drug and continue to build out and advance our deep pipeline of highly potent and targeted antibody drug conjugates. I would like to thank our teams for their resilience and dedication over the past month. In September, we reached a major milestone for our organization, announcing the submission of our BLA to the FDA for our lead program, Longo. for the treatment of relapsed and refractory diffuse large B-cell involvement. As we have previously discussed, this submission is based on data from our pivotal Phase II LOCUS II trial, which evaluated the efficacy and safety of MONCA in patients with relapsed or refractory DLVTL following two or more lines of prior systemic therapy, and demonstrated important anti-tumor activity and durability, as well as manageable toxicity across patients with difficult-to-treat disease. We are expecting to receive FDA feedback on this submission later this month, and in anticipation of our pending PDUFA date, we are currently preparing to launch Longer in 2021. In order to prepare for launch, we have recruited highly experienced and focused oncology, commercial, and medical affairs teams based out of our New Jersey office. Despite COVID restrictions, this team is collaborating seamlessly and engaging key PLBCL stakeholders. As we anticipate the FDA acceptance of our PLA later this month, we have continued our efforts to ensure a quick sales team build in 2021, comprising predominantly of haematology oncologist specialists with knowledge and network to effectively communicate the long-term value proposition to key stakeholders. The Salesforce will cover more than 90% of the DLBCL opportunity, and we anticipate a hybrid approach at launch due to COVID-19. Therefore, we are staffing and training all members of our commercial and medical organizations to be prepared to pivot between face-to-face and virtual launch activities. We have developed a multi-channel engagement plan to ensure that all key audiences – physicians, nurses, office managers, payers, and patients – receive the necessary information and support to ensure rapid and easy access to, and safe administration of, Longer. As part of our Longer preparations, we have had the opportunity to engage with healthcare professionals in advisory boards and market research regarding Longer's maturing profile. And I'm pleased to report that the profile resonates really well. Hematologists and oncologists have shared with us their challenges to find an agent in the third line in relapsed refractory DLBCL that can potentially address the majority of their patients, be they transplant eligible or ineligible, high-risk disease, heavily pretreated, or refractory populations. Based on feedback from physicians on long-term efficacy, tolerability profile, and needs of administrations, We believe Lonco had the opportunity to become the standard of care in the third line based on our competitive profile versus other available options. In addition to our Lonco commercial preparations, we have continued to progress and expand our pipeline. I'm pleased to hand the call over to Chief Medical Officer Jay Feingold, who will now discuss those programs with you in more detail. Jay.

Thank you, Chris, and good morning. I am pleased to present an update today on both our clinical and preclinical programs, in addition to providing some additional information regarding our upcoming ASH presentations. Overall, we continue our plan to expand the use of Lanca to earlier lines of therapy for patients with BL-BCL, with both our pivotal phase two combination study with ibrutinib and the opening of sites for our confirmatory phase three study in combination with rituximab, and to expand the use of Lanca into other cancer types with a pivotal Phase II trial in follicular lymphoma. For CAMI, we continue to model through our pivotal Phase II trial for patients with relapsed olfactory Hodgkin lymphoma, with the trial now 65% enrolled, and recently expanded CAMI's Phase Ib study in solid tumors to add a combination arm with PEMBRO and dose to our first patients. I will also provide a brief update on the Phase Ib study for ADCT602 and the phase one study, ABCT601, moving into a combination with a checkpoint inhibitor. First, let me give you an update on NARCA and our continuing life cycle development plan. As we approach the anticipated approval of NARCA next year, we are broadening our life cycle development program. First, we are investigating its potential as an early line of treatment in relapsing refractory DLBCL. Our Lotus 5 trial, A Phase III confirmatory clinical trial evaluating the safety and efficacy of Lanca in combination with Vitaximab versus standard immunochemotherapy in patients with LUDOPS or refractory DLVCL who are not eligible for autologous stem cell transplant is now open for enrollment. The study is designed to support a supplemental biologic license application for Lanca as a second-line therapy and to fill a post-marketing requirement to the FDA for full approval. if accelerated approval is granted to relapse to refractory DLBCL. We continue to enroll patients in our pivotal phase two trial of bronchia in combination with ibutinib and relapse to refractory DLBCL and mantle cell lymphoma, which in a phase one B showed a promising effect on overall and complete response rate along with manageable toxicity. In addition, we are planning to initiate a dose finding study of bronchia in combination with R-CHOP previously untreated DLBCL patients in the first half of 2021. Finally, we are expanding to new histologies that NACA has demonstrated encouraging activity, including follicular lymphoma, where we plan to initiate a Phase II trial of redox refractory follicular lymphoma in the first half of 2021. With regard to our second lead program, CAMI, the pivotal Phase II clinical trial in patients with redox refractory Hodgkin lymphoma who have failed at least three trial lines of therapy, continues to enroll. There are 65 patients enrolled as of November 6th, and we remain on track to announce further data in the first half of 2021. Data from this trial is intended to support the submission of the BLA to the FDA. In addition to our hospital informant program, we continue to advance our Phase 1B clinical trial of PAMI in solid tumors. In September, we presented preliminary data in the ongoing Phase 1B trial patients with selected advanced locally or non-static solid tumors in ePulsar at the European Society for Medical Oncology Virtual Congress 2020. Data presented, which included pharmacokinetics and biomarker evaluations, showed that treatment with CAMI is associated in some patients with clinically relevant modulation of immune cells, including an increase in CD4-positive and CD8-positive T-cells, an increase in soluble CD25, and cytokines and serum post-processing, and a dose-related increase in the effector T-cell to regulatory T-cell ratio. This presentation follows the publication of preclinical data related to CAMI in the Journal for Immunotherapy of Cancer, which demonstrated that single-dose CD25-targeted ABCs resulted in potent and durable anti-tumor activity against established CD25-negative cell tumors with infiltrating Tregs, both as a line therapy and in combination with an anti-PD checkpoint inhibitor. Based on these data, we've expanded the Phase 1b trial to evaluate the safety, tolerability, pharmacokinetics, and anti-tumor activity of Kami, in combination with pindolizumab, checkpoint inhibitor, in patients with selective advanced solid tumors. We recently announced that we diagnosed the first patient in the Phase 1b expansion, and we look forward to sharing the data in the future. In our earlier stage pipeline, we have a presentation of ASH analyzing the preclinical activity of the B-cell lymphoma models and potential firelockers for ADCT602 targeting CT22, which is currently in a phase 1-2 development in patients with relapsed respiratory acute lymphoblastic leukemia. We're also preparing to initiate a phase 1B combination trial with ADCT601 targeting AXL in patients with certain solid tumors the second half of 2021. We continue to advance our preclinical programs towards IMD submissions and look forward to providing further updates as these programs advance. We are pleased that eight of our abstracts were accepted for presentation at the American Society of Hematology Annual Meeting, which is being held virtually from December 5th to 8th. Presentations will feature data on three of the company's ABCs, WACUP, CAMI, and ABCT602. I'd like to highlight two of the Nalanka ethics. The first is to provide additional subgroup data in the Lotus 2 Pivotal Phase 1B trial of relapse and refractory DL-BCL. This data set is a more mature data set than previously shared. It will include efficacy and duration of response data, patient subgroups with high-risk characteristics, as well as patients who were refractory to first-line therapy, patients who were refractory to any line of therapy, Patients who received prior CRY-T or patients who received prior stem cell transplants. The second poster will highlight intimate results from the ongoing Phase 1b trial of LONCA combined with adenine and relapse to refractory DLBCL or MCL. The poster will provide more mature data on the efficacy and safety for a combination. There will also be three CAMI presentations. We have an oral presentation on the intimate results from the Phase 2 trial of CAMI and relapse to refractory Hodgkin lymphoma. The oral presentation will highlight efficacy and safety data from the first 47 patients enrolled end of August 2020. In addition, we will have a poster presentation of PKPD data from the phase one study in relapse of refractory Hodgkin and non-Hodgkin lymphoma. And preclinical data showing anti-tumor activity with Kami in combination with gemcitabine. With that, I will turn the call over to Jen to give a financial update.

Thank you, Jay, and good morning, everyone. In September, we completed an upsized public offering of 6 million common shares at a price of $34 per share. Gross proceeds from the public offering were approximately $204 million, and the funds are intended to support the acceleration of Lanka development activities, advancing our early pipeline, and the commercialization of Lanka. These funds position the company to deliver on the many opportunities discussed in today's call. And now, turning to our financials. As we reported in our press release, we ended the third quarter with cash and cash equivalents of approximately $494 million as compared to approximately $116 million as of December 31st, 2019. We used approximately $44 million in net cash for operating activities in the third quarter and $117 million in net cash year to date. We expect our spend to continue to increase over the next few quarters as we prepare for the anticipated launch of Lanka and continue to invest in our broad pipeline. R&D expense was $32.2 million for the third quarter compared to $30.5 million for the same quarter in 2019. The increase was primarily due to increased headcount to support the Lonca BLA submission and multiple Lonca and CAMI clinical programs, as well as increased share-based compensation expense. T&A expense was $20.3 million for the third quarter compared to $2.3 million for the same quarter in 2019. The increase was primarily due to increased share-based compensation expense and an enhanced commercial team as we prepare for the anticipated launch of Lonca. We also saw an increase in investment in our commercial preparations and the costs associated with being a public company. Our net loss was 20.3 million for the third quarter of 2020 compared to 31.3 million in the same quarter of 2019. Net loss for the quarter includes a $33.9 million non-cash gain related to the changes in fair value of derivatives associated with the convertible loans under the facility agreement with Deerfield. Net loss for the quarter was also impacted by share-based compensation expense of $11 million. Finally, our adjusted net loss, which excludes certain items including the Deerfield convertible loan and share-based compensation for the third quarter of 2020 was $41.3 million compared to $31.1 million in the same quarter of 2019. The adjusted diluted net loss per share was $0.58 in the quarter ending September 30, 2020, compared to $0.62 for the same quarter in 2019. With that, I will turn the call back to Chris for closing remarks. Chris?

Thank you. As you can see from today's call, we have several important upcoming milestones, and it's certainly an exciting time at ADC Therapeutics. As we've weighed feedback from the FDA on our BLA submission, our highly experienced commercial, market access, and medical affairs teams are actively preparing for a successful commercial launch next year. Looking forward to the first half of next year, we are eager to expand our long-term development program with the start of the pivotal phase two in funicular lymphoma. and to review interim results for the CAMI Pivotal Phase 2 trial in relapsed refractory Hodgkin's lymphoma. We continue to build the long-term value of the company and its assets through investment in Lonca and CAMI and our promising earlier stage pipeline programs. We look forward to presenting a number of key data sets during the upcoming ASH meeting in December, further showcasing the value and potential of our productive ADC platform and development team. We plan to host a conference call with Dr. Hamedani, Professor of Internal Medicine and Scientific Director of the Division of Haematology and Oncology at the Medical College of Wisconsin on Monday, December 7th at 8 a.m. Eastern to highlight our ASHAM strats. I look forward to updating you on our programs in the future and will now open the call to your questions.

We will now take any questions you may have. If you have a question, press 01 and you will put it into the queue. If you would like to cancel your question, please press 02. The first question comes from Matthew Harrison from Morgan Stanley. Please go ahead. Your line is open.

Great. Good morning, good afternoon. Thanks for taking the questions. I guess maybe one for Jay and one for Chris. Jay, could you just comment briefly, I guess, and I guess the question is more broadly on earlier lines of therapy in NHL. I mean, I think a lot of investors are trying to figure out the competitiveness of that landscape and how to view the early data that you have from the ibrutinib combination, how that fits in, and how much data you think you need to have from that combination before you feel confident that you have a signal there that is significantly better than competitors. And then Chris, or maybe it's for Chris and Jen, but could you just comment broadly on how we should think about commercial spend ramping up over the course of the next few quarters as you get ready for launch? Thanks.

So Matt, I'll answer the question first. I agree with you that the landscape is very competitive in B-cell non-Hodgkin lymphoma and even in, you know, for both DLBCL and foliculone lymphoma as well as mantle cell lymphoma. Focusing on DLBCL, you know, with the introduction of rituximab about 20 years ago, the cure rate for DLBCL increased significantly. But since that time, there's been little change and the remains are very, very difficult to treat disease if the patients are not cured in the first line. And as you know, about 30% to 40% or more in some cases, some studies, of patients are not cured in that first line. So we believe that bronchial, because of its significant activity as a monotherapy, has a role in the treatment of relapsed refractory BLBCL. In terms of moving up into early-line therapy, the early data that we've shared so far and what you'll see at ASHE, I think it's very interesting in the combination of Ronco plus Abutment, particularly in non-GCPD LBCL patients, which is where most of the data is at this time. So I just have to wait and see how it works out. I don't have a member of mine that would say to me, oh, yeah, this is so great, we have to go into a second line or whatever with this combination. I think we need to see more data. We need to see more about the durability. But the early indication is very positive.

Thank you, Jerry. Matthew, in terms of commercial spend, I'll let Jen answer that in detail. I will say that Jennifer and Joe Camado in commercial and medical affairs have made tremendous progress in this quarter in building their teams and interacting, as I mentioned earlier, with the healthcare professionals and the healthcare infrastructure more broadly. And they've received very encouraging feedback from those interactions. And we continue to recruit the commercial and medical affairs field forces ready for deployment. But Jen, perhaps you'd like to address the financial part of that question.

Sure. Thanks, Chris. And thanks, Matthew, for the question. As the teams have been building out, and as Chris mentioned, you know, we've had a lot of progress this year. in the commercial and medical affairs team building throughout this year. So we have seen our spend increasing steadily throughout this year with that preparation. And we'll continue to see an uptick each quarter as we head towards the launch, the potential launch of Lanka in the middle of next year. So I would say that we're seeing that increase in the year-to-date spend, and it'll continue to tick upwards as we head towards the middle of next year. Thank you.

I remind you that if you want to ask a question, please press 01 on your telephone keypad now. Ladies and gentlemen, thank you for participating in today's conference. This does conclude your program, and you may now disconnect. Everyone, have a great day.