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spk06: Welcome to the ADC Therapeutics First Quarter 2022 Financial Results Conference Call. My name is Michelle, and I will be the 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 1 on your touchtone phone. I will now turn the call over to Amanda Hamilton, Investor Relations Manager. Amanda, you may begin.
spk07: Thank you, operator. This morning, we issued a press release announcing our first quarter 2022 financial results and business update. This release is available on the ADCT website at ir.adctherapeutics.com under the press releases section. On today's call, Chris Martin, former chief executive officer, Jennifer Herron, chief commercial officer, Joe Camardo, chief medical officer, and Jen Creel, chief financial officer, will discuss recent business highlights and review our first quarter 2022 financial results before opening the call for questions. We will also have a brief introduction from our new Chief Executive Officer, Amit Mallet. As a reminder, this conference call may contain forward-looking statements. Such statements are subject to risks and uncertainties. For additional information concerning forward-looking statements and factors that could cause actual results to differ materially from those expressed or implied in these statements, we refer you to the section titled Cautionary Statement 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. Such statements speak only as of the date of this conference call, and we expressly disclaim any obligation or undertaking to update these forward-looking statements unless required to do so by applicable law. 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 research the information contained in the company's first 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 Chris Martin. Chris?
spk00: Thank you, Amanda, and good morning, everyone. Since co-founding ADC Therapeutics in 2011, I've had the privilege of taking our proprietary ADC technology from discovery to the bench to the clinic, then to our first FDA approval of Zinlonza. It is extremely rewarding to see Zinlonza benefiting patients and addressing an unmet need in the third-line plus DLBCL market. I've seen the company grow from a private startup to a New York Stock Exchange listed company. We now have over 300 employees, a commercial product on the market in Zinlanta, Cami progressing to a BLA submission, and five promising solid tumor programs in development. The approval of Zinlanta was a highlight for me, and since then I've been contemplating my next steps. With the company and the pipeline in such a strong position, I'm delighted to hand the CEO role to Amis Malik. I'm extremely confident that he is the right person to lead the company into its next chapter of growth from here. Logistically, I will serve as an advisor to the company for the next three months to ensure a seamless transition, and I'm very happy to be serving as a non-executive member of the Board of Directors and the Chair of the Science and Technology Committee. Amit has significant experience in oncology and commercialization, and a compelling vision for leading ADC Therapeutics in its next phase of growth. Amit spent 16 years at Novartis, where he ultimately served as Executive Vice President and Head of US Oncology, a $6 billion division of Novartis. Prior to that, he held various leadership roles at Novartis Oncology, including Head of Global Marketing, Value and Access, and Head of Latin America and Canada. He also served as Global Head of Biopharmaceuticals and Oncology Injectables at Sanbos and Head of Global Strategic Planning at Novartis Pharmaceuticals. Amit most recently served as CEO of Raphael Holdings, a biotech company focused on developing oncology and immune therapies. ADCT will benefit greatly from Amit's wide range of operational and strategic experiences, as well as his oncology expertise. I would like to formally welcome Amit to the ADCT and invite him to say a few words. Amit.
spk01: Thank you, Chris, for the kind introduction and the warm welcome. I'm thrilled to join the ADC Therapeutics team. I've had the pleasure of meeting the board and many members of the executive team, and I'm impressed by the company's unwavering commitment to developing novel cancer treatments for patients. In addition to the people and culture of the company, I was drawn to the industry-leading ADC platform and cutting-edge technology. ADCP has an impressive portfolio of pipeline assets and a very productive research team. In addition, I'm pleased to join a commercial stage company with a differentiated product in Finland and its potential to move into earlier lines of therapy. I'm excited by the opportunity to build on the solid foundation to take the company to our next phase of growth and to create sustainable value for all of our stakeholders. In the coming weeks, I look forward to meeting our employees across sites, understanding the business and portfolio plans at the deeper level and to engaging with many of you. I want to thank Chris for his partnership in this transition, and I look forward to continuing to work with Chris in the future. With that, I will hand the call back over to Chris for business updates.
spk00: Thank you, Amit. Now, I'm very pleased to share an update on our progress during the first quarter of 2022. Starting with the Zimlaunch launch, we delivered 16.5 million in net sales in Q1. We are encouraged by the progress of the launch to date and our ability to provide a truly differentiated treatment option to DLBCL patients. Sales in the first quarter were unfavorably impacted by our customers' modest inventory build at the end of 2021, and there were fewer new patient starts in DLBCL in Q1, which was exacerbated by the Omicron surge. However, we are pleased to see increasing product awareness, familiarity, trial and repeat orderings, With face-to-face opportunities trending upwards through Q1, we are confident in our ability to continue to grow Zinlanta as we strive to establish Zinlanta as a third-line standard of care for DLBCL. Jennifer Herron, our Chief Commercial Officer, will share more details on the Q1 launch dynamics a little later in this call. Moving on to our Zinlanta development plan, We are exploring the potential of Zynlonsa in combination with rituximab in first and second line DLBCL. We have our LOTUS-5 clinical trial, which is the ongoing confirmatory phase three study in second line patients who are not eligible for stem cell transplant. As you will recall, we successfully completed the safety lead-in for this study, which also showed additive efficacy. And we continue to enroll patients in the randomized portion of this study. In addition, we also plan to initiate LOTUS-9 our first-line study in unfit or frail patients later this year. For CAMI, the 12-month patient follow-up in the pivotal Phase II trial has been completed. We have submitted that data in an abstract for an upcoming haematology conference, and we are preparing for a pre-VLA meeting with the FDA. We remain excited about our promising pipeline of solid tumor programs, including three clinical programs. These are CAMI, targeting CD25, ADCT901 targeting CAG1, and ADCT601 targeting Axel. We also have two other solid tumor programs in IND enabling studies, ADCT701 targeting DLK1, and ADCT212 targeting PSMA. Dr. Joe Camardo, our chief medical officer, will elaborate on these and our other programs shortly. Finally, we ended the course with a strong cash position of $431 million which gives us a substantial cash runway to continue investing in the Zinlontan launch, lifecycle, and our pipeline. In addition, we have up to $100 million in potential milestones from our healthcare royalty partners agreement. Looking to expand our access to patients globally, we are pleased that the Overland ADCT Biopharma joint venture continues to make good progress with the continued enrollment of the pivotal trials. We are making solid progress in our partnership with Mitsubishi Tanabe Pharmaceutical Corporation in Japan. And finally, we continue to advance our regulatory submission in Europe. I would now like to turn the call over to Jennifer to report on the Zinlanta launch. Jennifer.
spk04: Thank you, Chris, and good morning, everyone. I am pleased to share an update on the progress of the Zinlanta launch and report our Q1 performance with Zinlanta net sales of $16.5 million. As we mentioned on the Q4 earnings call, we did see a modest customer inventory build at the end of the year, which we believe we have worked through during the first quarter. In addition, there was a decrease in DLBCL new patient starts in Q1 2022 versus the prior quarter. The decrease in new patient starts is largely attributable to insurance benefit reverification as well as COVID-related impacts. The Omicron surge during the first half of Q1 also impacted face-to-face interactions, especially with comprehensive cancer centers, academic institutions, and integrated healthcare systems. Regarding Zinlanta Q1 launch dynamics, we have made significant progress in terms of increasing product awareness, familiarity, trial, and adoption. We have seen increased Zinlanta patient share in the third line plus setting with healthcare professionals confirming that their real-world experience with Zinlanta is consistent with our Lotus 2 pivotal data. Importantly, face-to-face engagements increase throughout the quarter and are above the industry benchmark of 50% of total interactions. Since launch, over 75% of accounts that have ordered Zinlanta have reordered, reflecting a positive physician and patient experience. Over 96% of our priority accounts have ordered Zinlanta with approximately 90% of priority accounts reordering. Importantly, 94% of NCCN centers have ordered Zinlanta. In Q1, we continue to drive account depth and breadth. We grew our ordering account base 40% versus 2021, with two-thirds of Q1 new accounts coming from the community. And we expect continued new community account acquisition with the full execution of our permanent J-code. With higher volumes of third-line plus patients in academic centers, we continue to see about 60% of Zynlanta volume through academic accounts. Zynlanta's differentiated product profile continues to resonate with the Heme-Onc community. As you will recall in our pivotal phase two trial, nearly half of all patients receiving Zynlanta reached a PR or better. Importantly, 25% of patients treated with Zinlanta achieved a CR with a median time to CR of six weeks. This efficacy, in combination with our tolerable side effect profile and convenient administration, continues to be a very competitive and compelling choice for HDPs and patients. We are pleased to have received the permanent J code, J9359, which was effective as of April 1st. Since April 1st, we have executed our cross-functional communication plan to our prioritized payers, including revisions of a significant number of major medical policies with our permanent J-code. We have received positive feedback from community practices and, importantly, major community oncology networks representing opportunities for Zinlanta growth in the coming quarters. In summary, despite the Q1 headwinds, we are pleased with the launch progress to date, and more importantly, our opportunities for future growth. We remain confident in the continued successful launch of Zenlanta as well as its long-term value as the standard of care in Third Line Plus and the cornerstone for DLBCL treatment overall. We look forward to keeping you updated on our progress. Now I'll turn the call over to Joe to provide an update on our clinical development portfolio and research pipeline. Joe?
spk02: Thank you, Jennifer. I will start with updating you on the Zynlanta development programs. We continue to direct our efforts to the combination of Zynlanta with Sertuximab in both the second and first-line treatment for DLBCL. This combination offers the opportunity for patients to be treated with a regimen that will be effective, well-tolerated, and straightforward to administer. This regimen will also address significant unmet needs that persist despite recent advances in other treatments for DLBCL. The Phase III Registrational Study, LOTUS-5, in second-line DLD-CL, is proceeding for patients who are not eligible for stem cell transplant. The safety part of the trial showed good safety and good tolerability, and the data suggests the combination is adequate. Based on this, the randomized phase of the 350-patient trial continues to enroll at sites around the world. Later this year, we will initiate LOTUS-9. a study to evaluate Zinlanta in combination with rituximab in first-line DLD-CL patients who are unfit or frail. This is a segment of the first-line DLD-CL patient population that is unable to tolerate the full RCHOP regimen. Our advisors tell us that there is a significant unmet need in these unfit or frail patients. For these patients, there have been no specific advances that take advantage of the new drugs. partly because these patients are routinely excluded from clinical trials. We have engaged with physicians and oncology networks who see unfit and frail patients on a regular basis, and there is keen interest to find a new regimen that will be an improvement and an innovation for this population. This quarter, we will also initiate our Lotus 7 umbrella study. Based on strong preclinical data and our interest to develop combinations for Zinlanta with new drugs, This study will allow multiple combination arms. We will start with the combination of Zinlanta and Polituzumab. For our Phase 2 Lotus 6 trial in relapsed or refractory follicular lymphoma, as a reminder, the comparator Idelelizib was voluntarily withdrawn from the follicular lymphoma market. This study remains on hold while we work with our advisors and the FDA on potential next steps. Overall, we remain very excited about the opportunity to expand the uses in Lanta in first and second line for DL-BCL patients. We are fully focused on the execution of these trials, and we look forward to keeping you updated on our progress. Turning to CAMI in Hodgkin lymphoma, the 12-month patient follow-up in the pivotal Phase II data has been completed. We have submitted the data in an abstract for an upcoming hematology conference. We are in the process of compiling a briefing book in advance of a pre-BLA meeting with the FDA, and we will share our plans for the regulatory submission with you later this year. Now, moving on to our solid tumor portfolio. First, we have our ongoing CAMI Phase 1b safety and efficacy dose escalation trial in combination with Pembrolizumab in patients with advanced solid tumors. We have completed escalation to 80 micrograms per kilogram, and are now proceeding to the 100 microgram per kilogram dose. While proceeding with escalation, we also started a small dose expansion cohort at 60 micrograms per kilogram. The study was designed to allow for expansion of enrollment of a small number of patients at any dose in which activity was observed. So that's what we did. When we complete the escalation and the optimum dose has been determined, the study will enter a dose expansion phase. We expect to have data on the safety and tolerability of the combination as well as signals of efficacy next year. I'm personally very fortunate to be in a position here at ABC to explore the potential of ABCT901 targeting CAG1. It is a truly novel, first-in-class candidate for the treatment of patients with advanced solid tumors. The dose escalation of the Phase I study started at 15 micrograms per kilogram. We have completed the 30 microgram per kilogram dose level, and we are now at the flat dose of 4.5 milligrams. We expect to have an initial indication of the safety and tolerability, as well as early signals of anti-tumor activity by 2023. Like any dose escalation program, the exact timing is hard to predict. Next, we have ADCT601, mipacetamab ozopterine, our product that is directed to the surface protein called Axyl. This protein is overexpressed in many solid tumors and is highly prevalent in sarcoma. We expect to initiate the phase 1B in the coming weeks. The study includes a monotherapy arm in patients in whom actual gene amplification is detected and a combination arm with gemcitabine in patients with sarcoma. In addition to our clinical programs, we have two advanced preclinical solid tumor programs, ADCT701 targeting DLK1, which we are developing for neuroendocrine malignancies in collaboration with the National Cancer Institute. Our ADCT212 program is our optimized second-generation PBD-based ABC targeting PSMA, validated target for metastatic prostate cancer. We are currently completing IND-enabling work for both of these programs. As you can see, we continue to make great progress with our development and preclinical programs, and we have a robust and active pipeline. With that, I will turn the call over to Jen to give a financial update. Jen?
spk05: Thank you, Joe, and good morning, everyone. As we reported in the press release issued earlier today, Synlon's net sales were $16.5 million for the first quarter of 2022. As of March 31st, we had cash and cash equivalents of $431 million as compared to $467 million as of December 31st, 2021. This does not include up to $100 million in potential milestones from our healthcare royalty partners transaction. During the first quarter, we received the $30 million upfront from Mitsubishi Kanabe for our Zanlanta Japanese license agreement. We used approximately $34 million in net cash for operating activities in the first quarter of 2022. R&D expenses were $49 million for the first quarter 2022, compared to $39 million for the same quarter 2021. R&D expense increased for the quarter ended March 31st, 2022, as compared to the same quarter in 2021, as a result of our investments in Zenlanta trials in earlier lines of treatment and advancing our broad portfolio. Selling and marketing expenses were $18 million for the first quarter 2022, compared to $14 million for the same quarter 2021. The increase in selling and marketing for the quarter reflects the expenses for the Zinlanza launch and ongoing commercial efforts, as Zinlanza was approved in the second quarter of last year. T&A expenses were $19 million for the quarter, compared to $18 million for the same quarter 2021. T&A expenses increased for the first quarter 2022, as compared to the same quarter in 2021, primarily due to increases in professional fees associated with the Japanese license agreement. Net loss was 17 million for the first quarter, compared to a net loss of 52 million for the same quarter 2021. Our diluted net loss per share was 22 cents in the first quarter, compared to a net loss per share of 67 cents for the same quarter 2021. Adjusted net loss, a measure that excludes certain items as described in the press release issued earlier today, was $28 million for the first quarter, compared to an adjusted net loss of $57 million in the same quarter 2021. The adjusted diluted net loss per share was $0.36 for the first quarter, compared to an adjusted net loss per share of $0.74 for the same quarter 2021. The decrease in net loss and adjusted net loss for the first quarter 2022 as compared to the same quarter 2021 was primarily driven by license revenue of 30 million arising from the Mitsubishi-Tanabe agreement. These decreases were partially offset by the increase in R&D and selling and marketing expenses I mentioned earlier. In addition, net loss decreased for the first quarter of 2022 as a result of income arising from a cumulative catch-up adjustment associated with the valuation of our deferred obligation with healthcare royalty partners, partially offset by higher interest expense associated with our Deerfield credit facility and deferred obligation, both of which are excluded from our adjusted net loss. With that, I will turn the call back to Chris for closing remarks. Chris?
spk00: Thank you, Amit, Jennifer, Joe, and Jen. To conclude, in the first quarter, we remain focused on executing on all areas of the business, and we are well positioned to achieve our key objectives going forward. This includes driving the Zinlanta launch, working to develop Zinlanta in earlier lines of therapy, continuing to expand our geographic reach, and advancing our pipeline of differentiated hematological and solid tumor programs. I'm looking forward to working with Amit and the ADCT team. Now the team will be available for questions. Operator?
spk06: Thank you. If you have a question at this time, please press star, then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question comes from the line of Matthew Harrison with Morgan Stanley. Your line is open. Please go ahead.
spk03: Hi. I'm Steve. I'm asking for Matthew. I want to ask for the rental lunch dynamics. I want to ask about how much impact was from Omicron versus new patient starts, and have you ever seen an inflation in new patient starts in the recent months? Thank you.
spk00: Thank you. Jennifer, do you want to take that?
spk04: Yes, certainly. So good morning, and thanks for the question. As we've mentioned, the large environment and the third-line plus DLBCL market dynamics have been uniquely challenging. But we're pleased with the progress we've made since the launches in Lanta through Q1, which is less than a year on the market. I did mention in my remarks the Q1 headwinds of both the Q4 inventory build and burn as well as the Omicron-related impacts. And it's hard to really separate out the two. As you know, we don't get necessarily patient-level data, but we did watch account activity carefully in Q4 and I did mention that in Q1, we did not see an inventory build. The inventory levels have normalized. So I think that those impacts of lower level of patients presenting for treatment as well as inventory build are the result of the Q1 net sales of $16.5 million.
spk03: Sorry, the second part is, have you seen an inflation in new patients starting in recent months?
spk04: So at this time, we're not going to comment on Q2. We will be reporting our Q2 results in the August timeframe. We are encouraged, though, by the increased face-to-face interactions that we've seen opening up as we've progressed through Q1. We're very excited about the opportunity to fully launch our JCODE, which was effective as of April 1st, understanding that Over time, we'll be able to bring Zenlanta to patients in need in the community, as the patient distribution is a little different than in the academic institutions that see a fair number of concentrated third-line plus DLBCL patients. So we're very excited that the Zenlanta product profile is holding up in the marketplace, as we saw in Lotus, too, and confident that we will be able to establish Zenlanta as a third-line standard of care.
spk03: Got you. Thank you.
spk06: Thank you. And again, if you have a question at this time, please press star, then 1. And our next question comes from the line of Kelly Shee with Jeffries. Your line is open. Please go ahead.
spk08: Thank you for taking my questions. My first question is, would you be able to share the information on the breakdown in cells among the patients who had a prior CAR T- treatment versus like a no prior CAR T treatment? And my second question is, would you expect the patients prescribed from community centers having different patient baseline regarding the proportion of patients with prior CAR T treatment? And if so, should we expect a different sales run top at a community center versus academic center? Thank you.
spk00: Jennifer, do you want to take that? I don't know if also Joe might want to comment from the medical side afterwards.
spk04: Okay, Chris, I'll take the first part and then I'll ask Joe for his input as well. So, Kelly, thanks for your question. We're very excited about the community opportunity. We do appreciate that on a per-physician basis, the concentration of third-line plus DLBCL patients is less than we see in the academic centers where we do have concentrated third-line plus patients In terms of your question with regard to prior CAR T, we don't necessarily have patient-level data so that we could understand their prior therapies or even their future therapies after they received Nalanta. We have seen a lot of enthusiasm from thought leaders about the post-CAR T setting because it is an emerging area of high medical need. In the community, what we're excited about is the opportunity to offer our differentiated product profile to patients in the community who perhaps are not CAR T eligible or don't want to make the trip to a CAR T center because of our differentiated product profile, which has very robust single agent efficacy, very respectable response rates, including 25% CR with a very fast time to CR in just six weeks. For patients that want to stay in the community, we do think Zinlanta is the best agent for them in the third line plus setting. So with the J code, we're excited about bringing Zinlanta into the community for patients who need it.
spk06: Thank you. It was super helpful. Thank you. And again, ladies and gentlemen, if you have a question at this time, please press star then one. And I'm showing no further questions at this time, and I would like to turn the conference back over to Chris Martin for any further remarks. Oh.
spk00: Thank you very much for joining our call today. It's been a real pleasure leading ADC Therapeutics over the last 11 years and in particular I would like to thank each and every one of our employees for their real commitment to the company and their passion for the science and for serving patients. This has really been at the core and the driving force behind the progress of everything we've done and will continue to be so I'm sure. I've also enjoyed working with you and getting to know many of you over the years. I'm delighted to be handing over to Amit to lead ADC Therapeutics for the next chapter of our growth, and I'm sure you will enjoy working with him. So thank you all for your continued support. We look forward to keeping you updated on our progress. Have a nice day, everyone. Thank you.
spk06: This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
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