ADC Therapeutics SA

Welcome to the ADC Therapeutics Second Quarter 2024 Financial Results Conference Call. My name is DeeDee, 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 1-1 on your touch-tone phone. I will now turn the call over to Marci Graham. investor relations officer for ADCT. Marcy, you may begin.

Thank you, operator. This morning, we should release announcing our second quarter 2024 financial results and business update. This release and the slides we will use in today's presentation are available on the investor section of the ADC Therapeutics website. I'm joined on today's call by our chief executive officer, Amit Malik, and our CFO, Pepe Carmona, We will discuss recent business highlights and review our second quarter 2024 financial results. We'll then open 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 state power 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 the accompanying presentation on slide three and in the company's filings with the SEC, including form 10-K, 10-Q, and 8-K. ABC Therapeutics is providing this information as of today's date 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, except as required by law. The company cautions investors not to place undue reliance on these forward-looking statements. Today's presentation also includes non-GAAP financial reporting. These non-GAAP measures should be considered in addition to and not in isolation or in substitute for the information prepared in accordance with GAAP. You should refer to the company's second quarter earnings release for information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures. I will now turn the call over to our CEO, Anit Malik. Anit?

Thanks, Marcy, and thank you all for joining us. Today, I'd like to start by reminding everyone about our strategy to unlock the tremendous value we see in the company. Our first pillar and primary focus is hematology. Within this, we have a de-risked asset in Zynlanta, the key product in our prioritized portfolio. We continue to lay the foundation through our commercialization efforts in our existing Third Line Plus DLBCL indication, while we pursue the substantially larger potential opportunities in earlier lines of DLBCL therapy and indolent lymphomas. The second pillar of our strategy is grounded in our emerging solid tumor pipeline. ADCT601 targeting Axel is our most advanced asset. Beyond this, we are advancing a broad portfolio of differentiated ADCs against solid tumor targets of interest driven by our novel Exotecan-based platform. In the second quarter of 2024, we continued our focus on execution, advancing programs on several fonts in our Zonata expansion plan while working to deliver on our commercial strategy. In the first half of 2024, we achieved commercial profitability with revenues of $34.9 million year to date. Our second quarter revenues of $17 million compared to revenues of $17.8 million in the first quarter of 2024 and $19.2 million during the same period in 2023. Even in a highly competitive market, we have been able to secure our place as a treatment option for third-line plus patients with DLBCL. We've observed quarter-to-quarter variability over time, and we've seen continued competition in the third-line plus space with bispecifics. That said, the commercial business is now self-funding, and it's expected to be so going forward. We are confident in the roles Enanta plays today in the Third Line Plus DLBCL setting given its clinical profile as a monotherapy with rapid and durable complete responses, manageable safety, and ease of administration. Within our current indication, we see the potential to further strengthen our presence in the market even as the environment grows increasingly competitive. We are excited about the potential that grows Enanta beyond our current indication into earlier lines of DLBCL and in the lymphomas, significantly expanding the commercial opportunity. We are progressing in our Second Line Plus expansion efforts. Last week, LOTUS-5, our phase three confirmatory study of Zymanta in combination with Brutuximab passed futility and enrollment is nearing completion with full enrollment expected by the end of 2024 and with data likely by the end of 2025. In our Lotus 7 trial, enrollment remains on track in the part two dose expansion of the Zinlanta plus clofidimab combination arm and second line plus DLBCL. And complete enrollment is expected by year end. An update on safety and efficacy in a valuable patient is expected by the end of 2024 with data on all patients anticipated in the first half of 2025. We are also progressing our solid tumor programs. ADC T601, our novel actual targeting ADC, continues to enroll sarcoma and pancreatic cancer patients as we optimize the dose and scheduling and have begun screening non-small cell lung cancer patients. We plan to share an initial update from the phase 1 trial in the second half of 2024. And since sharing a comprehensive update in April, on our novel Exotecan-based solid tumor platform, including early data on our four lead preclinical ADC candidates. We have selected one candidate to move forward, which we expect to disclose in 2025 and continue to explore potential partnership opportunities. Throughout the quarter, we maintained our disciplined capital allocation strategy and decreased operating expenses in the second quarter by 23% year-over-year on a non-GAAP basis. This, in addition to our recent financing of $105 million, enabled us to extend our expected cash runway into mid-2026, providing the company with a stronger balance sheet to execute against our strategy. As we have now reached commercial profitability for Zenlanta in 2024, I'd like to go deeper on the substantially larger potential opportunity for Zenlanta in earlier lines of DLBCL therapy and indolent lymphomas. Our LOTUS 5 and LOTUS 7 trials are focused on expanding usage of Zymanta into second-line plus DLBCL. Assuming positive results based on these two studies, we are confident in our strategy to become the combination agent of choice in this setting with the potential to reach more than $500 million in peak sales. Our LOTUS V trial continues to advance, and we are pleased to announce a positive outcome on the interim futility analysis. The independent data monitoring committee has reviewed the unblinded efficacy and safety data and recommended to continue the trial without modification. As we have now passed futility, we remain on track to complete enrollment by the end of this year, with the potential for a headline readout by the end of 2025. If positive, we believe this trial will lead to full approval for Zymanta potentially as early as the end of 2026 and expand our indication into second line plus DLBCL in combination with rituximab, a treatment frequently used in the community setting. This could triple the potential revenue opportunity by doubling the potential patient population and increasing the treatment duration by roughly 50% compared to the current Zymanta label. In our LOTUS 7 trial combining Xenlanta with bispecifics, we continue to be encouraged by the initial safety and tolerability profile, as well as the anti-tumor activity observed at the initial investigator assessment among the majority of patients in Part 1 of the dose escalation. Enrollment is ongoing in Part 2 dose expansion with Xenlanta plus clofidimab in second-line plus DLBCL and we expect to complete enrollment and plan to share additional efficacy and safety data before year-end. We are excited by the opportunity to demonstrate that this in-line accommodation can improve efficacy versus either agent and reduce the potential need for hospitalization associated with bispecifics, thereby expanding accessibility in the community setting. Beyond DLBCL, we also see the potential to expand into the second-line setting of indolent lymphomas based on initial data from investigator-initiated trials at the University of Miami exploring Xenlanta monotherapy in marginal zone lymphoma and Xenlanta plus rituximab in follicular lymphoma. Early data from these studies demonstrate the potential for rapid, deep, and durable efficacy with a fixed duration of therapy and a manageable side effect profile. Based on the high CRH seen thus far in these studies, we believe there is the potential to provide marginal zone and follicular lymphoma patients years of remission. As there remains significant unmet need across these indolent lymphomas, with sufficient data, we plan to discuss the path forward with regulatory authorities, as well as seek inclusion in Compendia. We anticipate more will be shared on these two trials at future medical meetings. Within solid tumors, we continue to investigate ADCT601 targeting Axel in a phase one study. While others have explored Axel as a therapeutic target, we have a potentially differentiated profile with 601 due to its innovative design, incorporating a PBD toxin, as well as our patient selection approach with our validated biomarker assay. Axel is expressed in multiple tumor types, and it has been shown that the high expression of Axel is correlated to lower overall survival across many cancer types, including sarcoma, pancreatic cancer, and non-small cell lung cancer. In this trial, we continue to enroll sarcoma and pancreatic cancer patients as we optimize the dose and schedule and have begun screening in non-small cell lung cancer patients. With respect to our preclinical pipeline, our focus is on advancing differentiated ADC candidates. against prostate, non-small cell lung, colorectal, endometrial, and ovarian cancers. For each tumor type, the combination of incidence and five-year survival offers large potential opportunities and indicates that better treatment options are needed. Furthermore, in each case, chemotherapy remains a key part of the treatment armamentarium. From our four lead ADC candidates, NABI-2B, CLAUDIN-6, PSMA, and ASCT2, we have now selected one to move forward to IND, which we expect to disclose in 2025. In terms of stage, our NAAPI 2B, CLODN6, and PSMA ADCs are in IND-enabling studies, and our ASCT2 ADC is in the drug candidate selection stage, which we expect to complete this year. And we continue to seek research collaborations to advance a broad portfolio as we believe each offers the potential to improve the standard of care for cancer patients, and each utilizes our novel Exotecan-based platform. Preclinical work suggests that our four lead candidates each have a high therapeutic index, reflecting the proprietary design of the ADC. Given the unmet medical need coupled with the market opportunity, a successful outcome for our early research programs has the potential to transform the lives of patients and create significant value in the future. With that, I would like to turn the call over to Pepe.