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spk05: Based on the high complete metabolic response rates seen thus far in these studies, we believe there is the potential to provide marginal zone and follicular lymphoma patients with years of remission. We are looking forward to the lead investigators sharing more on these studies at the ASH meeting in December. As there remains significant unmet need across these lymphomas, with sufficient data, we plan to discuss the path forward with regulatory authorities as well as seek inclusion in Compendia. With that, I would like to turn the call over to Pepe.
spk02: Thank you, Amit. On the financial front, we remain well capitalized, ending the third quarter with $274.3 million in cash and cash equivalents, which is expected to fund operations into mid-2026 based on current plans. The long-term net product revenues were $18.0 million for the third quarter and $52.9 million for the first nine months of 2024 as compared to $14.3 million and $52.4 million for the same periods in 2023. The third quarter growth versus prior year is primarily driven by volume increase together with a net price increase. Throughout the year, we have maintained our disciplined capital allocation strategy and decreased operating expenses for the first nine months of 2024 by 12% year-over-year on a non-GAAP basis, which excludes stock-based compensation. In the third quarter, our non-GAAP operating expenses increased versus prior year by 5% due to investment in Simlanta Lotus 5 trial and Access Phase 1 clinical program, partially offset by efficiencies in other operating expenses. We will continue to take a very disciplined approach to our capital allocation through the remainder of 2024 and into the coming year. You can find the reconciliation of GAAP measures to non-GAAP measures in the accompanying financial tables of the press release issued earlier today and in the appendix of this presentation. On a GAAP basis, we reported a net loss of $44.0 million for the quarter, or 42 cents per basic and diluted share. as compared to net loss of $46.7 million, or a net loss of 57 cents per basic and diluted share for the same period in 2023. On a non-GAAP basis, adjusted net loss was $29.4 million, or an adjusted net loss of 28 cents per basic and diluted share, as compared to adjusted net loss of $32.4 million, or $0.39 per basic and deleted share for the same period in 2023. The decrease for the three months ended September 30, 2024, is primarily related to higher revenues, while the decreased year-to-date is primarily due to lower operating expenses. With our strong balance sheet, we believe we're well financed to continue to pursue our corporate strategy. As a reminder, hematology continues to be primary focus of our capital allocation, and within this, our key objective is to create value by expanding the use of CINLOMPA beyond our current indication. We expect to achieve this by fully supporting our commercialization efforts in the U.S. directly and through our partnership ex-U.S., and by investing behind potential expansion into early lines of DLVCL and indolent lymphomas. In solid tumors, our aim is to pursue multiple ADC candidates in parallel and increase our shots on goal through our novel exotican-based research platform. In addition to the candidate we are taking forward to IMD, we will determine on a case-by-case basis whether we wish to progress additional candidates internally or seek to partner in order to share the development of financial risk. With that, I will turn the call back to Amit.
spk05: Thanks, Pepe. As we've illustrated today, we made significant progress in the third quarter, maintained our disciplined approach to capital allocation, and are excited about what is ahead for the remainder of 2024. We have key potential value-driving milestones, which we expect before the end of this year. These catalysts include expected completion of enrollment in Lotus 5 and initial efficacy and safety data from Lotus 7, Part 2 dose expansion in December, as well as a presentation of updated endometrial lymphoma Phase 2 IIT data at ASH. Looking ahead with a strong balance sheet to execute our strategy, I am confident that ADC Therapeutics is well positioned to drive value creation for all our stakeholders. We can now open the line for questions. Operator?
spk08: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star followed by the number one on your touchtone phone. If you wish to be removed from the queue, please press star followed by the number two. If you are using a speakerphone, you may need to pick up the handset first before pressing the numbers. Once again, if you have a question, please press star, then one on your touchtone phone. One moment, please, for your first question. Your first question comes from Michael Smith of Guggenheim. Please go ahead.
spk07: Questions.
spk01: Could you comment a little bit more about the commercialization of Zenlanta and its approved indication? I know it's not expected to grow dramatically, but when we look at some of the recent CD25 specific antibody launches, I mean, they seem to be experiencing some meaningful uptake in a similar category. And so I'm just curious, you know, what are you seeing in terms of utilization right now and potential incremental growth opportunities from the current run rate, again, in the approved indication and then ahead of follow-up?
spk05: Okay, sure. Thanks, Michael. Appreciate the question. You know, as you said, there has been increased competition from bispecifics. Since they launched over a year ago, they obviously had penetrated pretty significantly in the academic setting and the third-line setting, as well as made some inroads into the community. One thing we see is more referrals going on between the community and academics for patients to get access to bispecifics. So they've certainly taken over probably close to about a third of the overall third-line plus market share. I think what I'm excited about with the team is, if you look at our overall volume, it's pretty much in line despite all that competition. So we continue to maintain a relatively stable mix of demand between the community and academic settings. So it's still about 50-50. Obviously, there's, like we said last quarter, there can be normal order to order, quarter to quarter ordering variability. But we see, you know, relatively strong advocacy for the use of Zenlanta by academic traditions and use in the community. So I think the trend that we've been seeing, we anticipate to continue to see, and we continue to see the possibility for an $80-plus million peak sales potential in the current indication.
spk01: Okay, great. And on the Lotus 7 data later this year, I know you said you'll expect to present data on about 15 to 20 patients with clofidimab. So what is a positive result here? What are you looking for in this initial data for Lotus 7? Thanks so much.
spk05: Yeah, I think it's a great question. So, I mean, if you look at other bispecific combinations, and there's been a number of bispecific combinations that have come out with data, and obviously our data won't be mature enough to look at PFS or overall survival. What we'll have is overall response rates and CR and PR rates. If you look at that, they tend to be in the 50 to kind of 60% range. I mean, if you look at the majority of the bispecific accommodations, they're in that range when you look at the second line plus setting. So, of course, we want to be competitive from an efficacy profile, but also to hopefully continue to show what we saw in the dose escalation, which is continued improvement, you know, in the overall rates and severity of CRF. And so... That's the goal for the profile. Obviously, you know, we have to let the data mature and we'll show it in December, but those are the two things we hope to be able to share. One thing I would just note also in terms of efficacy is that, you know, when data is reported by competitors or in other trials, it's always about best overall response rate and best CR. That matures over time. And so, you know, we expect to be able to share preliminary data on the scans, but also I think you know, data matures over time. And we'll continue to share updates, not just this year, but as we go into next year as well.
spk07: Thank you. Your next question comes from Eric Smith of Kantor.
spk08: Please go ahead.
spk06: So thanks for taking my questions. I appreciate the update, Amit and Pepe. Maybe just coming back to Axel 601 and sort of the solid tumor opportunity. Is there anything you learned from your decision to give this a quick hook with regard to, I don't know, PDD payload or linker or safety, or maybe it was just the target that was a no-go here?
spk05: Yeah, I mean, I think, you know, what's interesting is when we did the dose escalation, you're obviously giving more limited dose duration. And when you're doing the dose escalation, we did see some initial clinical activity, which we had shared in sarcoma, both as monotherapy and That basically led to the investment to say, let's do the dose expansion optimization. We knew with the payload and target combination, there was a limited therapeutic index. And so one of the things we wanted to look at was different dosing schedules, for example, three versus four weeks, or what we've done in other programs, start with a higher dose and then down dose. And so we played with that during the dose optimization and expansion phase. But unfortunately, we weren't able to sustain the level of efficacy that we want to see with a favorable tolerability profile. And so the benefit risk that we saw during that dose optimization expansion phase just wasn't there. It's hard to speculate how much is target versus payload, you know, but I would just say that some of the side effects that we saw as we were continuing to dose at high levels were more limiting to get to the efficacy we wanted to see. So the reason we made the call is, you know, we wanted to have a specific endpoint. You remember we said we're going to dose you know, up to 80 patients, we're going to either see a strong efficacy signal and a strong profile that we think we can go out and do a BD deal, or we're going to stop the program. And so we had very disciplined go-no criteria that we stuck with, and we just made the decision that it wasn't worth pursuing any further.
spk06: Appreciate the discipline. Can you be a little bit more specific on timelines for a next solid tumor IND filing and or, you know, partnerships? conclusion discussion?
spk05: Yeah. So, as you know, we've really shifted the whole solid tumor strategy towards newer payloads. So, as you know, Exotec is the most advanced. We have four different programs in that. We will give an update in the future. I mean, as you know, we've picked one program that we're already progressing on our own towards IND. We haven't given the timing expectation of that. We will give that in a future update. And we continue to be in discussions with partners around potentially research collaboration for some of the other programs. I don't anticipate that's going to happen this year, just to set expectations. I think it's more of a 2025 event.
spk03: And just to clarify, Eric, so between the drug candidate selection until you get to an IMD, an average takes about 18 months. It can fluctuate, but that's roughly the timeline on that. And we will obviously, as Amit said, we already selected the track that's going to move to IAP.
spk06: Okay. And a quick one for you, Pepe, on Zinlanta sales. I think you mentioned net pricing gains. Could you quantify the magnitude or percent increase in net pricing? Yeah, we take twice a year price increases
spk03: no single-digit.
spk07: So compounded anomaly is mid-single-digit, roughly. Thank you. Your next question comes from Kelly Shee of Jefferies.
spk08: Please go ahead.
spk00: Thank you for taking my question. So for a lot of seven trials, what kind of synergy you expect from this combo, particularly on durability front? And also just curious, are there any community centers are involved for this ongoing trial?
spk05: Yeah, so we hope to see synergy. Obviously, that's what we're testing, right, is to see either additive or synergistic efficacy, because obviously these are complementary mechanisms. Zinlant is, of course, the CD19-ADC, and Glufidamab is the CD20-ADC. CD3, T-cell, bispecific. So we hope to see additive or synergistic efficacy. And because of the way we're dosing, by giving this Enlanta a week before to debulk the tumor, we're also hoping that that reduces the rates and severity of CRS. So the profile is really to prove on both dimensions of the bispecific monotherapy. In terms of the trial, we are in academic centers and in large community centers We're in CAR T centers as well as centers that don't give CAR T. So we're really trying to make sure that we're testing this in a representative sample of second-line plus patients because we think it's really important to test across the whole patient sample. You should expect a patient sample that's very consistent with other large-scale bispecific combination trials.
spk00: Thank you very much.
spk08: Your last question comes from Gregory Renza of RBC Capital Markets. Please go ahead.
spk04: Hi. This is support on for Greg. Thanks so much for taking our question. On Loader 7, one of the key value proposition here is the potential to reduce side effect profile such as CRS. I'm just curious, what would that data need to look like in the initial update to be consider as a meaningful improvement from bispecific or bispecific plus chemo? And then I have a follow-up.
spk05: Yeah, I think the most meaningful thing, obviously, you know, what we saw in the dose escalation was in the low 30%. You know, glopidemab on its own is roughly 70%. So, you know, rates of CRS are obviously important, but I think severity is even more important because when you look at grade one CRS, it can be treated, you know, as simply sometimes as Tylenol, grade four, you're hospitalized. So, you know, the difference between these grades is very significant. And especially to remove the requirement or even option for hospitalization, I think the important thing is to get rid of high-grade CRS, so grade three and grade four. So what we would hope to see, like we saw in the dose escalation, was no high-grade CRS. I think that's the most important part from that standpoint. But again, we also want to see efficacy that's strong, too. So I think we're looking to hopefully improve on both dimensions versus the bispecific monotherapy.
spk04: Got it. Thanks. Thanks so much. And as a follow-up, I'm just curious, what should we be, I mean, can you help set expectations for the endolan informant update at ASH? And can you also remind us, like, what are the sizes of this data set that will be needed for the compendia listing and maybe help if you could help refine the timeline when you expect to have that sufficient data to pursue that route. Thanks so much.
spk05: Yeah, sure. So you probably saw the abstracts that were released on Tuesday, and we had a press release just summarizing the abstract data from both the Elastofactory high-risk SL study as well as the Elastofactory MZL study. So what I would expect in the presentations, you know, SL is an oral presentation, MZL is a poster presentation. updated data, as you see with most things. So, you know, when the investigators have to submit data in the summer, they, of course, will update that with more patients and more duration and provide further detail in the presentation. So, that's what you should expect at ASH. And then, in terms of the number of patients that are needed, you know, there's more of a precedent, I would say, in MZL, where when you look at patient sample sizes that have gotten the guidelines, it's been as little as 36 patients. The most has been kind of around 50. So, when there was inclusion. And even for approvals, it's only been up to about 68 patients. So that's kind of the range, I would say. We're doing a 50-patient study. You can see the data that was presented in the abstract. It was 20 patients. I would expect to see probably a few more, you know, when you get to the presentation because there will be more patients that have been enrolled. And that's sort of, you know, we'll have to be in that range, I would say, to be able to, with data that also has some level of durability, to be able to submit to get into, you know, potentially to get into guidelines or have discussions with regulatory authorities. With follicular, there's a little bit less of a precedent because there's a number of phase three studies that have gone on, head-to-head studies. The unique thing about the patient population we're studying, though, is it's only a high-risk patient population. Many of these patients are POD24, so the unmet need, of course, in this population is significantly higher. And so there may be a possibility with, remember, we're doing a 100-patient study, which is a pretty large study in this more narrow patient population. There's a possibility that we would be able to submit and have discussions with the FDA on a more accelerated path in this high-risk patient population.
spk07: And in terms of the timeline, when do you expect to have enough data? Yeah, I mean, I guess what I would say is you'll see a further update at ASH now.
spk05: That'll be the next real update on the data where you'll see more details versus what was in the abstract. In terms of timing, we haven't given any updates because obviously these are both investigator-initiated trials, so the enrollment's not in our control. I think you'll just see that versus the updates that we gave earlier this year and prior year, these continue to enroll. There continues to be interest given the high end that needed both of these settings.
spk07: Thank you so much.
spk08: Thank you, ladies and gentlemen. That concludes our question and answer session. I will now turn the call back over to CEO Amit Malik. Amit?
spk05: Thank you for joining our call today and for your continued support. We look forward to keeping you updated on our progress. Operator, please end the call.
spk08: Thank you. for attending, you may now disconnect your lines.
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