ADC Therapeutics SA
Q3 2020 Earnings Call Transcript

Published: 12 Nov 2020

[Operator:]

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. At this time, I’d like to turn it over to Amanda Hamilton, Investor Relations Manager at ADC Therapeutics. Please proceed.

[Amanda Hamilton:]

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.adctherapeutics.com under the Press Releases section. On today’ call; Chris Martin, Chief Executive Officer; Jay Feingold, Chief Medical Officer; and Jenn 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.

[Chris Martin:]

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 with our BLA to the FDA for our lead program, Lonca. For the treatment of relapsed and refractory diffuse large B-cell lymphoma, we have previously discussed this submission is based on data from our pivotal Phase 2 LOTIS 2 trial, which evaluated the efficacy and safety of Lonca in patients with relapsed or refractory DLBCL following two or more lines of prior systemic therapy, and demonstrated important antitumor activity and durability as well as manageable toxicities across patients with difficult-to-treat disease.

[Jay Feingold:]

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.

[Jenn Creel:]

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 Lonca development activities advancing our early pipeline and the commercialization of Lonca. 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 31, 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 Lonca 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. G&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.

[Chris Martin:]

Thanks, Jenn. 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 got feedback from the FDA on our BLA admission, 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 Lonca development program with the start of the pivotal Phase 2 in follicular 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 company and its assets through investment in Lonca and Cami and are promising earlier stage pipeline programs. We look forward to presenting a number of key datasets during the upcoming ASH meeting in December, further showcasing the value and potential about productive ADC platform and development team. We plan to host the conference call with Dr. Hamadani, Professor of Internal Medicine and Scientific Director of the Division of Hematology and Oncology at Medical College of Wisconsin on Monday, December 7 at 8

[Operator:]

The first question comes from Matthew Harrison from Morgan Stanley. Please go ahead. Your line is open.

[Matthew Harrison:]

Great. good morning. Good afternoon. Thanks for taking my 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 Jenn, 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.

[Jay Feingold:]

So now, I’ll answer the clinical question first. I agree with you that the landscape is very competitive and B-cell non-Hodgkin lymphoma, and even in – for both DLBCL and follicular lymphoma, as well as mantle cell lymphoma. focusing on DLBCL, with the introduction of rituximab about 20 years ago, the treatment for DLBCL increased significantly, but since that time, there’s been little change and it remains 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 in some cases, some studies, patients are not cured in that first line. So, we believe that Lonca, because of its significant activities as a monotherapy, has a role in the treatment of relapsed/refractory DLBCL in terms of moving up into early lines of therapy, the only that we’ve shared so far and what we’ll see at ASH. I think it’s very interesting in the combination of Lonca plus ibrutinib, particularly in non-GCB DLBCL patients, which is where most of the data is at this time. So, we’ll just have to wait and see how it works out. I don’t have a number of mine that would say to me, oh, yes, 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 indications are very positive.

[Chris Martin:]

Thank you, Jay. Matthew, in terms of commercial spend, I’ll let Jenn answer that in detail. I will say that Jennifer and Joe Camardo in commercial and Medical Affairs would make tremendous progress in this quarter. So, I think building their teams and interacting as I mentioned in the – 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 Jenn, I’ll let you address the financial part of that question.

[Jenn Creel:]

Sure. Thanks, Chris and thanks, Matthew for the question. As the teams have been building out, and as Chris mentioned, 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 Lonca 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.

[Operator:]

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.