ADC Therapeutics SA
Q4 2020 Earnings Call Transcript

Published: 18 Mar 2021

[Operator:]

Thank you for holding. Good morning and welcome to the ADC Therapeutics Fourth Quarter and Full Year 2020 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. Following the formal remarks, we will open up the call 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 ADC Therapeutics. Please proceed.

[Amanda Hamilton:]

Thank you, operator. This morning we issued a press release announcing our fourth quarter and year end 2020 financial results and business update. This release is available on the ADCT website at ir.adctherapeutics.com under the Press Releases' section.

[Chris Martin:]

Thanks, Amanda, and thank you all for joining us this morning. We made tremendous progress over the last year at ADC Therapeutics. We reported several meaningful data readouts across our programs at key medical meetings such as EHA and ASH. Advanced our promising development pipeline of potent and targeted antibody drug conjugates for patients. We built out our commercial team and infrastructure and financed the company to ensure we can execute on our goals and objectives. During the fourth quarter, we saw much of this hard work come together when we received FDA acceptance of our BLA submission for our lead product candidate, Lonca, in the treatment of relapsed refractory DLBCL. As we approach on May 21, PDUFA date and the planned commercial launch, we are ensuring that we are well prepared across our commercial, medical affairs, CMC, and support functions. I'll share more about our launch preparations in a moment. For our second lead program, Cami, we completed enrollment in our pivotal trial, bringing us one step closer to potentially addressing an unmet need in heavily pre-treated Hodgkin lymphoma patients. We look forward to reporting our updated interim data from the trial in the first half of this year. Jay will go into more detail on the Cami program shortly.

[Jay Feingold:]

Thank you, Chris and good morning. I'm pleased to present an update today on both the clinical and preclinical programs, starting with our lead program, Lonca. As Chris mentioned, we see great opportunity to expand the addressable patient population. Updated data from our LOTIS 2 single-arm, open-label, 145-patient Phase 2 clinical trial were presented at the recent ASH Meeting in December. These data continue to demonstrate Lonca's significant and durable antitumor activity. Based on the robust single-agent activity, we are currently advancing multiple clinical trials, evaluating Lonca in combinations with earlier lines of therapy in DLBCL and in additional histologies. First among these studies is our ongoing pivotal Phase 2 LOTIS 3 trial and Lonca combined with ibrutinib for patients with relapsed or refractory diffuse large B-cell lymphoma or mantle cell lymphoma, which is intended to support the submission of a supplemental BLA. Interim data for this trial were presented at ASH and showed encouraging efficacy and manageable toxicity and an overall response rate of 62.9% across all patients, and 67% in non-GCB DLBCL patients. Enrollment for the pivotal Phase 2 portion of the trial is ongoing, with 26 out of 66 non-GCB patients enrolled as of February 12. We expect to report additional data for the Phase 1 portion of this trial in the first half of this year.

[Jenn Creel:]

Thank you, Jay and good morning, everyone. As we reported in our press release, we ended the year with cash and cash equivalents of approximately $439.2 million as compared to approximately $115.6 million as of December 31st, 2019. We used approximately $51.7 million in net cash for operating activities in the fourth quarter and $168.7 million in net cash for the full year 2020. We expect our spend to continue to increase over the next few quarters, funded by our strong balance sheet, as we prepare for the anticipated launch of Lonca and continue to invest in our broad pipeline. R&D expenses were $48.6 million for the fourth quarter and $142 million for the full year ended December 31, 2020, compared to $30.4 million and $107.5 million for the same quarter and full year 2019. The increase for the quarter and for the full year was primarily due to the growth of our R&D organization to support the Lonca BLA submission, medical affairs, pre-launch activities and multiple Lonca and Cami clinical programs. During the fourth quarter of 2020, we started to present sales and marketing expenses as a separate line item in anticipation of the commercial launch of Lonca. Sales and marketing expenses were $9.4 million for the quarter and $22.1 million for the full year ended December 31, 2020.

[Chris Martin:]

Thanks, Jenn. As I said earlier in the call, this year has been a remarkable one for ADCT and we are eager to maintain this momentum going forward. As we are working to ensure that we are well prepared for the successful launch of Lonca, if approved. We are also excited about advancing the other programs in our pipeline. To expand Lonca to earlier lines of therapy, in the first half of 2021, we expect to begin a pivotal Phase 2 trial in follicular lymphoma and the first line dose-finding study with R-CHOP. We will also report our updated data from the Phase 1 trial of Lonca in combination with ibrutinib in relapsed or refractory DLBCL, as well as complete enrollment in the pivotal Phase 2 expansion portion of this study. Later in the year, we expect to report data from the safety lead-in of the Phase 3 of LOTIS 5 confirmatory trial in combination with rituximab. Moving to Cami. We await interim results from the pivotal Phase 2 trial in HL in the first half of the year, and continue enrollment for the Phase 1b clinical trial of Cami in combination with pembro for the treatment of selected advanced solid tumors. In our earliest stage clinical programs, we will continue patient enrollments in the ongoing Phase 1 study of ADCT-602, targeting the CD22 in acute lymphoblastic leukemia, and we plan to start a Phase 1b combination study of ADCT-601 targeting AXL in multiple solid tumors in the second half of this year. Lastly, we continue to advance our preclinical assets and anticipate an IND submission for ADCT-901, targeting KAAG1, in the first half of 2021. I look forward to updating you on our progress in the future. And we'll now open the floor for questions. Operator?

[Operator:]

Thank you. We will now take any questions you may have. Our first question comes from Tazeen Ahmad with Bank of America. You may proceed with your question.

[Tazeen Ahmad:]

Hello, good morning. Thank you for taking my questions. Chris, just wanted to get your thoughts on how interactions with FDA are going as you approach your first PDUFA? There have been instances recently of a surprise feedback from CA, actually across multiple therapeutic areas. And so with that in mind, I think investors are going to be keenly interested in hearing about how your discussions are going? And if you think you're on track to an uneventful hopefully PDUFA in the middle of the year? And then secondly, can you just remind us of how big of an initial commercial team you will launch with Lonca? How much of your commercial endeavors will initially be virtual? And how we should think about the early ramp expectations? Thank you.

[Chris Martin:]

Good morning, Tazeen. Thank you for those questions. I'll ask Jay to answer the first question, because he's daily interacting with this. And perhaps Jennifer can then jump in on the commercial side. Jay?

[Jay Feingold:]

Sure, thanks. Good morning, Tazeen Ahmad. And with regard to the FDA, we've been very actively engaged with them. The process is moving along nicely. There have been absolutely no issues to-date. We have no reason to anticipate any problems with either site business to manufacturing facilities with - to clinical sites, everything is going along very well.

[Tazeen Ahmad:]

Thanks, Jay. Are your visits - are the visits virtual to the sites or are they in-person?

[Jay Feingold:]

Look, sort of a combination, but I'll leave it at that.

[Tazeen Ahmad:]

Okay.

[Jennifer Herron:]

Okay. Tazeen, hi. This is Jennifer, thanks for your questions around the commercialization of Lonca. I think I've mentioned before that you know, we have built an entire commercial organization and infrastructure to enable launch on our own, and we're very excited about that opportunity to bring Lonca to patients. We have a customer-facing team that's over 70 highly skilled individuals deepened with oncology, hematology experience that spans market access, medical affairs, and sales, and we've sized our organization to cover more than 90% of the DLBCL opportunity. In terms of our deployment or how we're going to deploy, we've trained all of these teams already to launch Lonca in a hybrid environment, which is going to include, as Chris mentioned in his earlier remarks, you know, purely virtual engagement through hybrid and then opportunistic face-to-face meetings, and the teams have actually already been operating in this hybrid approach. And we think that we're going to monitor carefully as we go through the launch. It is fairly dynamic and it's variable across the country, but we're going to be very opportunistic in managing and monitoring the in-market performance very carefully. In terms of the launch uptake, you know, we're confident and prepared that we believe Lonca represents a meaningful treatment for patients with relapsed/refractory DLBCL. As I’ve alluded to, we've got a sophisticated plan to maximize that uptake, and we expect our launch to be very successful and well received by customers and patients and payers.

[Tazeen Ahmad:]

Okay, thanks, Jen. Maybe just one quick follow-up. In your discussions with physicians, have they've been talking about, you know, patients during COVID reducing their visits and seeing physicians with less frequency? We have heard that from other oncology companies, as difficult as that might seem, people are skipping important appointments. And so, just wanted to get a sense if you're hearing that.

[Jennifer Herron:]

Yeah, I really think it depends on the specific tumor types that you're talking about. I think in the relapsed/refractory DLBCL setting, because of the aggressive nature of the disease, we have not heard that type of patient behavior, if you will, from physicians directly. But I do - I am aware that other companies have made, mentioned that you know COVID because of patient visit has interrupted their business to some extent. But we don't - we do not expect that, particularly as the country is opening up a little bit more.

[Tazeen Ahmad:]

Okay, thank you.

[Operator:]

Thank you. Our next question comes from Matthew Harrison with Morgan Stanley. You may proceed with your question.

[Matthew Harrison:]

Thanks, good morning. So I guess just one follow-up to the commentary you made about the site visits. Has there been, I guess, specifically, has there been a manufacturing inspection or is there one scheduled? And just if you could comment on that. And then I guess two other questions. First, on, I believe in your prepared remarks, I heard you make a comment about a frontline study with R-CHOP. Could you just talk about what sort of, I guess what sort of signal you would look for an early study to make an investment there? Because obviously, a pivotal study there would be quite long and quite expensive. And then, secondarily, I guess, could you comment on the CD25 solid tumor combination study? And I guess the real question here is, how are you or what are you going to look for in that initial study to figure out if you're getting incremental activity versus PD model ? Thanks.

[Jay Feingold:]

Okay, so. Matt, if I forget any of those questions, just remind me. With regard to the first question, we've not provided much detail with regard to FDA interactions. But I think it's fair to say that, as far as we know, all of the FDA's investigation notice of our manufacturing is complete. So can we leave it at that for the moment?

[Matthew Harrison:]

Sure, sure. Thank you.

[Jay Feingold:]

In terms of Lonca plus R-CHOP, it's really a great question. The first thing I would point out is, can you get Lonca in addition to R-CHOP? And so, it's a dose-finding study, and depending on what sort of signal we see, then we have to identify which population of frontline patients we want to go to, is it the broad population or a specific subpopulation? But first, we need to see, first and foremost, can we get the two together? As you know, I'm not a fan of eliminating the parts of R-CHOP but would rather add it to it would be my preference, if it's possible. And then can you remind me what the third question was, I'm sorry?

[Matthew Harrison:]

Yeah. So the third question was basically Cami plus PD1 that Phase 1 study that you're starting. How are you going to - what are you going to look at in terms of either clinical data or biomarkers to figure out if you're getting incremental activity over PD1 in those solid tumor patients?

[Jay Feingold:]

Yeah, that's a great question. Thanks. So where PD1 is approved, obviously, we have to see some incremental improvement in response above what PD1 is known to do itself. So until the times when it's approved, that's what you'd expect to see. Where it's not approved, there have been studies in many different tumors where it's not approved, but there's data, right. So again, we would have to be able to show against literature where it's available while we're adding anything in terms of responsiveness. The other place we have to look, of course, is that the durability response, which is always of course, extremely important, and you know clinical benefit beyond just responding. So I think those are the things that we're looking for. We are doing a variety of biomarker studies as part of this study and we'll have more to say on that in the future.

[Matthew Harrison:]

Thank you.

[Operator:]

Thank you. Our next question come from Konstantinos Aprilakis with Stifel. You may proceed with your question.

[Konstantinos Aprilakis:]

Good morning, guys. Thanks for taking my questions. I've got a few on LOTIS 3 and then one on the competitive landscape. So first on the pivotal Phase 2 portion of LOTIS 3, you're guiding to enrollment completion in the first half of this year. That seems to be ahead of schedule since you only initiated dosing in July of last year? Can you comment on the pace of enrollment for that trial and perhaps what is driving its rapidity? And should we expect initial data from this trial by year end? And then I'll wait for the follow-up for the next question.

[Jay Feingold:]

Thanks for not stretching my memory. So in terms of the first question, yeah there's been one and let's say, it has been steady. I can't - I don't recall just predicting the enrolment will take longer than the first half. But I remain optimistic we can still complete the enrollment this year. The study is going to require some follow-up of the response data. So I don't think at this point I can advise that when we might see data from that trial from the Phase 2 part of that trial.

[Konstantinos Aprilakis:]

Okay, got it. And then on the competitive landscape just earlier this week, your competitor in the DLBCL space were posted, you know, provided revenue guidance for 2021 fell short of consensus. You know, what learnings have you been able to glean from Judy's recent entry into the DLBCL market, both with respect to impact from the ongoing COVID-19 pandemic and positioning with community oncologists versus academic centers?

[Jay Feingold:]

I'll leave back to Jenn.

[Jenn Creel:]

Yeah, thanks. Konstantinos, thanks for the question. Yeah. So I mean, in terms of the learnings that we've had as we've been monitoring landscape, I mean, it's been a really exciting time to be in relapsed/refractory DLBCL. And you know over the last say 18 months to 24 months, there have been a couple new options for patients, which is exciting and really good news for patients. I think it also underlies the continuing unmet medical need in relapsed/refractory DLBCL. I think that, you know, with Lonca, we have a unique opportunity, because we have a differentiated profile. As we put our profile even against the competitors in front of treating physicians with academic and community, the profiles resonate with them as a real world example of the patients that they're treating every day. And so you know we are very excited about the opportunity, hopefully in the very near future to bring Lonca to physicians and patients. We are confident in our plans. And we're just looking for FDA approval so that we're - we are ready to launch right now, but we'll have to wait for FDA approval.

[Konstantinos Aprilakis:]

All right. Thanks, guys. Looking forward to it.

[Operator:]

Thank you. And I'm not showing any further questions at this time. I would now like to turn the call back over to Chris Martin for any closing remarks.

[Chris Martin:]

Well, thank you. Thank you all very much for joining our call today. We look forward to keep you updated on our progress. And I wish you all a good day. Thank you. Bye.

[Operator:]

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.