ADC Therapeutics SA Q4 FY2024 earnings call

Key Accomplishments in 2024 - Achieved commercial brand profitability with ZYNLONTA in the third-line-plus DLBCL space with $69.3M sales in line with prior year. - Completed enrollment in pivotal Phase 3 LOTIS-5 trial and had initial efficacy/safety update on Part 2 of Phase 1b LOTIS-7 trial. - Presented Phase 2 IIT indolent lymphoma data at ASH and published follicular lymphoma data in Lancet Haematology. - Advanced exatecan-based preclinical solid tumor candidates, focusing on PSMA and Claudin-6. - Achieved double-digit reduction in operating expenses for the second year in a row. - Strengthened balance sheet via equity financing, providing cash runway into H2 2026.

The primary product segment is ZYNLONTA. In the fourth quarter of 2024, ZYNLONTA net product revenues were $16.4 million, same as the prior year quarter. For the full year 2024, ZYNLONTA net product revenues were $69.3 million, same as the prior year full year. ZYNLONTA contributes significantly to the company's revenue, with sales in line with prior periods despite competition from bispecifics in the DLBCL space.

2025 Outlook - Expect multiple data catalysts in 2025 to derisk ZYNLONTA life cycle management. - Potential peak revenue of $600M to $1B in US for ZYNLONTA with regulatory approval and compendia listing. - LOTIS-5 has potential to take ZYNLONTA to $200M to $300M peak sales in second-line DLBCL. - LOTIS-7 could expand ZYNLONTA's DLBCL opportunity to $500M to $800M peak revenue. - Indolent lymphomas could add $100M to $200M peak revenue.

Risks - Forward-looking statements subject to known and unknown risks and uncertainties. - Actual results may differ materially from forward-looking statements due to various factors including regulatory, competitive, and market dynamics.

Q: Good morning. Thanks for taking my question. Maybe just a first real quick one on the LOTIS-7 update in Q2. Is there going to be a specific forum that you have in mind or timing within the quarter we can look to?

A: We haven't disclosed yet what forum or exact timing within Q2 that we're going to be sharing the data, but what I can tell you is that we're on track to enroll the 40 patients in the dose expansion in the second quarter. We'll share a portion of those patients -- safety and efficacy data on a portion of those patients in the second quarter and then data on all 40 of those patients in the second half of the year.

Q: Your next question comes from Kelly Shi of Jefferies. Please go ahead. For LOTIS-7, do we expect a meeting with the regulatory agencies after second half update? And if that's the case, would we hear from ADC and if the info could actually share to the public domain? And secondly, what is your estimate of ZYNLONTA as market opportunity in indolent lymphoma including follicular lymphoma and [marginal zone] (ph) lymphoma?

A: Okay. So, once sufficient data is available on the 40 patients, and we have the correct follow-up, we do plan to pursue discussions from regulatory authorities, likely in the second half of this year. We also plan to pursue compendia strategy. We know that based on some of the recent inclusions of biospecific combinations and NCCN guidelines, we believe that the publication of data on approximately 100 patients with the selected dose would be sufficient for submission to compendia. So, we do plan to pursue both a regulatory strategy and a compendia strategy for LOTIS-7. With regards to the indolent lymphoma opportunity, as you know, we presented, we think, quite compelling data both in marginal zone lymphoma and follicular lymphoma at ASH this past year and those studies continue. Based on the opportunity, the potential regulatory approval and certainly the compendia from those studies, we believe that the peak opportunity from indolent lymphomas will be somewhere in the $100 million to $200 million range.

Q: Your next question comes from Michael Schmidt of Guggenheim. Please go ahead. By the end of the year, you should most likely also have the result of the LOTIS-5 trial in hands. And I guess I'm just wondering how does your LOTIS-7 strategy -- I mean how is it impacted by potential outcomes of LOTIS-5 by the end of the year? And then, I had a follow-up. And then, yeah, we saw you have an AACR -- an oral presentation coming up at AACR on your Claudin-6 ADC. And yeah, I was just wondering if you can help us understand sort of how important that presentation is and -- in terms of some of the learnings perhaps relative to other ADC platforms like the Daiichi Sankyo technology, how much insight will we gain from that presentation in terms of differentiation?

A: Okay. Well, it's a great question. We know that in this market, outside of the front line, really, no given treatment sort of dominates. A lot of the physicians really make treatment choices based on efficacy, safety and accessibility profile, but in the context of individual patient needs. So, for example, you see something like a CAR T, which has outstanding efficacy, only capture about 20% of the share. So, we think having both approaches ZYNLONTA plus rituximab and LOTIS-5 as well as ZYNLONTA plus glofitamab and LOTIS-7 are complementary approaches, which allow us to address different individual patient needs. Specifically with LOTIS-5, we believe that having a non-systemic chemo combination and offer a competitive second-line advocacy profile, but also with favorable safety and convenience, especially for patients who either can't access are not suitable for or progress on a CAR T or bispecific therapy. With LOTIS-7, based on the recent data we shared in December, which we believe is very compelling, we think that ZYNLONTA plus glofitamab has potential to be the preferred bispecific combination in second-line-plus DLBCL with a highly competitive efficacy as well as with the manageable safety profile and the potential for off-the-shelf convenient dosing. So, we believe that both approaches are complementary. Based on our quantitative market research, what we've seen is about 50% of patients are anticipated to get a CAR T or bispecific. So, it still leaves a lot of room for other therapies. And then we, of course, know that many of them, of course, they will progress. Yeah. I think you will see more data that has not been disclosed yet in the public domain, not only at Claudin-6, which, as you mentioned, is an oral presentation, but we also have poster presentations for at PSMA and ASCT2 compounds. As you're aware, we're using exatecan with a very novel linker system, which allows us to offset the hydrophobicity of exatecan and [indiscernible]. What we've seen so far preclinically is pretty consistently at therapeutic index that's greater than 10, which is quite differentiated. Relative to DXd, we've seen higher potency, higher [indiscernible] we noticed on MDR substrate. And we've also seen -- we haven't seen ILD, which you see with DXd and other topoisomerase platform. So, we do think the data is differentiating. And as both the oral presentation for topoisomerase as well as the poster presentations for PSMA and ASCT2, there will be additional, I believe, compelling data that share that hasn't been in public demand at this point.

Q: Your next question comes from Gregory Renza of RBC Capital Markets. Please go ahead. Unidentified Analyst: Hi, guys. Thank you so much for the time this morning. It's [Anish] (ph) on for Greg. Thanks also for the updates and for taking our questions. Just on LOTIS-5, what must the combination of ZYNLONTA and rituximab demonstrate in terms of efficacy and safety to be considered competitive? And what are the benchmarks for approval and to make a compelling case for clinical adoption in terms of complete response, median PFS, median DoR and median OS? Thanks so much. And if I could just squeeze in one more. I guess just on the commercial side, how do you foresee the competitive landscape for third-line DLBCL evolving in 2025 and beyond? And how might that differ from '24? Thanks again.

A: Yeah. No, thanks. For LOTIS-5, the way I think about the competitive set is that the world is going to be sort of CAR-Ts and bispecific-based combinations, of which there's going to be a portion of the population that's going to have access to those therapies and be suitable for those patients. But again, we anticipate based on the independent quantitative market research that about half the patients are going to get one of those therapies in the second line setting. And when you look at the other therapies and all the other combinations, whether they do targeted therapies or with chemo-based regimens, they tend to have CR rates anywhere between the 25% to 40% range. So, clearly, anything north of 40% would be differentiated. I think what we're encouraged by is in the safety run-in, which was the first 20 patients looking at the combinations in ZYNLONTA plus rituximab prior to the randomized portion of the study. What we saw was that overall response rate of 80% and a complete response rate of 50%. So, we believe anywhere in that 40% to 50% range is going to be compelling relative to the non-CAR T and non-bispecific options, which we know is going to be a big opportunity. In terms of PFS, the way this study is powered, so this is a randomized study versus R-GemOx. What we know is R-GemOx typically has a PFS of anywhere from three to four months. In the STARGLO study, for example, where it was most recently used as a control arm, the PFS was 3.6 months. The way the study is powered is that we need to show approximately a two-month difference to have a positive study. So, we feel good based on the safety run-in data. Obviously, it's blinded to the results of the study. So, we have to wait to see the results. But based on the early data, we're quite encouraged by the prospects of having a positive LOTIS-5 study, and for it to be clinically relevant, particularly relative to the non-bispecific and non-CAR-T options. Yeah. I mean I think the biggest competitive impact we've seen with the product since the launch is really with the introduction of bispecifics about 18 months ago. Bispecifics now have taken about a third of the third-line-plus market. I think what I'm happy about is that during the period, and if you look at the past several quarters, we've been in that $16 million to $18 million sales per quarter range. We had some fluctuation due to order and pattern variability, but we've been in that $16 million to $18 million range pretty consistently over the past several quarters despite the bispecific combination. The only real new competitive impact in the third-line-plus setting is the question before that Eric asked about ADCETRIS plus R2. So, we believe, of course, there's going to be some impact, but we believe it will be relatively limited, particularly as there's likely to be more community use and really in place of some of the other regimens like R2 and R-based chemo.

Q: Your last question comes from Sudan Loganathan of Stephens. Please go ahead. Sudan Loganathan: Hi, Ameet and Pepe. Thank you for the update and for taking my questions. My first one is, can you provide some examples of comparable bispecifics that demonstrated meaningful market share gain with DLBCL patients through compendia listing? And then, what were the number of patients in those bispecific clinical trials that were run that got published and were considered for compendia listing? And if I can squeeze in one more. I just wanted to ask on how long do you anticipate it will take to kind of achieve that peak penetration predictions for ZYNLONTA after achieving compendia listing or even a potential approval in the second and third-line setting? I know like whenever it was first approved, it was pretty swift in gaining market share. So, just kind of curious if you expect the same type of ramp once it's added to listing?

A: Yeah. So recently, I think it's too soon to tell what the update can be. But I think what we know is that very recently glofitamab plus GemOx, epcoritamab plus GemOx and mosun plus polatuzumab have all been very recently added to NCCN guidelines and the preferred regimen based on roughly 100 patients. So, when we look at all those analogs, we think about 100 patients is what's required to get into guidelines. That's what -- approximately what all three of those regimens had and too soon to set to what the uptake is going to be. Obviously, as you know, with any compendia listing, we, of course, will not promote off-label. And I assume none of these companies are going to promote off-label. But these become available to physicians to do what's best for the patients. And once again, the preferred regimen, payers, of course, will reimburse based on preferred listings typically. Yeah. We [haven't] (ph) guided to what the peak penetration would be, the timeframe, but what I can tell you is if you look at the other analogs that have been introduced up to this point, typically, the peak penetration is achieved usually within the first two years. Oncologists and hematologists, I think, are always searching to use the best products for the patients, especially unfortunately, in something that's life-threatening and where patients, especially when they relapsed post the front line, they tend to -- the prognosis is not great, unfortunately, for these patients. And so, usually, what you do see is adoption pretty quickly. For example, polatuzumab in the front line, obviously, we showed good data in the frontline setting, seems to have plateaued and it's in about two years. We see bispecific growth going down a little bit in the third line setting, we're at that 18-month mark. So that's typically what we've seen. I don't want to again predict what's going to happen for our products, but I'd just say that's typically what's happened up to this point in the DLBCL setting.