Adagene Inc. (ADAG) Earnings Call Transcript & Summary

Great. Good afternoon, everybody, and thanks for joining us for the next session. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Very pleased to have Adagene with us for the next session. Before we get started, I need to read a quick disclosure statement. Please note that all important disclosures, including personal holdings disclosures and Morgan Stanley disclosures, appear on the Morgan Stanley public website at morganstanley.com/research disclosure. So with that, pleased to introduce Peter Luo, the CEO of Adagene. And Peter, I know you want to make some opening comments, so I'll turn it over to you for that. And then we can get into Q&A.

Thanks, Matthew. And thanks, everyone, for your time. And today, I'd like to take this opportunity to walk you through a few highlights about Adagene. And here the investment highlights, I'd like to walk you through the opportunities Adagene presents. First of all, we are a platform company, and we have 3 platforms around antibody engineering. And with these 3 platforms, we have created 3 global clinical assets under the NEObody clinical assets, which is an agonist 41BB agonist, ADG106 anti-CTLA4 antibodies against a unique epitope. We also have our 4c in the clinics, we call the ADG126 against CTLA4 targets, and there are more coming around Safebody coming from this platform. And finally, we do have this POWERbody pipeline coming from the POWERbody platform. We recently announced we have 5 IND labeling program, and some of them are already well into the IND labeling process. And also, we show some partnership, and right now mainly around our platform with global partners and the commenced Chinese partners, and we also continue building our leadership team. So those are the highlights. And I'd like to also introduce the platform here with a little bit of details. Our NEObody platform is the technology that allows us to target some very unique epitope. And in this case, epitope conserved between mouse, monkey and human. And this unique epitope not only give us a broad business cost activity, it also brings some very unique biology about those targets. For example, the CTLA4 and the 4-1BB targets allow us to balance the safety and efficacy. And with the SAFEbody platform, we'll be able to only activate the antibody in tumor microenvironment. This will widen the therapeutic index or target like a CTLA4. And with our POWERbody platform, we take advantage of the Safebody give us to those modalities. Only allow those either Fc-enhanced or the T cell engagers or ADCs, the kind of modality only activate those performability in tumor microenvironments. So those are the core technology we are going to use and help our partners and ourselves to create highly differentiated products. So these are the collaborations we have done so far. As you can see, the SAFEbody platform allow us to create a lot of partnership, especially in ADC modality with our global partner from the Japanese partner, Tanabe, ADC Therapeutics in Switzerland and Exelixis in the U.S. and we'll continue this partnership and with some big global partners. And with our NEObody technology, we work with NIH, Celgene and GSK to create very unique molecules against those tricky targets on those unique epitopes. And we've also outlicensed some pipelines to domestic Chinese partners and 2 programs to the Sanjin Group. One is about nontargeted PD-L1 and level target, about other targets and enter into the clinic, and we will also work with Henry. So our 3 clinical programs, our ADG116 which we've shown here in this picture compared with EP in the purple colored one crystal structure, our green colored antibody crystal structure here, a small change in epitope with a big change in biology and the mechanism actions. We'd like to share with you some of that excitement in our clinical development. And also the SAFEbody, which was the masking binding site against the CTLA4 target, pushout at sort of a bigger window, even much larger than typically can be achieved for this target. And of course, our 4-1BB agonist we show here in the crystal structure in the green colored one compared to the BMS molecule on the top and the Pfizer molecule in the bottom. Here, again, we show this new epitope can bring the safety and efficacy in this challenging target. And with the 3 clinical collaboration with Merck, we recently announced and in combination with KEYTRUDA, and we're excited for this opportunity. Of course, the endorsement by Merck for the differentiation we bring in for the CTLA4 targets, even though they have an in-house program and also the clinical program in combination with EP. And with our 4-1BB agonist again with KEYTRUDA, as you can see, we will be able to benefit from Merck's extensive experience in combination with KEYTRUDA in the field and also we're looking into those indications, which are still challenging for PD-1 therapies, and those combinations will be exciting. As you can see, we put it here. Under the 41BB NEObody, 116, we put it here. And I think this the only target other than PD-1/PD-L1 choose monocell therapy efficacy and multiple indication in combination with PD-1. And the only IO target so far clinical proven for its efficacy by itself and also multiple combinations. There are still a lot of challenging with safety for the kind of approved therapy. In fact, there's only one approved modality so far for this target. And the challenge is really coming from the safety of the current molecule against CTLA4. By keeping this unique capital, we'll be able to come up with a much more potent molecule fivefold higher than the EP head-to-head comparison and a threefold safety in our GLP tox studies. And this is both improvement in safety and efficacy because they're targeting this unique epitope to give us a benefit in terms of how to block the target and how to come up a very strong there depletion, so there's a unique epitope really allow us to come up a very robust preclinical and clinical program. And we have launched -- we have dosed the patient right now at the 10-milligram per kilogram, perhaps the high risk dose and so far saying for the EP. And we clean up the DLT at 60PK dose level. And so far, for 22 patients, we dosed use our drug. This no drug treatment-related toxicity for Grade 3 or Grade 4. We only observed 2 Grade 2 treatment-related tox. So if you look at the historical data for EP at 3 MPK, the Grade 3 and the 4 toxicity rates about 3%. And with the dose escalation so far, the 3 patients at 3 -- another 3 and the 6 and 1 patient at 10, we didn't observe any grade 3 tox, so far. So we think this safety profile definitely compare favorably with the historical data, and we'll be able to report the top line data this year for the dose escalation and also the cohort expansion data at the 6 MPK this year. The next program is -- I basically just walk you through this very quickly, how we compare with EP head to head, right, at the dose level. We are basically 5x more potent than the EP here. and the mechanism is really the Treg in the tumor micro environment and the low defense in the PBM and the kidney. And so there's very strong ADCC effect compared to the EP and a soft [indiscernible] compared to the EP in the green color that we shared here, the green color molecules. So our SAFEbody program and with this masking. And so far, we are dosing about 10 patients, and we are dosing patients now at 3MPK, and we'll continue reporting this dose escalation data about this SAFEbody program and other things. And I have to say those clinical progress are very exciting for us for this target that we've known for years. And this SAFEbody again, we show not only safe, they're also active against the tumor models shown here. When they combine with PD-1, that really shows nice combination with PD-1, like our NEObody, and also the safety profile in that combination is also very robust in our preclinical models. Again, it's key expectations. So those are the GLP tox data we published. And I refer to you to look at this data and compare data published by BMS last year in the ASCO. As you can see, we'll be able to dose the monkeys at the 30-milligram per kilogram without the serious damage to the monkeys and the 200-milligram per kilogram, our safe masking market antibody. Those data compare very favorably with EP and the EP probody, ADCC enhanced the EP probodies. So our 4-1BB agonist, we have published extensively about our dose escalation data and include some dose cohort expansion data. Again, we show this epitope can make a difference in balance safety and efficacy. We have been able to dose cohort expansion at the 3 and the 5 PK much higher than other reported. And with this one of the high stable disease rate, the 56% for monotherapy, some partial response from our drugs. And we think we are making some breakthrough in this agonist antibody against this challenging targets. And again, we have a public extensively for the PD markers we show for NGL, soluble CD137 and the correlation with the clinical response and the predictable market related to the tumor shrinkage with this proprietary biomarkers. And finally, our exciting pipelines about our differentiated CD47 in terms of efficacy and the safety and the issues related to other modality around this target and our bispecific T cell engagers. And I basically will end my talk here and put some major catalyst event here for your reference, and I'm open for some Q&A section. Thank you for your attention.

All right. Thank you, Peter. Appreciate those introductory comments. Why don't we go through a couple of items. So maybe the first thing we started is with the NEObody CTLA-4. I think one of the things that you've highlighted in the past is about ADCC and that improving efficacy. So maybe you could just comment on why you think that's different and why you think no one else has done that in a target like this before.

Okay. Yes. So Matthew, it's great. I think that this is really related to our platforms because although we've shown you here, our NEObody platform, we'll be able to come up a very level design for antibodies. And we basically leverage, we call the AI power antibody same platform. This really allows us to come with a design with the same sequence, others with a confirmational diversity in the CDR regions. And what this allows us to do is this dynamic pending target allow us to engage target like a CTLA in a very novel way. And this adaptivity not only creates the cost of activity, which is very challenging in general for antibody engineering. And also, we show here the epitope we created here, right? And we created this epitope. This coming to blocking the leak and bend with CT4 under CD80 and A6, very different from the EP. And not only that, the same isotype, IgG 1, we show a huge difference between the ADCC effect from our antibody compared to the EP.

Okay, okay. That's helpful. And then I guess you highlighted sort of the dose levels that you're through and especially those dose levels compared to EP, maybe just remind people about how many additional dose levels and where you think you can get to. And then I think maybe more importantly, what that potentially gives you from a combination standpoint because, obviously, the combination here is what everybody is interested in.

Absolutely, yes. So currently, what those are the patients at 10 MPK, this is an original high risk dose we intend to do. But given the robust safety profile we have seen, we revised the protocol to go up to 20. So yes. And of course, in combination measures, just like you mentioned, in the field, what people do is usually do one dose level lower than the dose you have at DLT currents. So currently, we already cleaned up the dose, right, BOT clean up 6 MPK. So we can do dose articulation at 3 MPK. But because when dose are the patients that are right now at the 10 MPK, if we think up 10 MPK, that means we should be able to do the combination dose at the 6 MPK.

Yes. Okay, okay. Got it. And then I guess the follow-up to that is, obviously, you have both the NEObody and the SAFEbody against the same target, is there a reason that you take both of these forward? Or would you expect the SAFEbody to have the same kind of efficacy as the NEObody, but potentially because of the consistent activation be able to even dose higher?

Yes. So absolutely. So we know our SAFEbody has a very good safety profile. This sort of safe window is so much larger, right, because we show in this GLP-tox data here. At the 200 MPK, the monkey are perfectly happy. And so -- but if you look at the efficacy, our SAFEbody is as not as part of the NEObody because of the way we're marking it and activate, right? But what we find that is interesting is because given this much therapeutic vendors, we can dose in the animal at a higher dose, for example. We can achieve the same efficacy just like our NEObody if we increase the dose a little higher monotherapy. But what's interesting is if you look at the combination, the same dose level, our SAFEbody, not a lot of the potent or the NEObody, but when they combine with the PD-1, no defects in the efficacy, the combinations. And we will also have begin show the low actual safety singular add to that combination. So basically, just like you said, Matthew, we do we have the flexibility to dosing the patients higher because with this safety, and we also have this flexibility to combine with PD-1 with a better safety combination in these combinations and allow us to adjust the dose and the flexibility, again, in that combination, too. Because the endpoint is we don't want to leave any efficacy on the table, right, which has been an issue I have seen in a lot of EP level combination because of the safety concern even though we know the 3 MPK is a better combination with, say, PD-1 because of the safety concern and the people have to settle with a low dose, for example, 4 MPK, even longer duration. For example, in lung cancer, 6 weeks, in the last few weeks.

Right, right. Okay. So then you're going to do combinations with both the SAFEbody and the NEObody with pembro next year. So I guess it sounds like you want to see if there's any differentiation between those combinations before you decide on what one may be the better concept?