Adagene Inc. (ADAG) Earnings Call Transcript & Summary

Thank you for joining Jefferies China Biotech Summit. And for this company presentation, we have Adagene, and we are very pleased to have Chief Executive Officer, Dr. Peter Luo, for this session. Peter, welcome, and pass it to you.

Thank you, Kelly, and thanks, everyone. And today, I'd like to give a company overview and with the latest update as a disclaimer. And I'd like to always emphasize our goal at Adagene here, is really use computational power to drive the directed evolution process. And so by leveraging our AI-powered Dynamic Precision Library approach, we'd like to bring highly differentiated antibody-based drugs to cancer patients worldwide. I think at Adagene, we are really leveraging this platform to make things very differently with a lot of differentiation. And we really believe life is a motion and so are proteins and the antibody we are working with. So in this way, we'll be able to engage the target antibody in very different ways. So our strength, I would like to share with you, first of all, is our AI-powered we call the Dynamic Precision Library platform. And specifically, we focus on 3 body technology, which are the NEObody, SAFEbody and POWERbody approach. And this platform allow us to create our clinical pipelines for NEObody approach with 2 program in the clinics, including the agonist antibody ADG106 against CD137 or 4-1BB. And also another program we call the ADG116 is against CTLA-4. You'll notice, we want to show you some of our technologies. We can hit those targets, for example, 4-1BB or CTLA-4, which are long for safety issues. And our NEObody approach allow us to come up with novel epitopes, which give us a very different safety and efficacy profile compared to others either in the market or in the clinics. And we hope this kind of differentiation and the data which should be clinical and clinically will allow us get a new insight, and of course, and a new product profile for our patients. For our SAFEbody platform is our -- we have 1 program right now in the clinics that's against CTLA-4 again and ADG126, and we recently announced another exciting program under the SAFEbody that's against CD47, will help bring a lot of differentiated feature for these [ hard ] targets. And this, we already get the ASH -- accepted by the ASH. And I'd like to touch some of the key differentiating points in today's talk. But -- and also, I hope you will stay tuned for our news release and the abstract we're releasing pretty soon. For our POWERbody approach, we have launched the full program in IND-enabling approach. And again, this POWERbody give us a lot of power in our future pipelines and including bispecific T-cell engagers on our proprietary bispecific platform together with our masking technologies. And again, we have 1 program abstract accepted by ASH against liquid tumors. We also have a program going against solid tumors. We hope those transforming pipelines will give you a lot of excitement to the field. And also, we'd like to share those differentiated products of pipelines and -- in our abstracts in the future. And of course, we'll discuss some partnership or the validation to our platform. And this is going strong with already those partnership going on and a new partnership. And we'll also bring new leadership to the company across all part of what we are doing, from platform pipelines, clinics and the business and others, so we can help our patients better, our partners better and to build a good company for our investors. So this is a platform I'd like to introduce, it's a tailor-made antibody therapeutics and our NEObody approach show on the far left. As you can see here, the blue color is a 4-1BB target under the [ brand ], and the green color is our antibody. As you can see the crystal structure we show you here is coming from a dynamic engagement for our targets under the antibody we designed. You can see that kind of dynamic engagement really bring new dimensions for the diversity of antibody and the engagement between the antibody antigens. If you look at SAFEbody in the middle, this is only actively conditional in tumor microenvironment through our precision masking technology. This allow us to come up safety margin so much higher than the [indiscernible] antibodies. And of course, it gave us a surprise for target, for example, the CTLA-4 and the CD47 and our T-cell engagers, including the solid tumor targets. And the POWERbody I show here on the right, they can come in different flavor and format, including FC-engineered, T-cell engagers and ADC. And this technology has also powerful modality in combination with our masking technology allow us to target the tumors with very strong efficacy, still have very good safety profiles. So about platform validations through the partnership and the collaborations. We have announced our collaborations early this year with Exelixis. And this is a deal, actually, that we believe is one of the largest platform-based deal in any China-released biotech companies. The total deal size is close to USD 1 billion with $11 million upfront and $780 million in milestones and high royalty rates, adding together close to $1 billion. And the ADC Therapeutics is another topnotch ADC company from Switzerland. Again, we are helping them to masking their ADC modality, so they can achieve safety otherwise very difficult to achieve and show that in the preclinical studies about the safety margin and the potency they can achieve and with the packaging deals. And also, we are working with Mitsubishi Tanabe from Japan on their solid tumor ADC drug products, and we're making progress in all those programs. And our DPL technology could also help our partners to discover antibodies against those very challenging targets including from NIH, the HERV targets, very challenging antigens. And we'll be able to come up specific design for those antigen and antibody, very specific for those primary tumor cells. And so our partners at NIH and Dr. Richard Childs, the clinical division had on those targets, he work for years and therefore, potential CAR-T therapies, and of course, work on the biologics. And therefore, also, we work with BMS or Celgene and GSK for antibody discovery in very challenging space and therapeutic areas for either agonist antibodies or for antibodies against some very difficult targets. And we also work with Chinese domestic partners. And for example, Hengrui to make agonist antibody with cross-reactivities. And also, we licensed our pipeline to Sanjin and including PD-L1, which is a Phase II, and the CSF-1R in Phase I. So clinically, this year, we launched 3 clinical trial collaboration with Merck. And basically, it's a collaboration for each of our 3 clinical programs. And these 3 Phase Ib/II, open-label, dose escalation and cohort expansion trials with KEYTRUDA include our ADG116, ADG126 and ADG106. And in fact, Merck has assigned [indiscernible] to those trials. And we still have the freedom to collaborate with other partner in the space. And Merck is going to provide KEYTRUDA for global combination trials conducted at multiple sites across Asia and the U.S. And we are going to run the clinical studies with the importantly clinical input from the Merck clinical team about the trial design. So let's look at our 3 tailor-made antibody in the clinics in our pipeline. Again, I'd like to emphasize, we've chosen the target long to have outstanding safety issues such as CTLA-4 and the CD137 clinics, right? If you look at our NEObody, for example, against CTLA-4, the green-colored one, this smooth difference in epitope, the crystal structure we show inflation from the ipi in purple colors could make a big difference in terms of mechanism of actions and as a safety efficacy profiles. And to build on that antibody, we further masking the [ offending ] site using our SAFEbody technology to push the safety margin much higher, right? Where we show GLP tox data, that even 200-milligram per kilogram, we still have a very good robust safety profile in the monkeys. And for our 4-1BB agonist, again, we show the green-colored in crystal structure with the 4-1BB, which are differentiated from the BMS antibody on the top and the Pfizer molecule in the bottom in crystal structure. Again, this lower epitope gave us a life balance in terms of safety and efficacy for our agonist antibody programs based on 100 patient -- about 100 patient data from both U.S. and China. So I'd like to dive in a little bit about our anti-CTLA-4 therapies. There's a paradox in the field which people believe you have to treat in the efficacy for safety or vice versa. So if you look at currently, unlike PD-1 or PD-L1, even the CTLA-4 target has been known for more than 35 years now. So far, there's only 1 product for the ipilimumab being approved with 1 indication for monotherapy and 6 indication for combination with PD-1, without more coming for the combinations. This is highly unusual because this so far is still the only checkpoint target other than PD-1 or PD-L1 choose monotherapy efficacy, of course, in combination with PD-1. But while there's only 1 product being approved for the drug, I should say, people really try hard on these targets. Until recently, the safety, still a big concern for this limited efficacy and the usage for anti-CTLA-4 therapies. You have seen new [indiscernible] from Merck, for example, later last year, KEYTRUDA in combination with ipi failed in Phase III. And also, AstraZeneca has removed a lot of failed Phase III programs. But the good news is, recently, AstraZeneca has tried to achieve some fourth-line therapy in lung small cell cancers and also most recently in the HIMALAYA in Phase III trial in first-line HCC. Those are exciting news. We're yet to see those data. But apparently, the safety concept for the [ treme ] has been a deep -- has been a problem for this drug against this target. So what we can do if we will be able to create a differentiated anti-CTLA-4 antibodies. And I'd like to share our platform here -- or the example, how we'll be able to do something different here, differentiate. For example, for 116, starting with a dynamic binding interface. The same sequence, different confirmation, as we show you here, the binding pocket changed. Then you build a [indiscernible]. You see how our antibody colored in, right, cyan and green or engaging this green color, CTLA-4. This is a crystal structure we show you here. But before the engagement, they change this confirmation from both to have this dynamic engagement. This really allow us to engage this target at its epitope, specific epitope in a new way, a new dimension. We pioneered this approach for the fourth time in the world. And what this allow us to target this epitope, we show conserved epitope, human, mouse and the monkeys in this conserved epitope. Even though the human and mouse CTLA-4, the sequence identity is below 60%. We know antibody engineering. This is a very challenging job. But we can do that, targeting this conserved epitope. So -- but only we get this novel epitope, we'll also get cross-reactivity to study this antibody. From mouse, monkey to human, it's the same molecules. What it allow us is a rare, robust transitional program. We're doing this for many of our programs here. We can use this cross-reactive antibody, look at the mouse tumor models, syngeneic mice, complete immune system and we show you can achieve complete response at 0.1 mpk. We know this molecule is very potent. And then we show in the monkeys, we can go to the HNSTD to 30 milligram per kilograms in monkeys, which already shows the safety margin over what reported for ipi has 10, means we can have those are monkey, higher without serious damage. With -- armed with this efficacy and the safety data, then we will confidently go to the human trials. And I'm going to share with you in details later. Right now, we observed very robust dose-dependent PD activations. And we're dosing the patient right now up to 10 mpk. We are doing cohort expansion at 6 mpk, higher than what ipi approved original at 3 mpk in myelomas. And how can we do this? Why by changing the epitope by a small step can achieve such a striking efficacy and safety? And we basically will share with you here is a lower mechanism of actions because this allow us to come up a very strong ADCC effect to deplete the Treg and also allow us to safely activate T-cells to allow blocking effect. And the end result is a 5x more potent efficacy in a head-to-head comparison with ipi in preclinical testings. Under this very strong differentiated profiles, which shows preclinically, and right now are showing consistent clinical verification, I'm going to show you in a minute. Before I show you the clinical data, you'll see here very potent activation in the 0.1, complete suppression. And then we show for any tumors, right, any stage. For big tumors, [ probably 100 could ] confirm late stage 6 out of 8 complete response. And then we show the comparison with ipi head-to-head. 0.2 with complete suppressed tumor. For the ipi, you have to go to [ 500 ] [indiscernible] mpk. If you look at the [ 1 ] mpk here, it's only in the tumor microenvironment. You can see the Treg depletion from 40 to below 20 show this result and the ipi cannot. And of course, they're making a strong ADCC effect compared to the ipi. And also, the blockade is not as strong of the ipi, which leaves some safety margin for those products. And this is a clinical program I'd like to share with you. So this global trial 116, both Australia and the U.S., we are expanding to other regions. So far, we enrolled 25 patients. We finished 8 cohorts up to 6 mpk, no DLT. We observed strong dose-dependent PD markers and normal PKs. And we're dosing patient at 10 mpk. And the cohort expansion at 6 mpk are ongoing. And we were also approved by the safety committee for combination at 6 mpk with PD-1. As you can see, we do have a combination at the bottom line here, first initial with tori and also with our 4-1BB agonists and novel combinations. And against those indications we've chosen, which are highly promising for monotherapy or in the combinations because we know this Treg play a big role in those indications. And also, we got approval from the Chinese CE for doing the monotherapy starting at 3 mpk high dose for that. So we're very excited for this. And of course, our collaboration with Merck with KEYTRUDA has been approved for that protocol and submit to the FDA. [indiscernible], with these masking technologies, I'd like to share with you, with the masking technology, we can -- GLP, we can achieve 200 mpk, and we finished the dose speculation at 3 mpk, no DLT. And we are basically approved for dosing patient at 10 mpk now from both U.S. and Australia. This is a preclinical data, what you can see, this SAFEbody are [ active ] by the self against [ definite ] tumor models on the left-hand side, in combination with PD-1 with the SAFEbody or the NEObody 116 that show very potent combination against the cold tumors because our [ constructed ] antibody allow us to do very robust testing here. You can see complete response here and check the box for Treg depletion in the tumor microenvironment again. So those are the GLP tox data I just shared with you for both program. And about our 4-1BB agonist. And we have updated the data about our monotherapy for 100 patient data at the dose level at the 3 and the 5 mpk, very high than other agonists being used for those cohort expansions. And we also observe those interesting biomarkers related to this pathway and activation. And we will also have the combination with tori in China for dose escalation. And we will also submit abstract for both 106 and 116 and accept by ESMO-IO. And stay tuned for those informations. I'm going to skip those biomarker you already knows and welcome to look at those data we presented previously. And in the end, I'd like to share with you the excitement for our pipelines. I've already shared with you our ADG106, 116 in the account of Phase Ib/II and the 2 abstract submit to ESMO-IO accepted in the post [indiscernible] in the end of this years. And please stay tuned for the latest progress for both programs. And the other thing is about our SAFEbody programs. And the ADG126 are doing very well, and we'll get a comprehensive release about the progress of the program, approval, regulatory approval and all other things and this combination of all those things. But also, I'd like to highlight here for the CD47 highly differentiated programs and now accept for ASH for these programs. And I think I'll be happy to talk to Kelly about what's the differentiation there. And of course, we have other program in the POWERbody, 2 Fc-enhanced SAFEbody, well advanced in our IND-enabling process. And stay tuned for those abstracts. And also 2 bispecific T-cell engagers, including 1 for liquid tumor accepted by ASH for liquid tumors. And now, of course, I'll follow up with Kelly for that differentiation. And also, our ADC SAFEbody program with partners. And those are the [ companies ] and major events for those programs. And I basically will put it there. And I'm happy to answer the questions here. Thank you for your attention.

Thank you, Peter, for a very comprehensive presentation. I only have 1 question. So leveraging on your proprietary technology platform, NEObody, SAFEbody and POWERbody, it seems like you are building a broader early-stage pipeline. So in terms of future development plan, how do you think about -- assuming that you'll be very active on [ BD ] front, so how do you prioritize the internal pipeline versus the assets to find a partnership?

Yes. Of course, Kelly, that's a very good question. So of course, for our internal program, as you can see, our goal is to push the program to get the early clinical proof of concepts. For example, our 116, 126 is a great example against the same target 2 programs because the product profile are differentiated either for mono or for the combinations. Therefore, we do find partner are very interested in those differentiation like Merck, right, and other big partners we're talking to. So I shall say, for our partnership, and we like to show those clinical proof of concept, so we therefore will be able to do the transactions to enable our partners quickly getting into those important pivotal trials or whatever trials in [indiscernible], right, the [indiscernible]. And of course, while doing that, we will continue to develop some of them, say, in Great China either in partner with them or by ourselves. Choosing those indications are highly promising based on our AD clinical datas. But of course, for some AD programs, we are also, from the partner, are interested in those, but of course, difference on the value in fact for those programs will decide how to do this deal either in the early stage or a little bit late stage. And that all depends on how well we can bring our investments, right -- our investors for the investment in the company and their trust in us.

Great. Thank you very much. Looking forward to your update at ESMO-IO and ASH. And thank you, everyone, on joining us for this session.

Thanks, Kelly.

Thank you, Peter.