ADC Therapeutics SA (ADCT) Earnings Call Transcript & Summary

Hello, and thank you for standing by. Welcome to ADC Therapeutics Research Investor Event. My name is Towanda, and I will be your operator. [Operator Instructions] I would now like to hand the conference over to CEO, Ameet Mallik. You may begin.

For today's event, the speakers will be myself and Patrick van Berkel, our Chief Scientific Officer. I will discuss recent business updates and our research strategy, after which Patrick will provide details on our platform and lead candidates. We will then open the call to questions when we will be joined by Mohamed Zaki, our Chief Medical Officer; and Pepe Carmona, our Chief Financial Officer. Before we begin, I would like to remind listeners that some of the statements made during this conference call will contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain known and unknown risks and uncertainties, and actual results, performance and achievements could differ materially. They are identified and described in the accompanying slide presentation on Slide 3 and in the company's filings with the SEC, including Form 10-K, 10-Q and 8-K. ADCT is providing this information as of the date of today's conference call and does not undertake any obligation to update any forward-looking statements contained in this conference call as a result of new information, future events or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward-looking statements. I would like to set the scene by reminding everyone of the strategy we are pursuing, which we believe will unlock the tremendous value we see in the company. Our first pillar and primary focus is hematology. Within this, we have a derisked asset in ZYNLONTA, the key product in our prioritized portfolio, which we expect to carry the company through to profitability. We are deploying the majority of our capital to the ZYNLONTA franchise to commercialize our existing 3L+ DLBCL indication and to pursue the substantially larger potential opportunity in earlier lines of DLBCL therapy in indolent lymphomas. We believe these potential opportunities will help expand the ZYNLONTA franchise and have the potential to generate annual peak sales in excess of $0.5 billion. The second pillar of our strategy is grounded in our emerging solid tumor pipeline. Our most advanced asset is ADCT-601, and behind this, we have a number of exciting next-generation antibody drug conjugates which potentially address significant unmet patient needs. Driven by our novel platform, we see the potential to advance both as go it alone and in partnership, a broad portfolio of differentiated ADCs against solid tumor targets of interest, and this will be the focus of our event today. Before I move to our research strategy, I'd like to provide some brief business updates. ZYNLONTA revenues in the first quarter of 2024 are expected to grow mid-single-digit percentage sequentially versus Q4 2023. Importantly, we saw a progressive growth both in the community and in academic centers. We were pleased to announce last week that our LOTIS-7 study of ZYNLONTA, in combination with bispecifics has successfully cleared the final dosing cohort in both arms with no dose-limiting toxicities, no ICANS and either no or low grade levels of CRS. For ADCT-601, our novel AXL-targeting ADC, we are now enrolling pancreatic cancer patients and are optimizing the dose and schedule. Turning to our financial position. We continue to expect a cash runway into Q4 2025, which will support us through multiple potential value-generating catalysts this year and next while progressing our early research programs. Lastly, we are actively pursuing partnerships for a number of the solid tumor programs you will hear about today. Now I'd like to provide some introductory remarks on our research strategy. We have established a solid foundation with a proven track record as a pioneer and leader in the ADC field with specialized end-to-end capabilities. We have an approved product in ZYNLONTA. We have a robust pipeline, including 2 novel compounds in clinical development, in addition to our expansion initiatives for ZYNLONTA. We have a broad research tool kit, which we believe will allow us to expand beyond our initial focus on PBDs into next-generation ADCs with an enhanced therapeutic index, including the exatecan-based platform you will hear about from Patrick. Lastly, we have an experienced and tenured team to capture the many opportunities ahead of us. Our solid tumor research strategy is focused on 3 key elements. First, we have identified areas of high unmet need that currently feature high use of chemotherapy; secondly, we are pursuing targets within these tumor types that are amenable to an ADC approach; and third, we are utilizing our deep knowledge and broad toolkit to optimize the design of ADCs that fit within our first 2 criteria. This visual shows tumors that we have determined represent high unmet patient need and our primary focus. These are prostate, non-small cell lung, colorectal, endometrial and ovarian cancers. For each tumor type, the combination of incidents and unmet need offers large potential opportunities suggesting that better treatment options are needed. In each case, chemo remains a key part of the treatment armamentarium. Having selected our areas of focus, we identified targets that are amenable to an ADC approach. Specifically, these targets must be membrane-bound and capable of being recognized by ADCs. They must be differentially expressed on tumor types of interest and they must be capable of internalization in order that the ADC payload can be delivered into the tumor cells. Lastly, having determined the appropriate tumor type and target, we seek to engineer the optimal ADC construct to deliver a potent payload with a high therapeutic index. We have over a decade of experience working with different toxins, linkers and conjugation technologies. Our near-term focus is primarily on combining exatecan as a toxin with a novel hydrophilic linker and hinge cysteine-conjugation. As Patrick will also explain, we are not limiting our research strategy to this approach, but we are encouraged by the early data we have generated across our lead candidates, which provide initial validation for this differentiated platform. By bringing together the key elements of our research strategy, we have chosen 4 lead ADC targets. We have previously disclosed NaPi2b, Claudin-6 and PSMA, and I am pleased to announce for the first time that our fourth target is ASCT2, a novel first-in-class target. Each offers the potential to improve the standard of care for cancer patients and each utilizes our novel exatecan-based platform. Our 4 lead candidates have a differentiated profile and high therapeutic index, which reflects the proprietary design of the ADC that I referred to earlier. In terms of stage, our NaPi2b and Claudin-6 ADCs are in IND-enabling studies, and we were pleased to share exciting early data on these at AACR this week. Our PSMA and ASCT2 ADCs are in drug candidate selection stage, which we expect to complete this year. What's important to recognize is that we are trying to compete in areas where we believe we can be differentiated while avoiding crowded spaces such as HER2 or TROP2. In fact, based on our market research, currently, the competitive intensity for our 4 prioritized targets in the clinic is relatively low. While other companies are pursuing those targets at the preclinical stage, we believe our potentially higher therapeutic index will allow these candidates to be differentiated against products in development. If we are successful with these prioritized targets, we stand to enter high-value markets. The current global market opportunity across our solid tumor areas of focus amounts to over $50 billion per year. Given the unmet patient need, coupled with the market opportunity, a successful outcome for some of these early research programs has the potential to deliver significant net revenues in the future. On my final slide, I want to highlight that we have proven capabilities which support our confidence in delivering against our research strategy. We have filed 6 INDs that have entered the clinic a process which typically averaged approximately 18 months, and we have strong expertise in early development with 2 programs currently in Phase I clinical studies and 2 programs that have completed early development. We've enhanced our early and late-stage clinical capabilities to enable early incorporation of critical strategic elements, such as assay development, which we believe help improve the likelihood of success and reduce the lead time to clinical proof of concept. With that, I would like to hand over to Patrick.

Thanks, Ameet. I would like to introduce our ADC platform and the different options that we have when designing ADCs. From our research toolbox, we make intelligent choices as we seek to optimize the therapeutic index of our ADCs and strike the right balance between safety and efficacy. As we initiate the development process, we start by making a choice about what toxins to employ. We have access to a range of toxins, including pyrrolobenzodiazepines, other DNA damaging agents, immunomodulators, Topoisomerase I inhibitors and even dual payloads. While our near-term focus is on Topo1 inhibitors, we have experience with all these toxins. The second choice is related to the linker, which is important because it addresses the stability of the ADC. Moreover, capable linkers can also support the overall efficacy of the ADC by enabling bystander activity. At ADC Therapeutics, we believe bystander activity is a key contributor to the activity of the ADCs in solid tumors. Additionally, based on the potency of the toxin we're employing, we select the optimal drug-to-antibody ratio. A lower ratio is typically preferred for higher potency toxins and a higher ratio for the lower potency toxins. Next, we determined the best conjugation approach. Today, hinge cysteine-conjugation is the most validated way to conjugate in ADC, but we have more options, including enzymatic approaches like Glycan-remodeling or transglutaminase based. We also use approaches where we engineer the antibodies such that you can conjugate a payload to a specific site on the molecule. This could be Thiomab-based using Maleimide chemistry or any [indiscernible] modification that requires an enzymatic conjugation approach. Lastly, we must make a choice related to Fc silencing. Fc silencing, which can be done in a number of ways is generally preferred in order to reduce off-target toxicity driven by the ADC. As we have continued to expand our research toolbox, we've gained expertise at making intelligent choices about each component of our next-generation ADCs. As I noted earlier, our near-term focus is on developing ADCs based on exatecan, a Topo1 inhibitor. It's clear that Topo1 inhibitors can play an important role in the treatment of cancer patients. It started in the '90s with the approval of topotecan and Irinotecan across a range of cancer indications, including ovarian, colorectal, cervical and small cell lung cancer. And of course, recently, with the approval of ADCs such as ENHERTU and TRODELVY, it has become clear that Topo1-based toxins can be extremely effective toxins to use in the development of ADCs. ENHERTU in particular, has validated the exatecan derivative deruxtecan or DXd. While DXd is 10^24 less potent than exatecan, conjugating exatecan to and ADC has previously been challenging, given that exatecan is much more hydrophobic than DXd. We have made choices in our exatecan platform design that we believe overcome this challenge. We believe that our novel exatecan-based platform has certain key advantages over the DXd and other approved Topo1 inhibitors, resulting in a superior therapeutic index. Our preclinical data supports the dosing strategy over exatecan-based ADCs in patients at 5 mg/kg or higher. Additionally, given the tolerability, we believe our ADCs will be combinable with standard of care in the clinic and are allowed for combination with other targeted modalities within orthogonal mode of action. We also want to emphasize that so far in our preclinical experience, we have seen no signs of interstitial lung disease, a known severe side effect associated with the use of DXd based ADCs in the clinic. In terms of efficacy, although still in the preclinical phase, we've seen increased bystander activity in both [indiscernible] ADCs versus DXd in our internal studies. Additionally, unlike DXd, exatecan is not reported to be a PgP substrate, which may enable deeper responses in patients. So how have we achieved all of this? Leveraging our prior experience and expertise, we've developed a payload called PL2202, which is based on a novel highly stable hydrophilic protease-cleavable linker. Using a novel peptide spacer, we're able to offset the hydrophobicity of exatecan itself. PL2202 enables traceless release of the exatecan once it has been processed by the tumor cell. Now let's take a closer look at our first target, NaPi2b. NaPi2b, which is a phosphate transporter, plays a central role in cellular phosphate homeostasis and can be upregulated through tumorigenesis. NaPi2b is highly and specifically expressed in ovarian, non-small cell lung and endometrial cancer, making it an ideal ADC target. Other parties studying the same targets have seen responses to NaPi2b direct with ADCs in clinical studies thereby validating the targets. While these ADCs have since been discontinued, we believe our NaPi2b ADC is differentiated and optimized versus these candidates. Looking at the indications where NaPi2b is expressed, there is still a high unmet need. In ovarian cancer, the unmet need is highest in the platinum-resistant population. While the approval of Mirvetuximab Soravtansine has improved outcomes, we believe there is room for improvement, especially in patients ineligible for this treatment. The same is true for non-small cell lung cancer with a significant number of NaPi2b positive patients in the second-line plus setting where chemotherapy is the main study. We have designed an ADC against NaPi2b with optimized features versus discontinued NaPi2b ADCs. We use NaPi2b specific humanized monoclonal antibody, which is more efficiently internalized than the antibody used in Lifastuzumab Vedotin. We have also introduced mutations in the Fc region to make it Fc silent to reduce target independent toxicity, whereas [ upgrade ] platform had fully preserved Fc-gamma receptor interaction. Our ADC releases exatecan with a drug-to-antibody ratio of 6. We have achieved this by introducing a mutation in the hinge [indiscernible] conjugation, eliminating heterogeneity of the conjugation of all [indiscernible] in the hinge. The result has been a significantly high therapeutic index versus Lifastuzumab Vedotin, UpRi and XMT-1592. Of the discontinued ADCs, Lifastuzumab Vedotin has the best efficacy and safety profile in the clinic. So we've selected this ADC for benchmarking in our studies. Our preclinical data has supported our antibody choice versus Lifastuzumab. On the left, you can see that in terms of NaPi2b binding, our NaPi2b antibody has about fourfold better IC50 compared to Lifastuzumab. Additionally, when conjugated to our payload PL2202 with the same drug-to-antibody ratio, this resulted in a 20-fold better IC50 in the in vitro cytotoxicity assay, as shown on the right. In this experiment, we compared the bystander activity of NaPi2b PL2202 versus Lifastuzumab and DXd. The orange bar called direct represents NaPi2b negative cells that have been incubated with the ADCs at the 2 concentrations indicated. However, because these cells do not express NaPi2b, there's a very low level of cytotoxicity. The blue bars indicate bystander activity. This is where NaPi2b positive cells have been incubated with the ADCs at the same concentration then after a few days, the medium was transferred to the NaPi2b negative cells and cytotoxicity was determined again. As you can see, at the lowest concentration of NaPi2b PL2202, there are strong bystander activity on NaPi2b negative cells after incubation of the ADC on NaPi2b positive cells. And this increases at the high concentration of 800 picomolar. Moreover, when we compared our antibody conjugated to DXd, the bystander activity of our ADC was significantly greater. And similarly, when compared to Lifastuzumab Vedotin, the bystander activity of our ADC was significantly greater. Now looking at the in vivo antitumor activity of NaPi2b-PL2202. On the left, you see the activity of the ADC at a single dose of 6.6 mg/kg, which gives very good tumor regression in the lung adenocarcinoma xenograft model. On the right, you see activity in an ovarian cancer model. Even at the single dose of 1 mg/kg of the ADC we see very good tumor regression in this model. Importantly, Lifastuzumab Vedotin was started head-to-head at the same time at 3 or 12 mg/kg. In each case, you see that Lifastuzumab Vedotin does not match the in vivo efficacy of NaPi2b-PL2202, which supports our belief that our ADC is more efficacious compared to Lifastuzumab Vedotin. Let's look at toxicity. We test toxicity of NaPi2b-PL2202 in rats and Cynomolgus monkeys, both are cross-reactive [ stock ] species, which means that the antibody is cross-reactive to rat and cynomolgus monkey NaPi2b. On the left, you see the results of the rat study where we dosed the ADC up to 300 mg/kg and this was well tolerated. The pharmacokinetic profiles of total IgG as well as conjugated IgG do overlap, indicating a high stability of the ADC with a half-life between 13 to 15 days. We also detected exatecan at much lower levels with apparent half-life of about 9.5 days. On the right, you see the cynomolgus monkey data. We started dosing the monkeys at 40 mg/kg twice, 3 weeks apart. This was well tolerated with minimal clinical pathology and histopathology findings. At a higher dose level, 80 mg/kg, we reached dose-limiting toxicity, and this was mainly driven by degeneration and regeneration of the GI tract, which is a known class effect of Topo1 inhibitors. Again, looking at the pharmacokinetic profile, this was found to be highly stable with a half-life of around 7 to 10 days. So in summary, with NaPi2b-PL2202, our preclinical data suggest that we have an optimized ADC directed against the validated target with high potential impact in ovarian cancer and non-small cell lung cancer. We believe we have an optimized ADC design with a high therapeutic index driven by strong antitumor activity at single low mg/kg dose in different models. To some extent, we believe the improved efficacy is driven by a better NaPi2b binding antibody compared to Lifastuzumab. The optimal therapeutic index is furthermore driven by a very good tolerability profile in both rats and cynomolgus monkeys with a stable ADC. Moving forward, with opportunity to examine the combination potential of NaPi2b-PL2202 in vitro and in vivo with immunotherapy and/or other targeted therapies. We will also conduct more benchmarking work while we progress towards IND readiness. One important component is also going to be the development of a NaPi2b immunohistochemistry assay, as the [ work of others ] have shown that patient selection is going to be key for this target. Moving on to our second program, targeting Claudin-6, which is another validated ADC target. Claudin-6 is expressed in tight junctions, regulating cell adhesion and tissue integrity. It promotes proliferation, cell migration and invasion ability and is often upregulated in tumors. On the top right, you see the Claudin-6 is highly expressed in ovarian cancer and non-small cell lung cancer. In terms of normal tissue profile, Claudin-6 expression in healthy adult tissue is very limited, making it an ideal ADC target. We believe the indications of which Claudin-6 is expressed represents a high unmet need, including platinum-resistant ovarian cancer, and second-line plus non-small cell lung cancer. We have designed an ADC against Claudin-6 with the following features: It's based on a humanized monoclonal antibody specific to Claudin-6, and we also introduced mutations in the Fc region to make it Fc silent in order to offset off-target toxicity on immune cells. The payload is PL2202 and the ADC has a drug-to-antibody ratio of 6. We have identified a few key differences compared to TORL-1-23, another Claudin-6 specific ADC currently in clinical development. Based on our preclinical work, we believe we have a better therapeutic index. Our monoclonal antibody shows superior internalization compared to the monoclonal antibody used in TORL-1-23. Furthermore, the payload in TORL-1-23 is MMAE, a known MDR substrate. The evidence today suggests that MMAE-based ADCs typically have a narrow therapeutic index as a result of peripheral neuropathy. Here, we compare the binding properties of our Claudin-6 specific monoclonal antibody, GB01 to the monoclonal antibody used in TORL-1-23, designated as AB3-7. On the left, you see cellular binding to Claudin-6 positive cells. And you can see that our antibody has about a twofold better IC50 compared to AB3-7. Next, we've conjugated AB3-7 to the same payload PL2202 with the same drug-to-antibody ratio and compared to in vitro cytotoxicity. You can see that the twofold better binding of our Claudin-6 monoclonal antibody resulted in a fivefold better IC50 in in vitro cytotoxicity assay when compared to AB3-7-PL2202. Here, we determine bystander activity of GB01-VA-PL2202, which shows no specific activity against Claudin-6 negative KB cells, but efficiently kills Claudin-6 positive PA-1 cells, as shown on the left. On the right, we show a transfer of conditioned medium from PA-1 cells causes cell killing of the Claudin-6 negative KB cells indicative of strong bystander activity driven by the exatecan payload released from PL2202. Now we are looking at the in vivo and the tumor activity of our Claudin-6 ADC. On the left, you see the activity of the ADC at a single dose as low as 3 mg/kg given very good tumor regression in an ovarian teratocarcinoma xenograft model. On the right, you see activity in another ovarian cancer model, which expresses very low levels of Claudin-6. We tested the toxicity of the ADC in cynomolgus monkey, which is a cross-reactive [ stock ] species. This means the antibody GB01 has cross-reacted to cynomolgus Claudin-6. We dosed monkeys starting at 20 mg/kg followed by 30 mg/kg and 40 mg/kg. The ADC was well tolerated at 40 mg/kg twice given 3 weeks apart with minimal clinical pathology and histopathology findings. At a higher dose level of 60 mg/kg, we reached dose-limiting toxicity, and this is mainly driven by degeneration and regeneration of the GI tract, which, as I mentioned for our NaPi2b targeting ADC is a known class effect of Topo1 inhibitors. The pharmacokinetic profile is highly stable with comparable curves for total IgG and conjugated IgG with a half-life of around 8.5 to 10 days. In summary, with our Claudin-6 ADC, we have an optimized ADC directed to cancer validated target with high potential impact in ovarian cancer and non-small cell lung cancer. We believe we have an optimized ADC design, with a higher therapeutic index driven by a strong antitumor activity at a single dose in different models and a very good tolerability profile in cynomolgus monkeys. Moving forward, our planned [ mirror ] dose for NaPi2b. Specifically, we will examine the combination potential of our ADC in vitro and in vivo with immunotherapy or other target therapies. And we will continue to conduct benchmarking work while we progress towards IND readiness. One important component is also going to be the development of a Claudin-6 immunohistochemistry assay so that we're able to select the right patients in clinical development. Our third target is PSMA. Although this is a well-known target, PSMA still has a poorly defined role in the physiology of prostate cells. PSMA may promote cancer progression, and it has been validated as a target by the lutetium-based radionuclide therapy, Pluvicto. In terms of expression, PSMA is expressed in the majority of prostate cancer patients, including those with metastatic castration-resistant disease. On normal tissue by contrast, PSMA expression is limited to the prostate and some other minor tissues such as salivary glands, which makes it an ideal ADC target. Based on the competitive landscape, we see the opportunity to develop an improved ADC for PSMA. Importantly, there is still a high unmet need in metastatic castration with resistant prostate cancer. There are many patients in the second line plus setting and although recent approvals such as Pluvicto has improved the outcome for these patients. We believe there is still a need for alternative therapies to address the limitations of curative treatments. We are in the process of completing our candidate selection work for PSMA-PL2202. Our PSMA selective ADC is based on a fully human antibody specific for PSMA. We have selected this fully human antibody because our preclinical data shows it has a better half-life and better ADC properties compared to the widely used chimeric monoclonal antibody, J591. The payload is PL2202, which I've previously described and which releases the exatecan warheads. The drug-to-antibody ratio is 4. Based on our preclinical work so far, we've identified a few key differences compared to other PSMA targeted products such as Pluvicto and ARX517, a PSMA-specific ADC currently in clinical development. According to the published literature, Pluvicto has a disadvantage and that a significant number of patients are inherently resistant to PSMA-based radioimmunotherapy, and acquired resistance is inevitable. Patients also need PSMA screening before treatment, but patients with heterogenous PSMA expression may not be eligible. Finally, due to nature the product, there is administration complexity, which also limits combinability with products administered in different care settings. While still early in our development program, when compared to ARX517, we believe we have a better PSMA monoclonal antibody, which does not fail to deliver, which is a known feature of J591, the monoclonal antibody used in ARX517. Also, we believe that the lack of bystander activity of the warheads used in ARX517 may result in lower efficacy, especially in patients with heterogenous expression. The use of MMAF additionally posted the risk of neurotoxicity in post-taxane patients. So taken together, we believe with our exatecan-based PSMA, PL2202, we may be able to progress a novel and highly effective ADC, which could potentially treat PSMA outcomes without the need for prior screening. Coming back to the antibody. As shown on the left, our PSMA monoclonal antibody has a significantly better half-life compared to J591, in human FcRn transgenic mice, which potentially could result in better exposure of the ADC in patients. When both monoclonal antibodies are conjugated to a PBD payload and tested head-to-head in vivo, we see much better tumor regression with ADC based on our monoclonal antibody versus the J591 based ADC. We have therefore selected this monoclonal antibody to be used in PSMA-PL2202. And as the bottom graph shows, we see strong antitumor activity in vivo, when conjugated to the exatecan-based payload PL2202. In summary, with PSMA-PL2202, we're developing an optimized ADC directed against the validated target with high potential impact in metastatic castration-resistant prostate cancer. By selecting an optimized monoclonal antibody conjugated to an exatecan payload with strong bystander activity, we believe we can develop the strategy in prostate cancer, which may not require a preselection of patients based on PSMA expression. Importantly, a DXd based ADC against B7-H3 has shown benefit in metastatic castration-resistant prostate cancer. So our hypothesis is that exatecan-based ADC with greater potency and stronger bystander activity may potentially offer benefits over existing therapies. Moving forward, we plan to complete the candidate selection work by establishing a final therapeutic index based on tolerability data in cynomolgus monkeys while we progress towards IND readiness. The fourth and final ADC candidate, I want to discuss is directed against ASCT2, a novel target, which we have previously not disclosed. ASCT2 is another transporter protein expressed on the membrane. It facilitates amino acid-transport with glutamine as the preferred substrate. In cancer cells, glutamine is essential for tumors to promote their proliferation. Hence, ASCT2 is often upregulated in many tumors, not only solid tumors but also hematological tumors. As an example, on the top right, you see that ASCT2 is highly expressed in almost all colon cancer and non-small cell lung cancer patients. However, ASCT2 is not exclusively expressed on tumor tissue. Being a transporter protein, there is ubiquitous expression in normal tissue such as lung, skeletal, large intestine, kidney, testis, T-cells brain and adipose tissue. The successful development of ENHERTU targeting HER2 which also has a decent level of healthy tissue expression has shown that it's feasible to develop camptothecin-based ADCs against targets which are not exclusively expressed on tumor tissue. We therefore believe that ASCT2 provides an interesting potential first-in-class opportunity for us. This becomes especially apparent when looking at the indications where ASCT2 is highly expressed. With a significant number of colorectal and non-small cell lung cancer patients that would be amenable to ASCT2 target approach. In each indication, the current standard of care is not optimal and there is room for improvement in these settings. Our ASCT2 ADC is designed similarly to our NaPi2b and Claudin-6 ADCs with use of an Fc silence ASCT2-specific monoclonal antibody and the payload PL2202. The ADC had a drug-to-antibody ratio of 6. This slide confirms that the target is expressed on a wide variety of hematological cell lines, including leukemia and lymphoma as well as solid tumor cells, including those derived from ovarian, colo and renal cancer. The ADC we designed ASCT2-PL2202 was tested in vivo in multiple solid tumor and hematological models. In OVCAR-3 ovarian cancer model, a single dose of 6.6 mg/kg had complete tumor regression. In a non-small cell lung cancer patient-derived xenograft model, we obtained very good tumor aggression for more than 30 days following a single dose of 10 mg/kg. Similar data was obtained in 2 different hematological models in vivo. One, an AML model on the left and one Burkitt’'s lymphoma on the right, which both responded very well to a single dose of ASCT2-PL2202. Obviously, the toxicity profile of this ADC is critical, given the expression of the target in healthy tissue. We tested the toxicity of ASCT2-PL2202 in cynomolgus monkeys which is cross-reactive [ stock ] species, which means that the antibody is cross-reactive to ASCT2 in cynomolgus monkey. We started dosing the monkeys at 40 mg/kg twice 3 weeks apart. This was well tolerated with minimal clinical pathology and histopathology findings. At a higher dose level of 60 mg/kg, we reached dose-limiting toxicity in one animal, but we were able to give a second dose of 50 mg/kg in 2 monkeys. At the 60 mg/kg dose-limiting toxicity was again degeneration and regeneration of the GI tract. The pharmacokinetic profile was found to be highly stable with a half-life of around 4 to 5 days. In summary, with ASCT2-PL2202, we have optimized ADC directed against a novel target with high potential impact in many indications, including, but not limited to, colorectal cancer and non-small cell lung cancer. We believe we have an optimized ADC design with a high therapeutic index driven by strong antitumor activity at a single dose in different solid tumor and hematological models. This ADC has shown a very good tolerability profile in cynomolgus monkeys. Moving forward, we plan to complete the candidate selection work, which entails selection of the final humanized ASCT2 specific monoclonal antibody. We will study the combination potential of our ADC in vitro and in vivo with immunotherapy or other target therapies while we progress towards IND readiness. In the last few minutes, I'd like to give you a preview into what we believe our research platform can deliver. We also believe that with our proprietary exatecan-based platform, we're in a position to develop a portfolio of differentiated products against novel and more validated ADC targets. In addition to the 4 targets disclosed so far, we have identified a number of other targets that we expect would be amenable to an exatecan-based approach. As mentioned earlier, we're also further diversifying our toolbox with drugs with other modes of action, including other DNA damaging agents and immunomodulators. Ultimately, we want to be a leader in the design of ADCs with different toxins incorporated into one ADC. But before we can do so, we need to have the individual tools available and better understand them. We are, therefore, continuing our efforts to master different payloads. As you can see on this slide, we've compared to the efficacy of different payloads when conjugated to the same antibody. On the left, PL2202, in the [ middle graph ] Duocarmycin, both of which demonstrated strong tumor regression in ovarian cancer xenograft models. On the right, TLR 7 agonist conjugated to another antibody demonstrating excellent efficacy in a breast cancer xenograft model. At the same time, we have access to and implemented a number of approaches to design dual conjugate ADCs. On the left, you see an example of a branched linker structure, which in this case, contains 2 toxin molecules. This can be the same toxin like an example, exatecan or 2 different toxins. In the middle, it shows that ADC with another toxin conjugated to another conjugation site as used in the first example. In the last example, the 2 approaches are combined into one ADC, providing a dual conjugate ADC, which shows the greatest specific potency in vitro. Altogether, we're confident that we have established a great tool box that will allow us to design and explore the ADCs of the future. With that, I'll turn the call back to Ameet.

Thank you, Patrick. Before we open the call up to questions, I want to make some remarks on our corporate business development strategy and to summarize what you have heard today. Consistent with the 2-pillar strategy I described earlier, hematology remains our primary focus, which we believe can bridge the company to profitability and grow as we potentially enter earlier lines of therapy and expand into indolent lymphomas. We believe. We have a tremendous opportunity to create value in solid tumors through internal development and collaboration. We have an exciting differentiated research platform and potentially promising candidates in various stages of early development. To close, we are pioneers in the ADC space. We are at the forefront of next-generation ADC development and we are progressing a novel proprietary platform, which is supported by encouraging early data. We believe we have selected tumor types where there remains high unmet patient need and we have a unique opportunity to bring forward multiple potentially transformative ADCs. Taking a step back, this research event, along with the completion of the dose escalation portion of the LOTIS-7 Phase Ib study, which was announced last week, represent achievement of 2 of the 3 key milestones we committed to in the first half of 2024. We continue to expect the third milestone initial data for ZYNLONTA in relapsed/refractory marginal zone lymphoma in the second quarter. In addition, we expect several meaningful catalysts in the second half of the year and look forward to sharing those with you in the future. Now we will be available for questions. Operator?

[Operator Instructions] Our first question comes from the line of Naureen Quibria with Capital One Securities.

I guess maybe I'll start with a strategy one first. I'm at AACR and there's so many ADC posters that I have been seeing. I am just curious, how is ADC Therapeutics uniquely positioned to compete in a dynamic and sort of evolving ADC space with other competitors, particularly with exatecan based platforms?

Thanks, Naureen. Indeed, yes, well, I think it comes down to a few things. We have picked targets, first of all, where the majority of these targets have been clinically validated with an ADC approach. So that's, of course, one important component. Secondly, our platform uses an [indiscernible] linker approach to trace release the exatecan. And we are confident in this approach based on the preclinical data that we've just shared. So and we will be one of the first companies going after these prioritized targets that I just disclosed with this approach. So that's, of course, another important factor. And finally, we have validated end-to-end capabilities with an approved ADC, as you know, 2 novel compounds to clinical development and multiple INDs far since 2015. So a proven track record, getting things into the clinic. So we think those 3 components are important and make us well set for the future.

Great. Maybe you can answer. It may be -- it may also answer my second question in part. But with the NaPi2b program, obviously, there have been 2 clinical -- key clinical setbacks. With NaPi2b as a target, and you're still going ahead with it as an ADC for that target. So can you just sort of tell us the rationale behind why you believe you have a better molecule, not just against the molecules that you referenced, but there are still a number of ADCs that are currently in development targeting the NaPi2b. So how does it compare to those? And how is it differentiate it?

So you mean compared to the UpRi and [indiscernible]?

Yes. UpRi as well as Genentech as well as there are one other ADC programs, right, that are currently still in development. They haven't discontinued their program.

Right. So they're all preclinical. So we've basically looked at the clinical programs that have been discontinued so far. And I think the -- there are 2 reasons why they were discontinued probably. First of all, the patient selection strategy that was used by the companies; and secondly, the ADC design. So it's clear that Mersana terminated the UpRi molecule due to a lack of efficacy and toxicity. On the other hand, Genentech saw pretty good efficacy in a subpopulation of high expresses. So that validated the target really, but also highlighted the importance of a biomarker-driven approach to selecting the right patients for NaPi2b. So one important component for us, of course, is going to be ready for patient selection based on a robust NaPi2b [indiscernible] when we get to the clinic. And secondly, the molecule design. I think our data shows that we have a superior fabric index compared to those 2 molecules, which, of course, is an important component if you compare those molecules.

Great. And if I could squeeze one more in. So with the ADCT-601 program, the AXL ADC. Obviously, you have some initial data -- Phase I data. I was just curious, there's also an independent preclinical study with this asset in adenoid cystic carcinoma and ACC. Is there -- and it was at least from clinical study, basically, it just shows a tumor month away with one treatment. I'm just curious if there's any interest in evaluating it in ACC as well in addition to sarcoma and non-small cell?

Yes. Thanks, Naureen. There's not an interest right now. As you know, we're trying to go after areas -- tumor types where there's high expression, high unmet need and reasonably sized patient population. So we started with sarcoma as approved from concept because especially before we had the biomarker, it was a great way for us to test, get to the right dosing, but also to test a little bit if there was a signal of antitumor activity in a population where we know there's high levels of expression. There's 2 big areas in pancreatic and non-salt cell lung cancer, where you have high levels of expression of axle with significant unmet need when you get in that relapsed/refractory setting. And that's where we think we have the greatest potential. So as you know, we announced recently that we started screening. Patients are ready for pancreatic cancer. That's our real next focus as we continue to expand and optimize the dose of sarcoma. And once we do that, we'll move into a selected population in non-small cell lung cancer. That's our current focus, but I think the preclinical data validates some of the early signals we've seen in the clinic, which is that we're in the therapeutic index where we're seeing some level of activity. And of course, that has to be confirmed now in a broader population.

[Operator Instructions] Our next question comes from the line of Michael Schmidt with Guggenheim.

Really nice overview of your new platform capabilities here. I think we all know that exatecan has been a quite difficult payload to work with. And it looks like you have develop new chemistry here, especially around the linker technology. And I'm just curious, as we are now that bystander factors are quite important, especially in targeting solid tumors with ADCs. I'm curious if you're using the same linker in all your products and progress or whether those are individually optimized? And how you feel about the degree of bystander effect that's necessary for each of those targets?

Thanks. Yes. So the answer is yes, we're using the same payload so far for all these programs. That's the one which we call PL2202, which is based on this novohydophilic linker that we designed to offset the exatecan. So in the past, it has been quite difficult to work with exatecan because of the hydrophobicity. And you need to design a linker which offsets the hydrophobicity in order to be able to conjugate the exatecan. So that was what became PL2202 and we're using that same payload, as we call it, for all the programs so far.

Great. Then yes, interesting, obviously, smart sort of target selection strategy to pursue some of the less crowded targets, there's a lot of HER2 and TRP-2 programs, obviously, out there in the ADC space. On Claudin-6 specifically, which is quite interesting, we've seen some data recently from an ADC using more of a legacy technology and MMAE-based payload showing a 32% response rate, in Phase I, which is quite exciting and obviously validates Claudin-6 and as an interesting ADC target. And I think the majority of the patients in that study were in ovarian cancer. And I'm just curious if pursuing this with an exatecan based ADC, whether there are any particular tumor types that you think might be particularly sensitive to a topoisomerase inhibitor versus an MMAE-based payload?

Yes, sure. I think, as Ameet introduced the strategy. I mean we're looking into indications where Topo-1 inhibitors have a proven track record. And of course, ovarian is one of them. And -- but the same is true for non-small cell lung cancer where Claudin-6 expressed. So that could be another very compatible indication for extense Claudin-6 approach. So certainly, we're looking into that, yes.

Okay, fair. And then maybe just a last question. Shifting over to ZYNLONTA actually. Just following up on your recent announcement of completing the Part 1 of the LOTIS-7 study without any safety signals really. As we think about the expansion cohort and second-line DLBCL in combination With glofit. So what level of efficacy do you think would you want to see here later this year, perhaps also relative to LOTIS-5 to pursue next steps and to be in a really good competitive position in second-line DLBCL?

Yes, it's a great question. I mean maybe just framing and you know this, Michael, I mean, on the one hand, in second line, you have CAR-T where you could see 60%, 70% CR rates, but unfortunately, as you know, it's kind of cap right now, plateauing at roughly 20% of patients, the majority of the patients that are treated in academics that are kind of get CAR-T. But even when you look at the performance, it's not available to most patients. And it's not growing as much in the second-line setting. So the majority of patients right now are getting other therapies. Most of those therapies are more in that 40% CR rate. I think we're encouraged by LOTIS-5, at least the patient safety running data were in the first 20 patients, we saw 50% CR rate. We would expect the bispecific combination with [indiscernible] glofit plus ZYNLONTA to be north of that number. And clearly, the combination just deliver more efficacy than the bispecific with alone in a second-line setting. Renal bispecifics deliver about 40% CR rates in the third-line setting. We'd expect as you move into earlier lines, they should be north of that on their own, and ZYNLONTA should be additive. So clearly, in that 50% to 60% range, I would expect the CR rates to be potentially north of that. We'll have to see the data. But importantly, also the safety profile, I think, is going to be important that what we've seen so far in the dose escalation having either no CRS or low-grade CRS small patients. So far, it compares very favorable to the current glofit label. If that continues in that second-line setting, the hope is that we can make bispecifics more accessible in the community setting. And so if you can have an offering that's higher in efficacy than what the current available treatments are closer to where CAR-Ts are now today. It may not be completely there, but at least if you get -- start bridging the gap from where we are today, which is 40% to 60% to 70%, we can get north of 50%, ideally closer to 60% CR rate, with a better tolerability profile that makes it amenable to both the academic and community setting. That's sort of our ideal profile. So that's what we're testing right now in the expansion cohort as we move into second line.

Our next question comes from the line of Brian Cheng with JPMorgan.

Maybe just one on your [ PT ] strategy. On your last couple of slides, you talked about your potential strategy on the AXL program you're seeking for potential collaboration for deals on the AXL side. There's also another AXL competitor that's looking for strategic collaboration. Can you kind of comment on how competitive it is today to identify partnership for an AXL targeted agent? And I have a follow-up.

Yes. I think part of this for AXL specifically is going to be data driven. I think at the end of the day, we're still -- we're generating data that we think will start being more mature when we'll get to the later part of this year. And I think that's when it's going to be more interesting. I think clinical data is going to drive it. But also, I'm going to pass it to Patrick because I think there's important distinctions between our molecule and the competitor molecule which give us some level of confidence in terms of the activity we've seen. And we hope to continue to see in other indications as well.

Yes. So the other molecule you're referring to is an ADC based auristatin. And of course, we are using a proven today more EPS, and this is a payload, which is shown to be very efficacious in how to treat patient population, such as the one we're going after with AXL. So it's an important differentiator compared to the competitor ADC within auristatin. We believe that we have is probably better suited to treat those patients. The other difference is that we are using a normal antibody targeting approach. So we have an antibody recognizing AXL. This other company is using a conditional antibody binding approach. That's, of course, an approach that is novel, very interesting. But we are using just a normal antibody binding approach. So these 2 things are very important differences between our ADC and their ADC.

And ultimately, Brian, I mean we want to develop this to a point in which you have the data to have the right partnering discussions. We're not at that point right now. Once we have the data in hand, that's when I think it becomes much more interesting for partners. And I think if you see clear activity in across solid tumors like pancreatic cancer, which there's a significant unmet need, I think that's where it's going to be more interesting for a potential partner. So that's not going to happen in the near term. But as the data matures, we think that's a much bigger possibility.

Great. And then maybe just one NaPi2b. If you look at other clinical studies from the discontinued programs. They both saw hem-related issues related toxicities. Do you think that's an on-target effect? Can you also comment on whether if you saw any hem issues in your preclinical top studies? And then I have one last follow-up.

Yes. I mean, well, the tox issues you're referring to, I think we don't see that in our preclinical studies. So I mean at the dose levels we reported in this presentation and the hematological toxicity is really, really low. So we don't see that as an issue for NaPi2b ADC. I think the ones that you refer to in the clinic because NaPi2b is not expressed in the bone marrow or on hematological cells or probably driven by the platforms that we're using, whether it's MMAE or the Mersana platform.

And then on your LOTIS-7 work, as we head into Roche 2 Phase IIIs, Starkloand also Sunmi readouts later this year, from there bispecific combos in the second line later this year. Can you just talk about -- and just kind of recap on the positioning of your LOTIS-7 combo. What kind of differentiation are you trying to show? And what kind of response would be meaningful -- meaningfully differentiating from those combination work that Roche is doing?

Yes. And as you know, we're collaborating with Roche on lease combinations, too. I mean I think those combinations are obviously with Polivy. As you know, Polivy has moved to the frontline setting showed -- I mean it's actually moving quite rapidly. You see it in the sales progression. What we've heard pretty clearly from physicians is when they use Polivy upfront, they don't plan on retreating. There's just so many options. They'd rather switch to other therapies. The one modality that you do see retreated right now as we're talking about maybe the case with biases in the future is CD20-based therapies. That's the one therapy that you see getting recycled, like you see chemotherapy in recycled across lines as well. So we believe actually having a CD20, CD3 based like [indiscernible] glofit plus ZYNLONTA actually is going to fit perfectly in the second-line setting. Obviously, the efficacy and safety profile are going to have to be very competitive with the trial that you mentioned. But we believe, I mean, based on the safety data we're seeing right now, it's pretty compelling in terms of the combined ability of these agents, obviously, the efficacy as we get into a second-line population, broader numbers of patients and longer follow-up that will test efficacy. But as I mentioned, Michael earlier, I think we're going to have to be clearly north of 50%, which is what I think you're seeing, for example, with some of those trials, ideally approaching closer to 60%. I think that's going to be the range to be very competitive with a profile that is able to be given second line post where poly-based combinations are based. So we think if that data comes in, particularly with a better safety profile, it's going to be very competitive.

Our next question comes from the line of Kelly Shi with Jefferies.

This is Yun for Kelly. So the first question is on the interstitial lung disease. You said you haven't seen any. Is that purely based on a better therapeutic index? Or could there be anything else contributing to safety profile, please?

Yes. I mean it will be speculation to say why we don't see it. But the reality is that indeed, in all the studies we've done so far in our -- in the monkeys with those 3 programs that we just described, we don't see it yet. I mean, of course, you never know what's going to happen in the future. But so far, we haven't seen any toxicology observations in the lungs of the animal. So whereas the antibodies were of course reactive in all cases. So for us, that means that, yes, this is a good observation. And of course, we'll continue to look for it.

Okay. And next question on the pipeline. And I believe you guided for ZYNLONTA profitability in 2024. So with that, how much were -- how far would you be willing to develop the solid tumor programs before you -- I know that you said you are actively looking for partnerships, but how much work will you be willing to do independently?

Yes. So the majority of our capital is going to ZYNLONTA. So we talk about commercial brand profitability. That means the sales this year which will progressively grow from last year will more than offset the cost of the commercial organization, the commercial spend, the medical affairs organization, the medical spend, everything associated with the current indication will be covered by the current sales. So basically, what we're funding, what we're financing is new indications like LOTIS-5 and LOTIS-7. Those are the things that we're financing. But the majority of our capital is going towards ZYNLONTA. A smaller portion of our capital is going towards our solid tumor portfolio, whether it be AXL to get the critical data across the indications we mentioned as well as progressing our research platform along the IND-enabling pathway. We're clearly not going to be able to finance all of these programs through into the clinic. And through clinical trials, that would be too big of a use of capital. So we want to progress things forward. I think as we've engaged with partners, it's clear where there's additional data that would be helpful. It's clear where we're in good shape. So we're going to keep progressing things forward. And I think as we generate the data, it will be attractive for partners. And that will be a key part of our funding strategy, ideally, if you can do a mix of internal and external development to reduce the overall capital needs of the company, that's the ideal mix.

Our next question comes from the line of Gregory Renza with RBC Capital Markets.

This is [indiscernible] for Greg. So it looks like PSMA and are expected to have drug candidate later this year. Is it reasonable to read into this target have higher priorities? If so, just curious what's the calculator here?

Yes. No, I think there's just a little bit behind. So it's not a big delay versus NaPi2b and [indiscernible] I would just read into it as -- those are started first, and so we're already at the DC stage in the IND-enabling study stage and the other ones are just a bit behind right now because they were just started a little bit later. So I wouldn't read into anything when it comes to prioritization. Obviously, as we think about prioritization, we're going to take into account the data that we generate. We're going to take into account of say a very evolving dynamic competitive environment and look at the overall business case as well as the value you could get from potential partnerships and where the interest is. So a lot of these factors will drive, I think, the prioritization right now, we're in a process right now of. We don't have to invest a lot to generate, I think, meaningful data in the near term across all 4 of these, and that's what we're continuing to do right now.

But I mean since you mentioned, just to be curious, so how really, I guess, are you at basically partner any of these targets out -- are there any tisothat you would try would you rather develop yourself all the way to the end?

Yes. I think it depends a lot on the -- obviously, the value you would get from -- so it's hard to answer that in isolation, obviously, because it depends on the discussions with the partner and what the value that we'd be able to create in a partnership versus going it alone. And so that comes down to specific terms that you have to make that decision one by one. I don't think we're stuck to saying that this one will never let go of and this one we're absolutely in a partner because I think we feel like all 4 right now are attractive for different reasons. And all 4 have good business cases and all 4, we think are fairly competitively positioned. Now again, this will evolve as we keep generating more data. But I think a lot will depend on how things evolve with the data, how the competitive landscape evolves and then how the value that we believe we can create with a partnership versus going it alone.

And just to complement, I mean here, it's within learn a full BD process for this, which we believe is pretty well structured. Right now, we have -- we're in various discussions with people in different stages are in confidential stage and others still getting into the data set. So this is a process that we're going to run without any rush. We have the resources to keep their assets going forward. We want to make sure that as we partner the assets, we partner with the right player with the right economics and the right timing.

Got it. And last question -- can you not a very beknown candidate. I'm just curious if you have done any preclinical experiments internally to compare in the same tumor models with other candidate other targets, for example. And with regard to the expression in normal tissues, how concerned, I guess, should we think about this? And is there any experiments you can do to derisk this? Or do we have to wait and see the Phase I results?

So to your first point, we haven't done any head to have comparison yet of the ASCT2 ADCs with other preclinical ADCs that we have announced. But if we look at the data, I think overall, it looks pretty similar in terms of efficacy in the different models that we run so far. So we see good efficacy with single-dose treatments at a mg/kg stage level. So I think that's going to be pretty similar overall. Secondly, to your question around healthy tissue expression. Well, of course, I mean, the monkey studies that we showed are important here because, I mean, if there would be on target toxicity, we would see it because the antibody is cross-reactive. So we think that if there would be on-target tox, we would see it. But apparently, it looks like that the levels of ASCT2 unhealthy tissue are low enough such that you don't drive toxicity to the tissue. And that's, of course, different from the cancers, which overexpress the ASCT2. So overall, we're pretty confident that this is a good target for an ADC approach.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Ameet for closing remarks.

Well, I want to thank you all so much for joining our call today, and thanks for your continued support. We look forward to keeping you updated on our progress. And I wish everyone a great day. Thanks, everyone.

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