ADC Therapeutics SA (ADCT) Earnings Call Transcript & Summary

Good morning, everyone. My name is [Mary Lou], and I'm one of the associates on the healthcare investment banking team at JPMorgan. It's my pleasure to introduce our next presentation from ADC Therapeutics. I'm joined by the company's CEO, Ameet Mallik, who will give a presentation on the business, followed by a Q&A session. Thank you very much for being here. And with that, I'll turn it over to you.

Thank you very much. It's a pleasure to be here with all of you today, and I'm very happy to introduce our company, ADC Therapeutics. So overall, we're in the ADC space. We have an approved product in ZYNLONTA that we're currently working to expand in combination in earlier lines of DLBCL and into indolent lymphomas. Over the course of 2025, we made significant accomplishments, most notably progress with all of our key trials where we will again demonstrate key data, which we believe is derisking the portfolio of trials for ZYNLONTA, but also to strengthen our capital position, both through restructuring the company and through significant equity raises. If you think about where are we as a company going forward now, this is a year of final data disclosures for a lot of our key studies. So this is a year where the data is going to get derisked. And as we go into 2027, we'll get approval and compendia inclusion for multiple new uses, which can lead to growth starting in 2027 and continuing into 2028 and well beyond. Now just taking a step back, ZYNLONTA, our approved asset, is a CD19 directed ADC using a PBD-based warhead. It's approved currently in the third line plus DLBCL setting. That has a few attributes that are very unique and differentiating versus other molecules. First, it works very quickly. The median time to response is first disease assessment, 1.5 months. Patients are getting a response, most times even best response if they're going to get to a CR within that time frame. Even as a single agent, and there's very few single agents approved within relapsed/refractory DLBCL, we have a 48% overall response rate and nearly a 25% CR rate. The median duration of response when you get to a CR wasn't reached even 2 years later. So when you get to a CR, you're going to get there quickly and they tend to be very durable. The side effect profile is manageable. We don't have any ICANS, CRS or any cumulative irreversible toxicities like you see with many of the other therapies in the field. And a simple Q3-week dosing, physicians typically administer for a fixed duration, no REMS or inpatient stay. Now overall, where we're approved in a relatively small indication as a single agent in the third line plus setting, the strategy is really, one, to move in combination in earlier lines of DLBCL as well as to move into indolent lymphomas. Across all of these settings, we've seen very differentiated data that I'm going to walk through today, which we think can expand the opportunity significantly within the lymphoma space. Now if you deep dive into what is happening within the market within DLBCL, when patients get treated in the frontline setting, they're getting pretty standard therapies. Typically, their R-CHOP or Polivy R-CHP. But when you move to that second-line plus setting, that relapsed/refractory setting, Treatments really fall into 2 main categories. You have more complex therapies like CAR-Ts and transplant and bispecific-based therapies that require unique patient management and infrastructure requirements to administer these therapies. So for patients who have access to these therapies and are suitable for these therapies, they tend to get these complex therapies. But we know many patients, particularly in the community, either don't have access or not suitable for these therapies, and you also see broadly accessible therapies. These are typically ADC-based monoclonal antibody-based or chemo-based therapies. And so these 2 segments coexist right now. If you look at the third-line setting where we play today, in the complex therapy market, bispecifics were approved about 2.5 years ago and we gained significant share. So together, complex therapies are now at about 60% and broadly accessible about 40% share. We have 10% share of the total market. So roughly 10 of those 40 share points is where ZYNLONTA plays today. Now in the second-line therapy, where bispecifics have not yet been approved, but were added last year to guidelines, we see complex therapies at about 35% share. So 65% of patients are still getting a broadly accessible therapy in that second-line segment. We expect that complex therapies will grow driven by bispecific-based combinations in that second-line setting. But nonetheless, these 2 segments will continue to coexist going forward. And our strategy is really to be able to win in both of these segments to have leading efficacy potentially in both of these segments. With our LOTIS-7 trial, this is the combination with ZYNLONTA plus the approved product, glofitamab, the approved bispecific product glofitamab. And then in the broadly accessible segment, our ongoing Phase III study, which we expect to read out in the second quarter of this year with ZYNLONTA plus rituximab. Now when you look at the data that's been generated up to this point and put it in line with what's going on in the competitive landscape, starting first with complex therapies, the bispecific monotherapies were approved with roughly a 40% CR rate, which is actually quite good for a monotherapy. Then you get to bispecific combinations. There's 3 different combinations that have been added to compendia. They have CR rates ranging between 51% and 61%. And then, of course, CAR-T, the approvals were in that 65-ish range for CR rate. What we were able to demonstrate in the first 49 patients, and I'll go through this data with ZYNLONTA plus glofitamab is a 78% CR rate. So very encouraging data that we've seen so far in this trial. Now going to the right-hand side of the page, the broadly accessible segment, chemotherapy is still a mainstay in use quite often, particularly in the community in that second-line plus setting. The CR rate is typically around 25%, which is very similar to what we see with the monotherapy for ZYNLONTA. The combinations in this space, which are typically ADC or monoclonal antibody based have a roughly a 40% CR rate. What we were able to show in the first 20 patients, the safety run-in portion of our Phase III study was about a 50% CR rate. So we think we have a chance, again, to be very competitive and even differentiating potentially in both of these segments. Now as you move to second line, you don't -- only add twice as many patients in the second-line segment as you have in the third-line plus segment. We also have an ability, we think, to capture higher market share with a more differentiated clinical profile. And then finally, the duration of therapy, where we see, on average, 3 cycles with ZYNLONTA monotherapy. In the combination studies, we're seeing about 5 to 6 cycles. So all of these factors can help to drive a significantly higher revenue growth opportunity than what we see in the monotherapy. Now deep diving into our Phase III study. This is our LOTIS-5 confirmatory study. This is a randomized study with 420 patients, 1:1 randomization, 90% power, where we're looking at ZYNLONTA plus rituximab versus R-GemOx. Overall, the primary endpoint is PFS and key secondary endpoints like overall survival, ORR, CR and other key secondary endpoints. As I mentioned before, before we went into the randomized portion of the study, there was a 20-patient safety run-in on which the basis of the data I shared where we demonstrated an 80% overall response rate, 50% CR rate and over an 8-month PFS. This study completed enrollment in the -- by the end of 2024. We need to hit a prespecified number of PFS events of approximately 262 in order to stop the study and read it out. We expect to be able to have that and read top line results for this study in the second quarter of this year and then full results to come at a medical congress by the end of this year. Now if you look at the profile of our compound, as a monotherapy, we have some distinct differentiating points. One is it works very quickly. As I mentioned, you're typically getting to a response, oftentimes the best response already at the first disease assessment. So it works very quickly. And when you get a CR, they tend to be very durable. The other thing that's very good about the product profile is its manageable safety. There's no irreversible toxicity. So through down dosing or stopping treatment, the patient can -- those side effects resolve, also convenient dosing schedule. Physicians are administering this typically with a fixed duration, and it's a Q3-week dosing with a 30-minute infusion. So very easy to give, very easy to add on to other therapies as well. Now the limitations right now of the profile as a monotherapy is that we have a limited indication with only third line. Most other combinations are being playing in the second line plus. So why does that matter? If you're a community physician, for example, you may only see 1, 2 or 3 patients in a year than in the third-line setting because you tend to refer out much more to academic physicians as you get to later lines of therapy, whereas in the second-line setting, you may be seeing these patients every month. So it becomes a little bit less relevant for some of the community physicians. And then we also have a CR rate that's around 25%. When we move into LOTIS-5, not only are you moving into a broader patient population, which is significantly more patients is more relevant for community physicians because they see those patients much more often. But also the efficacy from a CR standpoint, we believe can be competitive and even potentially differentiating. It doesn't take a lot just with this first opportunity to transition this from what was roughly a $70 million opportunity. We ended last year with roughly $73 million of sales to get this to $200 million to $300 million opportunity. We already have, if you look at the left-hand side, 6,000 patients in the third line plus setting. We have roughly a 10% share with 3 cycles that translates in that roughly $70 million. With LOTIS-5, when you add an additional 12,000 patients in the second line, even with only a 5% to 10% share with increased number of cycles, that takes the opportunity to $200 million to $300 million. With every additional 5 share points in the second-line setting, that's an additional $100 million opportunity. So we believe this really already in this one indication can significantly increase the revenue opportunity for the product. Now I'll turn to the other combination in DLBCL that we're very excited about, which is our LOTIS-7 study. This is looking at the combination of ZYNLONTA plus glofitamab, both approved products as single agents with complementary mechanisms of action. We, of course, as I mentioned, our anti-CD19 ADC and glofitamab is an anti-CD20, CD3 T-cell engaging bispecific antibody. Now we had a hypothesis that we could see additive or synergistic efficacy, but of course, you need to test the safety as well. And so we did a dose escalation first, looking at the full dose of glofitamab as well as 3 different doses of ZYNLONTA, 90 micrograms per kilogram, 120 micrograms per kilogram and the approved dose of 150 micrograms per kilogram. There were no DLTs in the dose escalation, so we moved on to dose expansion. Within the dose expansion, we approved -- we looked at the 2 higher doses of ZYNLONTA with the fully approved dose of glofitamab. Again, I'll share data on both of those looked good, and we're continuing now to expand with 100 patients at that approved dose of ZYNLONTA, 150 micrograms per kilogram plus the approved dose of glofitamab. One of the unique things about the dosing sequence around this is glofitamab already has Obinutuzumab given on day 1 before the step-up dosing of glofitamab. This is typically when patients have to be hospitalized because of the risk of CRS and ICANS that can occur during that step-up dosing. But glofitamab on its own, when you look at the monotherapy data, still has about a 70% all-grade CRS rate. What we did is after obinutuzumab on day 1, we give the first cycle of ZYNLONTA on day 2. So before you do the step-up dosing of glofitamab on day 8 and day 15. And then these cycles are given -- these products are both given on the same day every 3 weeks. They both are Q3-week dosing, where ZYNLONTA is given for up to 8 cycles and glofit is given for up to 12 cycles. We believe that by doing that, we could debulk and hopefully reduce the rate and grade of CRS, which you'll see in the data coming forward. Overall, we are pleased with the safety profile that we saw with this combination. The most common Grade 3 event for both products actually is grade 3 or higher neutropenia, roughly 30% in the label of each product. We were happy to see that we didn't really see additive toxicity on the overall grade 3 neutropenia was about 33%, which is very similar to what you see with either product alone. The other grade 3 and higher events that we saw were very, I would say, typical to what's known in the profile of either product. We didn't see any new side effects and the levels were very similar. CRS, as I mentioned, was able to improve. So whereas you see 70% with the monotherapy of glofitamab when we used the 120 dose of the -- dose that's below the approved dose of ZYNLONTA, that went down to 52%. At the approved dose, which is where we're currently expanding, CRS went down to 25%. So significant reduction versus what's seen in the label, and that was all grade 1 and 2. ICANS is about 4.1%, only grade 1 and 2, again, similar to the profile of glofitamab. From an efficacy standpoint, again, very encouraging. In the first 49 patients that were tested, roughly a 90% overall response rate and close to a 78% complete response rate. So this data, when you look at it in the competitive landscape is, we believe, can be highly differentiating. Of the 38 patients that were in CR, 33 remained in the CR as of data cutoff. I'll show you the swimmer's plot, so you can see the duration of therapy. Most of the patients achieved a CR at the first disease assessment, but about 14 of those 38 CRs converted over time from an initial assessment of either PR or stable disease. 8 patients were treated previously with CAR-T, 6 of which achieved a CR. So again, encouraging data in a tough-to-treat population. When you look at the efficacy across both the relapsed population and the primary refractory population, again, we saw very strong efficacy in both populations. You can see overall in the relapsed population, nearly a 92% complete response rate and in the primary refractory, 64% CR rate. So overall, very encouraging results. As you all know, not only in the post CAR-T population, but primary refractory, these are much tougher to treat patient population. So we're happy to see that across these different segments, we're seeing strong efficacy. Here's a look at the swimmer's plot. The green bars represent the CRs. And you can see when you look at that day 42, roughly that 6-week point, the first disease assessment, you see a lot of white either triangles, stars, those are PRs or CRs that are happening right at the first disease assessment. When you see the black stars, those are ones that convert to CRs over time. And you can see again, as I mentioned, the majority of the CRs, 33 of the 38 remain in CR as of the data cutoff. All of these patients had a minimum of 6 months of follow-up and the longest patient was nearly 2 years of follow-up. So we're seeing encouraging again, early durability data, which we will continue to progress as this trial enrolls. Now I'll turn to marginal zone lymphoma. Marginal zone lymphoma, although being an indolent lymphoma still has high unmet need. There's very few therapeutic options. BTK inhibitors are still the mainstay for most patients. There's roughly 3,000 to 4,000 patients in the U.S. that have relapsed/refractory marginal zone lymphoma. And outside of the recently approved CAR-T product where typically CAR-Ts are not used very significantly in the indolent setting. You see CR rates only of up to 29% right now. And for therapies, oftentimes, the BTK inhibitors where patients have to keep on the therapy until they progress, so they can be on sometimes for quite a long period of time. We're running an IIT, multicenter IIT driven by the University of Miami, Dr. Lossos, with 50 patients right now. This is data that was presented last year at ICML in June in the first 26 efficacy evaluable patients, overall response rate of 85%, complete response rate of 69%. And the safety profile was consistent with the known profile of ZYNLONTA. This is again, single-agent use of ZYNLONTA, fixed duration. patients are getting, again, on average, like 5 to 6 cycles. And so we think this, again, could be a real important opportunity for us. We're in the process -- the study is now in the process of enrolling the 50 patients in this setting. And then we plan to not only once the study is completely enrolled and reads out, submit to compendia, but also we're evaluating potential regulatory strategies as soon as we have sufficient data from these 50 patients. Now turning to follicular lymphoma. There is still -- there's many more therapeutic options in follicular than there are in marginal zone, but nonetheless, especially when you get to high-risk groups, there's still quite a bit of high unmet need. So this is a study that's looking at the combination of ZYNLONTA plus rituximab. This is the same combination that's being used in our Phase III confirmatory study in DLBCL. And again, looking at high-risk patients, many of which are POD24 patients. In the 55 efficacy evaluable patient population, the trial was able to demonstrate 98% overall response rate and nearly an 84% complete response rate, again, with no new safety signals and a profile that was very consistent with the known profile of ZYNLONTA. So again, we think this is very, very encouraging. Right now, the study, again, is a multicenter study on track to enroll 100 patients. And then again, we'll assess both regulatory and compendia strategy as soon as the study is completed with sufficient data. Now if you take a look at the overall opportunity, we're playing in that small box on the lower left, that roughly $70 million-ish opportunity with third line plus monotherapy. As I walked through the data already before, we have a chance to take that opportunity just with LOTIS-5, the Phase III study that's going to read out in the second quarter of this year to a $200 million to $300 million opportunity. We can take that to $500 million to $800 million with the combination with glofitamab with regulatory approval and compendia inclusion. And then with those indolent lymphomas that I mentioned with marginal zone and follicular lymphoma that could provide an additional $100 million to $200 million with regulatory approval and compendia inclusion. So overall, we think the potential of this product can grow from where it is today to a $600 million to $1 billion peak potential in the U.S. alone. When you take a step back and look at the milestones and the key value-driving catalysts coming forward, we plan to for LOTIS-7, complete enrollment of the study in the first half of this year. We expect to have a readout of that study by the end of this year and then to be able to pursue both compendia strategy, which should happen soon after and then regulatory strategies in parallel. We think, again, the publication and potential inclusion in compendia can happen in the first half of 2027. With LOTIS-5, we plan to share top line results from the Phase III study in the second quarter of this year. And then again, would file the sBLA and in parallel, share the full data at a medical congress, and that can lead to an approval, we believe, in mid-2027. For marginal zone and follicular lymphoma, the idea is to finish these studies, and we will share that data as early as the end of this year, but sometime between that and the middle of next year to have final results from both of these studies. So we have a lot of data coming on our molecule across these different settings over the course of this year and into early next year. So I want to thank you. I appreciate the opportunity to share the story with you, and I think we'll open up to questions.

Thanks very much for the presentation, and we'll open the floor to questions now. Maybe I can start with the first one. You've covered a lot today, and it's clear that ADC Therapeutics strategy is centered on ZYNLONTA, DLBCL. Can you share a little bit more about the current treatment landscape and where ZYNLONTA fits in and where you believe ZYNLONTA has the opportunity to play a significant role?

Sure. So patients are treated in DLBCL either in the academic setting or in the community setting. And when you're in the front line, the treatment options are very similar. Patients are typically going to get either R-CHOP or Polivy R-CHP. Those are really the standards of care. And when you look at it, roughly 35% of patients are treated in the academic settings and about 65% in the community. When you move to second line, the treatment options start to again change because now you start getting the segments that I mentioned before of complex therapies, which are more driven by academic institutions and then broadly accessible therapies. These 2 segments exist. And as you get to later lines of therapies, physicians tend to refer out more to academic centers in the community because they don't always have access or the capability to deal with these more complex therapies. So when you get to second line, it's roughly a 40-60 split between academic and community. It gets to about 50-50 by the time you get to third-line setting. So you see this increasing trend of referring from community to academic. Nonetheless, as I mentioned, within each of these segments, complex therapies, despite having very strong efficacy, patients have to both have access to it, but also be suitable for it. And there's comorbidities that can also preclude a patient from getting access to some of these therapies. So that's why our strategy is really to win in both segments. It's critical to have options for all patients regardless of their patient characteristics or regardless of the treatment setting in which they get treated for the DLBCL. So that's where, again, LOTIS-7 is well positioned, we believe, to be differentiated within that complex therapy segment. And our LOTIS-5 combination, we believe, is very well positioned to be differentiated within that broadly accessible segment.

And what has your current experience been for the third-line plus DLBCL with ZYNLONTA? And how do physicians feel this product?

Yes. I think physicians really like the fact that it works fast, CRs are durable and it's really safe and convenient to give. So I think that those are the attributes that physicians really like. And despite bispecifics, which were launched about 2.5 years ago and in that third line plus setting, gained about 35% share, we were able to maintain our 10% share of the total market despite the market getting much more competitive. And again, we're playing as a single agent in a field of mainly combinations. So we feel like the attributes we have are already playing quite well. As we move into these combinations in earlier line settings, not only do you become more relevant, but the clinical profile, we think can be much more differentiated, and that will open up a significantly bigger opportunity for ZYNLONTA as we expand beyond the third-line setting into earlier lines.

Sales have been essentially flat for ZYNLONTA over the past few years. Where do you see the opportunity to grow with this product?

Yes. I think because we played in a small segment in the third-line plus setting. And as I mentioned, where competition gained a lot of share, we were still able to actually hold our own at the roughly $70 million mark by maintaining our roughly 10% share in that third-line setting despite increasing competition. As we move into the earlier lines, that's when we think there's going to be a big revenue inflection in the product. So we should be getting into compendia for many of these combinations and uses potentially as early 2027. That will lead to some growth. But the real big inflection point will come in the middle of the year when we have the approval of LOTIS-5. And we think that's when you can have significant growth starting in mid-2027 going through 2028 and beyond.

That's great. You have 2 important trials in the second-line plus DLBCL. What is the strategy in this line? And how do these 2 trials play together?

Yes. As I mentioned, I mean, there's -- the reason that these 2 segments exist is, for example, if you think of CAR-T, which is one of the more tougher to administer products in that complex therapy segment, has great efficacy, but not all patients can get access to it. Only about 20% of patients get a CAR-T in second line, third line despite the strong efficacy. So we know that there's still a need for other therapies. Even bispecific products, which again have strong efficacy, many community physicians can't administer those products. They don't have the capability to manage CRS or ICANS. And so the core of our strategy is really to make sure that we can offer great complementary solutions and be a backbone therapy for what's used most commonly in DLBCL. So we think bispecifics will be the backbone therapy within the complex therapy segment. And again, we're adding on instead of chemo or other ADC products. And in the broadly accessible therapy, our based therapies, Rituxan-based therapies are the most commonly used therapies, typically Rituxan and chemo. We're replacing that with ZYNLONTA and again, can kind of fit in with the way physicians think about the treatment. They think about, I'm using a bispecific-based therapy or Rituxan-based therapy. We're replacing the chemo with an ADC where we think we can deliver a significantly better clinical profile.

What do you need to see in LOTIS-5 to be competitive, assuming a positive trial, what is the potential source of business for LOTIS-5?

Yes. So I think to be competitive, as I mentioned, there's already some attributes that are really differentiating about the product. The fact that it works fast, the CRs are so durable, it's safe and convenient. In addition, we think by moving to the second line, you become much more relevant, especially for community treaters, where we think that will be the biggest opportunity to expand ZYNLONTA with LOTIS-5 in the community where broadly accessible therapies are still the mainstay. And then also having a more competitive CR rate, where right now, we're at 25%, where most of the other therapies are around 40% CR rate. So if we're at or above that level, you're competitive to differentiating on efficacy as well. So we think those elements are what's going to help to drive the use of ZYNLONTA should we have a positive study with LOTIS-5. Now the sources of business will come from the main broadly accessible therapies. So chemo is one of the biggest ones, but also, of course, Monjuvi, Polivy, other targeted therapies that are used in that second-line plus setting. Those would be the sources of business, the currently approved products in that broadly accessible segment.

And what gives you confidence you will be able to achieve the noted peak revenue with LOTIS-5?

What gives me confidence is that even with a complete response rate that's below that of the combinations we're competing with as a single agent and despite bispecifics gaining so much share in that third line plus setting, we've been able to maintain roughly a 10% market share. If we achieve that same market share in the second-line setting with a better profile in combination, that would lead to a $300 million opportunity. So I think just simply put, even with the suboptimal clinical profile, we've been able to do it in the third-line setting because of the other attributes. When you improve the CR rate in the clinical profile and you get into a population where you add an additional 12,000 patients to the 6,000 patients we're planning today, you get to about a $300 million opportunity. So that's what gives us the confidence is we've been able to do it, and I think we can continue to execute and deliver on that with the profile that we expect.

What can we expect from the next update on LOTIS-7.

Yes. So we shared a couple of interim looks at LOTIS-7 most recently in December, where we showed data on the 49 patients that I shared with the 78% CR rate. So the next update will be the final data on all 100 patients with at least 6 months of follow-up. That we expect to happen at the end of this year at a major medical congress and publication. We think that can be the basis for submitting to guidelines as well as for any regulatory discussions with the FDA and other agencies.

How does the opportunity for LOTIS-7 change if you're listed rather than pursuing the full approval?

Yes. So obviously, if we're just listed before any potential approval, we won't promote the product. So that does affect the amount you could do. What we said is that LOTIS-7 with a regulatory approval in compendia beyond the $200 million to $300 million with LOTIS 5 could be an additional $300 million to $500 million opportunity. But of course, if you're not promoting the product, you're going to capture a portion of that. What we know now in the landscape is that all the bispecific combinations that are currently being used in the second-line setting are all in compendia. So if we had a compendia -- if we're only in compendia initially, we'd be at a level playing field. So again, we won't promote the product. That's not something we would ever do off-label. But we have seen that the use of bispecific combinations, just given the data has been there. And physicians tend to be data-driven. So we believe that ZYNLONTA plus glofitamab has the chance to have the most highly differentiating clinical profile within that class.

That's very helpful. Thank you. I think we're at time. Thanks very much again for the great presentation, and thanks, everyone, for joining.

Yes. Thank you very much.