Zai Lab Limited (ZLAB) Earnings Call Transcript & Summary

Hello, and welcome to Zai Lab Investors Webcast. [Operator Instructions] I would now like to hand the conference over to Dr. Rafael Amado. Sir, you may begin.

Hi, everyone. Thank you so much for joining us today. I am Rafael Amado, Zai Lab's President and Head of Global R&D. Before we begin, we will be making forward-looking statements today, and I ask you to review Slide 2 for further details. Moving to Slide 3. During today's call, we will be discussing the monotherapy Phase I dose escalation clinical data of ZL-1310, our Investigational DLL3-Targeted ADC. These data were presented earlier today during a plenary session by Dr. Alex Spira at the ENA Symposium here in Barcelona. Dr. Spira is one of the lead researcher for this trial. He's here with us now to present the data. Dr. Spira is the Director of our Clinical Research and CEO at NEXT Virginia, Co-Director of the Virginia Cancer Specialist Research Institute and a Clinical Assistant Professor at Johns Hopkins. He's widely recognized and awarded for his distinguished career treating patients and advancing innovative research. Following Dr. Spira's presentation, I will discuss next steps for the program and then we'll take questions. I will now pass it on to Dr. Spira.

Hello. My name is Dr. Alex Spira, and I'm a medical oncologist at NEXT Oncology in Fairfax, Virginia. On behalf of my co-authors, I'm pleased to present the preliminary results from ZL-1310-001, an ongoing Phase Ia/Ib open-label, multicenter study evaluating ZL-1310, a DLL3 Targeted ADC in patients with recurrent small cell lung cancer. Here are my disclosures. Lung cancer, as most of you know, is the #1 cause of cancer deaths around the world. Small cell lung cancer represents approximately 15% of all lung cancer cases, affecting around 372,000 patients worldwide, including over 100,000 patients in the U.S. and Europe. 2/3 of patients are diagnosed with extensive stage disease and approximately 50% of patients will develop brain metastases. So, the prognosis for patients with small cell lung cancer is particularly grim, with outcomes that are often devastating. The mortality rate is high, with a 5-year survival rate of just 5% to 10%, highlighting the critical need for treatments against this aggressive, fast-growing neoplasm. The typical patient journey begins with frontline treatment consisting of platinum etoposide therapy plus an anti-PD-L1 followed by maintenance with PD-L1 inhibitors. While this treatment has shown a high response rate of approximately 60% to 70%, there is considerable toxicity with over 70% of patients experiencing Grade 3 or higher treatment-emergent adverse events. Moreover, the duration of response is relatively short, lasting only about 4 to 5 months, owing to the fast replicative potential of this tumor, leading to 12 to 13 months of survival. Treatment options are limited when patients progress. Topotecan or other chemotherapies can be used, but provide limited benefit with high morbidity. Recently, however, there has been progress in the recurrent setting with the accelerated approval of Imdelltra, also known as Tarlatamab earlier this year. With Tarlatamab, we observed an increase in efficacy with a response rate of 40% and up to 9 months duration of response. Although an important and promising treatment advance, serious adverse events occur at a rate of 58% with this bispecific drug. Other challenges with Tarlatamab include need for dose titration and management of CRS and ICANS, which can further limit its usage. Thus, despite recent improvement versus the prior standard of care in the treatment of extensive stage small cell lung cancer, there is substantial opportunity to improve outcomes across all treatment settings, whether that is on an efficacy, safety and availability. DLL3 or Delta-like ligand 3 is known to be a driver of neuroendocrine tumors. It is aberrantly expressed in over 85% of small cell lung cancers and is a validated target for these tumors. It is also minimally expressed in healthy tissue. As you can see in the left figure, ZL-1310 is a novel ADC developed using the proprietary TAMLIN platform. It comprises a humanized anti-DLL3 antibody, a protease cleavable linker and a camptothecin derivative payload termed [ C24 ]. This novel linker payload was designed to avoid common intracellular resistance mechanisms to other topoisomerase 1 inhibitors. With the high specificity for DLL3 and a drug antibody ratio of 8, ZL-1310 has shown significant anticancer activity in preclinical cellular assays and PDX models. Today, I'm happy to report the preliminary findings of ZL-1310 in patients with recurrent small cell lung cancer. This is an ongoing Phase I first-in-human dose escalation and expansion study of ZL-1310 in patients with extensive stage small cell lung cancer following a platinum-containing regimen initiated in January in United States and China. Patients with asymptomatic brain metastases, both treated and untreated, as well as patients with prior DLL3 targeted therapy were allowed. The primary endpoints are safety related and secondary endpoints will assess clinical activity as well as pharmacokinetics. This study has progressed through 4 dose levels from 0.8 mgs per kilogram to 2.4 milligrams per kilogram and is currently enrolling at a dose of 2.8 milligrams per kilogram. As of the data cutoff date of October 10, 2024, 25 patients have been dosed or are evaluable for safety. 19 of these patients had at least 1 post-treatment tumor evaluation and are evaluable for efficacy. After the dose escalation is completed, we'll optimize the dose by evaluating the totality of safety and efficacy data from 2 doses in a randomized fashion. The baseline demographic data on the slide highlight that all patients had progressed following standard platinum-based chemotherapy regimens and 56% of patients have failed at least 2 prior lines of therapy. 92% of patients progressed after immune checkpoint inhibitors and 1 patient progressed after Imdelltra. 28% of patients had brain metastases listed as either target or non-target lesions at study entry, including 2 patients who entered the study with asymptomatic untreated CNS disease. Pharmacokinetic analysis of ZL-1310 demonstrates that the systemic exposure of the ADC and the total antibody were approximately equal and dose proportional, as shown in the top part of the graph, while demonstrating relatively low levels of circulating naked payload seen in green below. The observed half-life of 6 to 7 days supports the current every 3-week dosing regimen. Overall, ZL-1310 is very well tolerated with only 40% of patients experiencing a Grade 3 or higher treatment-emergent adverse events regardless of causality and only 20% of patients have a treatment-emergent adverse event being related to ZL-1310 by the investigator. One transient DLT of neutropenia and thrombocytopenia occurred in a patient treated at the 2.4 mgs mg per kilogram dose level. Dose interruptions were uncommon at 20% with dose reductions required for only 12%. The adverse events associated with dose reductions were mostly hematologic or gastrointestinal in nature, as might be expected. Furthermore, there have been no adverse events leading to study drug discontinuations. The most common treatment-emergent adverse events, regardless of causality, included nausea, hematological toxicity and decreased appetite. Hematologic toxicities were responsible for the majority of Grade 3 or greater toxicities, appear to be dose-dependent, and the majority were still Grade 1 or 2. It is important to note that no Grade 3 hematologic toxicity was observed at the 1.6 milligram per kilogram dose and only 30% neutropenia was observed at 2.4 milligrams per kilograms, suggesting that ZL-1310 may have a therapeutic window amenable to combining with other agents. This waterfall plot shows the change in the sum of target lesions for the 19 patients who had at least 1 post-treatment tumor assessment. Objective response rate per RECIST 1.1 is 74% with 5 confirmed and 9 unconfirmed responders with responses observed at all dose levels tested, including 0.8 milligrams per kilogram. Importantly, responses were rapid, typically observed by the first tumor assessment, which is between 6 to 9 weeks. One patient showed significant tumor reduction as early as 3 weeks after a single dose of ZL-1310. As small cell lung cancer usually progresses quickly, the rapid responses to ZL-1310 may be beneficial for patients with aggressive disease, especially those patients with intracranial lesions. In addition, the 6 response evaluable patients enrolled with brain metastases achieved an objective response, including the 2 with previously untreated asymptomatic CNS disease. Although the data are still early, with a median follow-up of only 2.4 months, 13 of 14 responders remain on study with 1 patient on at 6.5 months. I would like to draw your attention to the one patient who does not seem to have any benefit. This patient, interestingly, had no detectable DLL3 by IHC with an H-score of 0. Only 1 patient with a confirmed response has progressed, presenting with a new lesion. The other patients who have stopped treatment also progressed with new lesions. We look forward to the continuing maturity of these data. Here is the swimmer plot. 20 of 25 or 80% of patients continue on study. One patient continues after a dose escalation from 0.8 to 1.6 mgs per kilogram. Three other patients have required dose reductions as previously noted. Overall, 13 or 14 responders continue on treatment with the longest at 6.5 months. Preliminary evaluation of DLL3 expression is available from 16 adequate pretreatment biopsies stained by IHC for DLL3. These biopsies demonstrate a range of H scores from 0 in 1 patient up to 260 with a median of 92.5. It is impressive that objective responses were observed with an H score as low as 5 and clinical tumor reduction as low as 2. Clinical activity has been seen with other next-generation antibody drug conjugates in tumors -- in patients whose tumors express low levels of target. The mechanism of action may reflect the avidity of the ADC or the putative bystander effect of this linker payload. Interestingly, the only patient who did not have a clinical benefit had an H-score of 0. Further analysis on the correlation between expression and response will continue as the study matures. We would like to highlight 2 patients in the trial. The first is a patient of mine who developed progressive disease in 2023 after focal consolidation, lung irradiation and a standard triple therapy who presented with a new brain lesion seen here. He is 1 of the 2 patients included in the data cut who had asymptomatic untreated CNS disease at baseline. Thus, the brain lesion was included as target lesion and measured over time. After 2 doses of ZL-1310, the patient achieved a PR, partial response at the first scan with a 45% target lesion reduction, including almost complete resolution of the intracranial lesion without any CNS-directed therapy. As previously mentioned, while most CNS lesions were entered as non-target lesions and not measured due to prior radiation, all 6 response evaluable patients with brain metastases at study entry achieved partial response. This activity is clinically significant given that over 50% of small cell lung cancer patients develop intracranial lesions, which is a source of significant morbidity. This slide highlights a patient with prior Imdelltra failure. This patient is a 66 year old woman with a recurrent extensive stage small cell lung cancer with lesions in the lung, liver and retroperitoneum. She responded initially to frontline therapy but required consolidation of radiation to the lung. Upon recurrence, she received Tarlatamab to which only 1 liver lesion decreased in size, but she unfortunately progressed in all other lesions. She then received an aurora kinase inhibitor on a clinical study, but also progressed after 2 months. A tumor biopsy obtained after the Tarlatamab failure was tested for DLL3 and showed an H score of 170 as seen here on the left. She was subsequently enrolled and received ZL-1310 at 2.4 milligrams per kilogram. Her first tumor assessment showed a decrease in all of the target lesions, resulting in a 67% overall reduction and she continues on study. In conclusion, we are very excited by the preliminary clinical activity of ZL-1310 in patients with recurrent small cell lung cancer. ZL-1310 has a good safety profile at all therapeutic dose levels. ZL-1310 shows a robust 74% objective response rate across all dose levels treated to-date, including dose level 1 at 0.8 milligrams per kilogram in patients with brain metastases and anecdotally in a patient with previous Tarlatamab therapy, suggesting that DLL3 target loss may not be a mechanism of resistance across modalities. These data support continued developments in both recurrent and earlier lines of small cell lung cancer as monotherapy and in combination with other agents. Thank you very much. And with that, I will pass the call back to Rafael.

Thank you, Dr. Spira. We have a great opportunity to significantly improve outcomes of patients with small cell lung cancer, and we will work to rapidly accelerate ZL-1310 in relapsed/refractory small cell lung cancer. We are in the latter part of dose escalation and currently enrolling at 2.8 milligrams per kilogram dose level. We will then be in a position to bring forward 2 doses into dose optimization to find a dose level ready for a pivotal study evaluating ZL-1310 as a monotherapy treatment in second-line plus small cell lung cancer. While it is premature to assess the durability of response, the response rate is the highest observed to-date in second line and beyond in small cell lung cancer and among the highest with an ADC in any disease. Owing to the length of follow-up, we are unable to estimate the median duration of response, but 2 individual patients continue to respond past 6 months. We plan to share further updates over the course of next year. In addition, we will move quickly into the frontline setting as well. We're evaluating ZL-1310 added to atezolizumab, and we will continue with combination of atezo plus chemotherapy in the same Phase I study. We're hopeful that ADCs like ZL-1310 will play an important role prolonging survival in frontline small cell lung cancer, replacing one or both chemotherapeutic agents in the current IO plus chemo triplet standard of care, just like Nectin-4 targeted ADC plus pembrolizumab in frontline bladder cancer, and we're excited about the possibility of combining ZL-1310 with other treatment modalities. Good tolerability and combinability of such new treatments in frontline patients will be very important, especially if added onto IO maintenance. While our data is still preliminary, the safety profile of ZL-1310 appears to afford prolonged therapy. DLL3 is also highly expressed in other neuroendocrine tumors, and we will explore other potential indications for ZL-1310. Lastly, I would like to end with a snapshot of our global pipeline that is in development. This year, we have added 4 new programs to our global portfolio. In oncology, this includes our ROR1 ADC in solid tumors, which we license in preclinical stage. We also have 2 new preclinical assets yet to be disclosed. One is an ADC in solid tumors and the other is a next-generation technology in DNA damage repair pathway. In autoimmune disease, we disclosed and presented preclinical data for our internally discovered IL-13/IL-31 Bispecific earlier this year, which we are aiming to develop in atopic dermatitis and other inflammatory and pruritic conditions. We also have several other undisclosed IND-enabling assets in development with the goal of generating at least 1 IND per year, and we are well on our way to achieving that goal. I look forward to providing you with more updates on our global pipeline over the next year.

[Operator Instructions] Our first question comes from the line of Yigal Nochomovitz with Citi.

This is Ashiq Mubarack on for Yigal. Congrats on this interesting looking data. I'm just curious how you would characterize the dose response at this point. And I'm curious how you're thinking about the go-forward doses you'll take into expansion. I'm also wondering if you're thinking about introducing a biomarker approach, although that seems that might be a little unnecessary, but curious how you're thinking about next steps in expansion at this stage.

I guess I can take that. It's Alex. So, a couple of things. So, I mean, the n is still relatively low, as you all can see. So, with -- small numbers per patients per cohort. So, in terms of dose response and the go-forward dose, I think we still have a lot of learning to do, getting through that last cohort where we are and then expanding it to cohorts to see which one is the optimal dose. I mean, given the fact that you've seen responses at the lowest dose level, I think, tells us that we want to see what the durability of some of these responses are before a dose is finalized, obviously, going forward to, obviously, abrogate any toxicity. Did I get your question? And you asked me something else as well. I apologize, I don't remember.

Yes. Yes, it was related to the biomarker. Seems like it's may not necessarily giving the same responses at low [ expect ] levels?

So if you look right now, we're seeing responses across the board, number one. If you look at the history of DLL3 as a biomarker as well, there hasn't been a -- really any clear biomarker that works. I'm sorry, DLL3 has not been a biomarker in the previous iterations of ADCs or even in Tarlatamab as far as we can tell. So I don't think it will be helpful to do that. Obviously, we're going to get more biopsies and more data there. But it seems to me that right now, that's a good agnostic approach regardless of the biomarker, which is actually helpful for small cell lung cancer patients, clinically. They're often very hard to get biopsies on, number one; and getting repeat biopsies would be inordinately challenging because of the rapidity of the growth of their disease.

Got it. And if I could just sneak in one more on safety. I think we've seen hematologic tox in neutropenia and related AEs with other topoisomerase ADC payloads. I'm just curious how you might compare and contrast the safety profile with other similar ADCs. And to the neutropenia point, I'm just wondering if Pegfilgrastim was part of any prophylactic regimen or if it was all treated as it happened.

So, PEG was not used prophylactically in any of these patients. Getting back to your other question, right now we have the 1 DLT at the 2.4 dose level, but other patients were able to be treated. Obviously, we're going on and going to see where we get with the doses there. I think the real question is, is there going to be more neutropenia in these doses or not? You asked -- and again, without having -- without implementing too much bias, I will say this is less neutropenia than I think that we've seen with some of the other ADCs out there. So, I think it's certainly on the more benign side of all the other ADCs.

[Operator Instructions] Our next question comes from the line of Anupam Rama with JPMorgan.

This is Priyanka on for Anupam. Congrats on the data. Just have a question for the KOL, Dr. Spira on the line. How do you think about the safety profile in the dose escalation relative to the competitive landscape? And for the company, how do you think about moving in combinations, given the safety profile observed thus far?

Yes. So, the competitive landscape, and I think there's 2 different landscapes. One is compared to Tarlatamab. And certainly, this is easier than Tarlatamab. I mean, if you look -- Tarlatamab is a good drug, we cannot deny that. But it has the inpatient requirements, which are still mandated, and that's really limited because of the CRS and the ICANS in terms of how well it can be administered in real-world situations. Remember, the patients that ended up on the earlier study were all selected because they could travel to these places so they could do it. But real-world small cell lung cancer patients are older, sicker, extensive tobacco use commonly, making it a little bit more challenging. In terms of combinability, I think we certainly have an opportunity to combine, given the toxicity profile. The Phase I combo with the checkpoint inhibitor is ongoing. So, I think there's certainly a window there to combine it or even with chemotherapy as well in the future. I think I got your questions. If -- I know we're limiting it to 2, but if I missed one, just let me know.

Our next question comes from the line of Michael Yee with Jefferies.

Congrats on the data. This is Kyle Yang for Michael Yee. So, really quick on the dose expansion studies. I guess, how many patients are you planning to enroll? And looking further beyond, what is the treatment -- what does the regulatory pathway look like? Have you sat down with the FDA? Do you think you're going to be able to file with the accelerated approval pathway?

I'll defer it to my colleague. Rafael? Rafael?

Rafael, check to see if you're on mute.

Rafael, if you want -- so I'll comment, and Rafael, if you want to come in my room. I actually have good audio here. But it looks like we're planning on 50 patients. Oh, there you are, Rafael. Okay.

Okay. Thank you. And I apologize for that. I was having difficulties with the audio. So, as you've seen, we are in the dose escalation period now. We have moved to 2.8 milligrams per kilogram and we've actually filled that core already. We will analyze the data both in terms of safety and efficacy and allow enough durability to see whether there's a dose proportional effect with regards to durability. Very quickly after that, we will do a dose optimization, which, as you know, is often asked by FDA and their Project Optimus and select a dose and continue expanding the selected dosing in conjunction with FDA discussions. Once we have enough durability and we think that we know what doses we're going to test, we will try to apply for designations for breakthrough and orphan drug status and then come up with an agreement with FDA with regards to whether there's a pathway for accelerated approval. As you know, Imdelltra has accelerated approval only, even though they obviously are doing their confirmatory trial. So there's still a window in 2-plus line, which would be our first indication. And FDA has also shown some leeway to products that are well differentiated, that have different mechanism of action, that are relatively nontoxic, that are highly active and especially if there's durability. And in this case, we've seen factors like activity in low expression tumors as well as rapid responses as Dr. Spira said before, potential for combinability, et cetera. So, our plan is to move as quickly as possible next year to do dose expansion and engage with FDA on a regulatory pathway that we hope could be through accelerated approval in second plus line of therapy.

If I may, just a quick follow-up. What's sort of the breakdown between China and U.S. patients? And have you seen a difference between the 2 populations in terms of responses?

Yes, we've looked at that. There's, I think, just a couple of differences in the number of patients. So it's very close. And the response rates are also very close in the high 60s in the U.S. and in the higher 70s. But one patient up or down in either one of the regions would just change that. So, just the numbers are too low to see -- to really make a conclusion that there's any difference in terms of outcomes with regards to China versus the U.S.