Welcome to the ADC Therapeutics Third Quarter 2022 Financial Results Conference Call. My name is Kevin, and I'll be your operator for today's call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. I will now turn the call over to Amanda Lachebaugh, Investor Relations Manager.
Amanda, you may begin.
Thank you, operator. This morning, we issued a press release announcing our Q3 2022 financial results and business update. This release is available on the ADCT website at ir.adctherapeutics.com under the Press Releases section. On today's call, Amit Malik, Chief Executive Officer Joe Camardo, Chief Medical Officer and Jen Creel, Chief Financial Officer, We'll discuss recent business highlights and review our Q3 2022 financial results before opening the call for questions. As a reminder, this conference call may contain forward looking statements.
Such statements are subject to risks and uncertainties. For additional information concerning forward looking statements and factors that could cause actual results to differ materially from those expressed or implied in these statements, We refer you to the section titled Cautionary Statement Regarding Forward Looking Statements in Exhibit 99.2 of our report on Form 6 ks filed with the U. S. Securities and Exchange Commission earlier today. Such statements speak only as of the date of this conference call, and we expressly disclaim any obligation or undertaking to update these forward looking statements unless required to do so by applicable law.
Today's presentation also includes non IFRS financial measures. These non IFRS measures have limitations of financial measures and should be considered in addition to and not in isolation or as a substitute For the information prepared in accordance with IFRS, you should refer to the information contained in the company's Q3 earnings release For definitional information and reconciliation of historical non IFRS measures to the comparable IFRS financial measures, It is now my pleasure to pass the call over to Amit Malik. Amit?
Thanks, Amanda, and thank you all for joining us today. During the Q3, we made good progress executing on our strategy. There is a strong sense of purpose and direction across the company and I'm proud of the collective effort we are putting forward to serve our patients. I would like to highlight some of our achievements during the quarter, starting with ZINLANTA. Net sales in the Q3 were $21,300,000 representing 23% growth Over Q2, Zenlata's strong performance was driven by the targeted initiatives we put in place in the 2nd and third quarters, which began to produce results.
I will elaborate on this more in a moment. The ZILONTA development program continues to make progress, Encouraging safety run-in data from the Phase 3 LOTUS-five trial in second line plus DLBCL patients was presented at the Society of Hematology Oncology Congress in September, providing initial evidence of the efficacy and safety of the ZENLATA and rituximab combination. As for the geographic expansion of ZENLATA, during the quarter, we signed an agreement with Sobeys for Development and commercialization of XERMATA in Europe and international territories, excluding Greater China and Japan. We received a positive opinion from the CHMP in September and expect a regulatory decision by the end of the year. Sobeys is making good progress of launch preparations and expects to launch upon the completion of the marketing authorization transfer, which typically takes 2 to 3 months after approval.
With the Sobeys partnership, Mitsubishi Tanabe in Japan And the Overland JV in China, we have commercial partners, Surezentlanta Worldwide. Turning to candidates for Hodgkin's lymphoma, we believe that the data The Phase 2 trial demonstrates strong clinical activity and the potential to offer a significant benefit to later line HL patients. However, it became clear to us during our recent interactions with the FDA that the regulatory landscape is evolving more dramatically than we had previously anticipated regarding accelerated approvals. The FDA is now strongly guiding towards An extensive confirmatory Phase 3 study could be well underway before considering accelerated approval. As such, we are no longer planning to submit our BLA next year.
We are pausing material investments in the Hodgkin's lymphoma program as we continue our dialogue with the FDA regarding their guidance and the potential regulatory path forward. Joe will elaborate on this shortly. During the quarter, we also made the decision to discontinue the CAMI combination with pembrolizumab in solid tumors. While there were some interesting signals of immunomodulatory activity, the clinical data were not compelling enough for us to move forward. We recognize that the considerable effort required to fully pursue this opportunity may be better suited for a partner with IO development expertise.
This immunotherapy approach is very different from our other solid tumor programs and we do not see any read through to our other trials. We are committed to prioritizing our preclinical and clinical programs and are taking a disciplined approach to resource allocation. We continue to progress the rest of our pipeline and Joe will give a more detailed update. We have a strong balance sheet with $381,000,000 in cash, Not including $125,000,000 is potential future milestones related to the European regulatory approval and first EU sales of NU Lanta. These milestones combined with our business plan provide an expected cash runway extending into early 2025.
Before I provide some additional details about the ZYNOLTA launch, I would like to take this opportunity to welcome our new Chief Commercial Officer, Kristin Harrington Smith and our new Chief Legal Officer, Peter Graham, for the company. We are thrilled to strike from the management team with such a high caliber of talent. In particular, Kristen has an impressive commercial background with relevant experience in the DLBCL space to continue building on Xelanta's strong loan item. I would like to thank Jennifer Herron for her many contributions to the company, including building the commercial organization and the launch of NAMASA. Jennifer will stay with the company through mid December to ensure a smooth transition.
Now I'm going to provide a deep dive into the XINLANTA launch. We are encouraged by Zumonta's strong performance this quarter resulting from our focus on customer facing execution and the new initiatives we launched in the 2nd and third quarters. We saw continued progress in Q3 in terms of awareness, share of voice and third line plus patient share. The new initiatives focus on 3 areas: 1, healthcare professionals 2, community practices and networks And 3, patients and caregivers. These initiatives are building momentum in the marketplace and position us well for steady growth in the coming quarters.
1st, starting with healthcare professionals. We enhanced our promotional materials with more competitive messaging and additional data and launched a new regional marketing capability. At the same time, we increased our face to face interactions, which is critical to build awareness, Familiarity, trial and adoption. 2nd, we saw strong uptake in XENLANTA use with a significant number of new accounts in At the same time, the number of academic accounts ordered remained relatively stable. In terms of volume, we're seeing growth from both segments, Rapid growth in the community and steady growth from academia.
In Q3, for the first time since launch, our greater proportion of accounts earnings in Lonza Came from the community, roughly 60% as compared to 50% since launch. In terms of volume, historically academic represented approximately 60% of our business, but with the growth in the Community segment in Q3, volume by segment is now approximately a fifty-fifty split. As a new key initiative starting in Q4, we began contracting with community oncology networks. We believe this will help us unlock an important opportunity as roughly half of the community market is served by these networks. Although GPO contracts will modestly impact our gross to net, We believe the upside volume will outweigh the cost.
Lastly, we have increased our multi channel patient education and engagement efforts. Since the launch of our patient campaign, we've been able to drive a meaningful increase in online awareness, interest and engagement. We know that in the 3rd line plus setting, patients and caregivers play an integral role in making treatment decisions. Overall, we are Pleased with the significant progress we have made with this Enlata launch in Q3. Looking forward, we are confident in our ability to continue to grow both the community and academic Segment over the coming quarters as we engage healthcare professionals, community networks and patients regarding Xelante's differentiated product profile.
Now I'll turn the call over to Joe to provide an update on our pipeline. Joe?
Thank you, Amit. Let me start with ZENLANTA and the Phase 3 LOTUS-five study evaluating ZENLANTA in combination with rituximab in patients with relapsed or refractory DLBCL. Encouraging safety lead in data were presented at the SoHo Congress in September, showing an overall response rate of 75% and complete response rate of 40%. Furthermore, we did not observe any safety events materially different from those observed in our prior clinical trials. These data give us confidence in the feasibility, safety and potentially the efficacy of the combination of ZINLANTA and rituximab.
As the DLBCL landscape evolves, we see a significant opportunity for ZENLONTA plus rituximab And second line patients who are not eligible for transplant or CAR T, the patients who are not able to access CAR T due to location or cost. In addition, the combination of ZENLONTA plus rituximab is also being explored in the ongoing LOTUS-nine trial for first line DLBCL patients who are unfit or frail. This remains an underserved population of patients who are not able to receive the first line standard of care in many We also have the ongoing LOTUS-seven trial to explore novel combinations of ZYNLATA. We recently signed a clinical Collaboration agreement with IgM Biosciences to evaluate IgM's novel bispecific antibody in combination with SYNLANTA for patients with Relapsed refractory B cell non Hodgkin's lymphoma. Our clinical team is focused on the successful execution of the ZENLONTA trials, and we look forward to keeping you updated on our progress.
Moving on to KAMI in Hodgkin lymphoma. Following our pre BLA meeting in September, we had a Type C meeting with the FDA in late October. At that meeting, It became clear to us that the regulatory landscape is evolving more dramatically than we had previously anticipated with regard to the process and timing to seek accelerated Although we believe our data show that Kami has a positive benefit risk profile in late line patients, the FDA has now given strong guidance and for them to consider an accelerated approval path, a randomized confirmatory Phase 3 study must be well underway and ideally fully enrolled at the time of any BLA submission for Kami. This means that we will not submit the BLA for Kami next year as we estimate that it would take at least 2 years to fully enroll a randomized confirmatory Phase 3 study. We are engaged with FDA in an ongoing and constructive dialogue regarding their guidance and the potential regulatory path forward.
At this time, We are pausing any material investments in the Hodgkin lymphoma program. We will be evaluating options for Kami with a disciplined and strategic approach to resource allocation. Regarding the combination study of Kami and pembrolizumab in solid tumors, We observed evidence of immunomodulatory activity and the desired impact on the ratio of T effector to T regulatory cells. However, The clinical data were not compelling enough for us to move forward. Given the resources needed to fully explore the signal, We decided it would be better not to pursue this opportunity on our own, but rather to explore potential partnerships.
I would like to remind you that this study employed a unique approach to enhance immune activation by targeting specific intratumor T cells. We have prioritized our other solid tumor programs moving forward, programs for which the PVD will have a direct effect on the cancer cells. As for the rest of the solid tumor portfolio, we are progressing with the Phase 1 trial of ADCT-nine zero one targeting CAG1. As you may remember, CAG1 is expressed in a variety of solid tumors, including platinum resistant ovarian cancer and prostate cancer. Dose escalation is proceeding and we expect to have an indication of the safety and tolerability as well as any early signals of antitumor activity in 2023.
Moving on to ADCT-six zero one targeting AXAL, the Phase 1b trial is ongoing. As a reminder, the study has a monotherapy arm including patients with actual gene amplification and a combination arm with gemcitabine in patients with sarcoma. Our goal is to determine the optimal combination dose as well as the dose as a single agent, either of which could be used in an expansion cohort. We are also using this opportunity to optimize the assay to detect actual expression on the surface of tumor cells in order to identify appropriate patients. Lastly, we are completing IND enabling work for 2 preclinical solid tumor programs.
ADCT701 targets DLK1 and will be evaluated in neuroendocrine malignancies in collaboration with the National Cancer Institute. ADCT-two twelve is our optimized second generation PVD based ADC targeting PSMA, a validated target in metastatic prostate cancer. We plan to enter the clinic with both of these programs next year. I would also like to share that initial data showing incurred in clinical activity From the Phase onetwo study of ADCT-six zero two targeting CD22 for patients with relapsed or refractory acute lymphoblastic leukemia Has been released as an ASH abstract from MD Anderson. Additional details will be disclosed in an oral presentation at ASH.
We continue to work with MD Anderson to optimize the dose and schedule for ADCT602. With that, I will turn the call over to Jen to give a financial update. Jen?
Thank you, Joe, and good morning, everyone. As of September 30, We had cash and cash equivalents of $381,000,000 as compared to $377,000,000 as of June 30, 2022. We received the upfront payment of $55,000,000 from Sobeys in Q3. Based on our business Plan and expected milestones from Sobeys and Healthcare Royalty Partners, we continue to expect a cash runway that extends into early 2025. Potential near term milestone payments from those agreements include a $50,000,000 milestone due from Sobeys Upon European regulatory approval of ZINLANZA and 3rd line DLBCL and a $75,000,000 milestone from our Healthcare Royalty Partners Agreement for the 1st EU commercial sale.
During the quarter, we entered into a strategic transaction with Alrock and Oaktree to refinance the Deerfield convertible notes that were due in May 2025 and push the term of our debt obligations out to 2029. In addition to refinancing the existing convertible debt, we were pleased with an equity investment by Blueout. Deerfield also accepted equity as part of the exchange of the convertible notes. Turning to the P and L. XINLONSECA net sales were $21,300,000 for the Q3 2022 and license revenue was $55,000,000 for the Q3.
Looking forward, we expect our GPO contracting to negatively impact our gross to net starting in Q4 by approximately 2 to 3 percentage points. Despite this impact, we see the GPO contracts as an important opportunity to drive volume growth in the community over time. Cost of product sales was $1,300,000 for the quarter compared to $500,000 for the same quarter in 2021. The increase was primarily related to impairment charges in connection with manufactured product intermediates that did not meet our specification. Please note that the specification issues did not and are not expected to impact the company's ability to supply commercial products.
R and D expenses were $42,000,000 for the Q3 2022 compared to $37,000,000 for the same quarter 2021. R and D expense increased for the quarter due to continued investments in our pipeline. Selling and marketing expenses were relatively stable at $17,000,000 for the Q3 2022 versus 2021. Lower share based compensation expense was offset by an increase in expenses for the XINLANTA launch and ongoing commercial efforts. G and A expenses were $20,000,000 for the quarter compared to $17,000,000 for the same quarter 2021.
G and A expenses increased for the Q3 2022 as Compared to the same quarter in 2021, primarily due to costs related to the recent CEO transition and higher share based compensation expense. Net loss was $51,000,000 for the Q3 compared to a net loss of $72,000,000 for the same quarter 2021. Our diluted net loss per share was $0.65 in the Q3 compared to a net loss per share of $0.93 for the same quarter 2021. Adjusted net income, a measure that excludes certain items as described in the press release issued earlier today, It was $10,000,000 for the Q3 compared to an adjusted net loss of $46,000,000 in the same quarter 2021. Adjusted net income per share was $0.13 for the Q3 compared to an adjusted net loss per share of $0.59 in the same quarter 2021.
The decrease in net loss and adjusted net loss for the quarter ended September 30, 2022, as compared to the same period in 2021 Was primarily due to higher product and license revenue, partially offset by the increase in operating expenses. In addition, Net loss decreased for the Q3 of 2022 as a result of lower charges arising from changes in the fair value of our warrant obligations and derivatives, partially offset by the loss on extinguishment of the Deerfield credit facility and higher interest expense. With that, I will turn the call back to Amit for closing remarks. Amit?
Thank you, Joe and Jen. To conclude, we are pleased with the progress in the Q3 and we remain focused on executing on our key objectives going forward. We are a well positioned leader in the ADC space with unique capabilities from discovery to commercialization and over a decade of experience. We have a validated technology platform with ZULRATA, a rich pipeline of hematological and solid tumor programs and an innovative toolbox to develop next generation assets with novel antibody constructs and payloads. We look forward to keeping you updated on our ongoing progress.
Now the team will be available for questions.
Operator? Thank you. We will now begin the question and answer Our first question comes from Gregory Renza with RBC. Your line is open.
Yes. Thank you for taking our questions. This is Sudan on for Greg. So first, Jen, I wanted to I ask you, based on the gross to net impact that you're mentioning, the 2%, 3%, Is that specifically for this year, for 2022? Is that extended to 2023 as well?
And Just wanted to get more insight into how you're looking at that and how that's going to also have a positive impact with the community And then secondly for Joe, just wanted to kind of I have some more details on like the Kami meeting that you guys have with the Type C meeting and how that kind of transpired to Make the decision to potentially start the confirmatory enrollment. Is that something that's still on the table to get the filing potentially on board in the next 2 to 3 years. And then for Amit, I just wanted to Get a question in on ZYNOLTA and just kind of or just mostly on the business development side of things, how looking at building into the Earlier stage pipeline that we have and then also how the developments of the early stage pipeline that we're expecting Could dictate how this development is looked at going forward next year. Thanks.
Hi, Greg. This is Jen. Thanks for the question. I'll start out with the gross to net question. So for year to date 2022, we've really been in the general range for gross to net deductions that we'd expect for a drug, an infusion drug in the slate line population.
As I mentioned in the prepared remarks, starting in Q4, so really effective October 1, we are starting the GPL contracting And we do think that that's going to modestly impact the gross to net about 2 to 3 points and that will be from Q4 onwards. So you would Expect that also in 2023. And we really see this as something that's going to help us to drive incremental volume going forward in the community, so a net positive for the company. I'll pass it over to Joe now.
Hi, this is Joe Kumar. I'll answer your question about Kami. Over the years, we've interacted with FDA several times and we were working on a good plan for accelerated approval based on Phase 2 data with a follow on confirmatory study. As a reminder, KAMI is very active In late line Hodgkin lymphoma patients, we had an overall response rate of 70% and complete response rate of 30% in patients who had failed rantuximab, failed pembrolizumab Half of them had relapsed after stem cell treatment. So, we had a very important population of patients here.
What happened in the last year is that the regulatory environment has changed very significantly, specifically with regard to the approach To accelerate approval and at our most recent meeting in October, it became clear that The requirements for the Phase 3 confirmatory trial have changed. FDA told us that the trial would need to be well underway and ideally fully enrolled at Time of a BLA submission, which is a different kind of a plan than what we had been working on in the last several years. At the moment, we paused our investments. In order to move forward, we're going to have to assess the trial requirements, the time, the feasibility, the cost, The patients, the endpoints, etcetera, and evaluate that as an opportunity for an investment relative to the rest What we have in our portfolio. So, a change in the requirements has led us to consider a change in how we move forward.
Yes. Thanks, Joe and Joe. Yes, with regards to our pipeline, we do really have a pretty rich pipeline. We have 901, 601, and 602, which are currently in Phase 1 trials. And then we have 212 and 701, which will move into the clinic next year.
By next year, we'll have 5 different Phase 1 programs. And in addition, pretty robust research platform where we've been doing a number of investments to expand our platform, both in terms of novel antibody construct, but also in terms of drugs, including novel payloads beyond our PVD platform. So we're always going to explore, given that you have we don't have infinite resources, how we prioritize, what we decide to Our own and where we decide to collaborate. So I think that will increasingly be a part of our strategy to sort that out. But we're Lucky that we have such a rich pipeline and such a differentiated research platform.
Thanks and congrats on the quarter again.
Yes. Thank you.
One moment for our next question. Our next question comes from Brian Chiang with JPMorgan.
Hey, guys. Thanks for taking my question. So one on your contracting with the community networks, can you give us a better sense of how That's when you're contracting, with those network could potentially give you a niche over competitors. Is this contracting offering More of a ease of access to those who want to get on the drug. And then lastly on expenses, can you give us a sense of where you Where you stand in terms of the run rate, given KAMI is now on pause?
Thank you.
Yes. Thanks, Brian. So first with regards to contracting with the community networks, we do think that's put us in a place, which is at Lease to parity, I mean, there are other competitors that were already contracting before in the community and we weren't and potentially even in advance with the terms that we've given. But we think it was important For us to be able to tap the overall community network. Just to give you a sense, the 4 biggest GPOs Cover roughly half of the total community accounts in the country.
So it's a big part of the overall community opportunity. And as with any contract that you do with GPOs, to open up the community opportunity, there's a fixed component and a volume based variable component. And so That's at least the range of 2% to 3%. In a way, if we get to the higher end of the range, it's because we've driven even higher volume in those accounts, which would be a good thing. We believe that contracting with community accounts just opens up the opportunity more To access those patients and drive a lot of educational initiatives.
So we think it's important for us to remain very competitive in the DLBCS space. With regards to expenses, at this point, we're still confirming. We've had a lot of positive momentum in our pipeline It'd be on Kami, but we're currently still confirming our cash flow going into early 2025.
Great. Maybe just one question to follow-up. So maybe on a broader level related to The accelerated approval path in oncology, can you give us a better sense of how the agency is thinking about Just the requirement in general to get the accelerated approval. Is it because more Often unmet need now is now somewhat changed in the Hodgkin's space or do you think that the requirement is more now applicable all cancer types across.
Yes. Hello, Brian, this is Joe. I really can't Speculate about the changes. I mean, there have been public statements by FDA, by the commissioner. There have been articles written by the Head of the Division of Oncology about the accelerated approval pathway, but it's really not I can only refer to those Public comments that are available, the position still holds that accelerated approval is an area It's supposed to be an opportunity for patients to have access to drugs sooner rather than later because Medical need, I don't think that's really changed.
I think what's changed is as FDA has stated that they're interested In having the confirmatory studies as they told us, somewhat more progressed at the time they reviewed dossier. That's what they told us and I think they've made that Statement also publicly.
Great. Thank you. Thanks, Joe.
You're welcome.
One moment for our next question. The next question comes from Boris Peaker with Cowen. Your line is open.
Great. A couple of questions for me. First, maybe on XANLANTA. Can you talk about any changes in inventory during the quarter that may have impacted the results?
Yes. We're not aware of any inventory changes. So we believe this is demand driven growth.
Got it. And do you have some kind of an internal estimate based on ZENLANTA label, like what fraction of your target market you've penetrated so far?
It's hard to estimate because as you can imagine, the data sources with just a small disease like this aren't precise. I mean, directionally, we can obviously tell We're gaining on every metric. We're gaining share. We're gaining and we have competitive share of voice in our awareness, which is one of the big issues we have particularly in the community Early in the year, it's really improved. Let's say all of our kind of launch metrics are improving.
We believe there's still A good amount of potential to continue to grow.
Got it. And lastly, so in all the Genentech announced BLA filing Polyvie and frontline DLBCL, so this is based on a Polaris trial. So if approved, I'm curious how do you see that impacting ZULANCE and I guess other drugs in relapsedrefractory Yes.
I think it's an opportunity. Frankly, I think if all of these just like CAR Ts are moving earlier lines, I think it actually opens up the space even more for us In the 3rd line plus setting, I mean, I actually think in a way the 3rd line plus setting is getting less competitive even as DLBCL is getting more competitive overall. So we see it as a positive. Physicians rarely cycle through the same therapy in multiple lines of therapy. So if polavli moves frontline, It's unlikely that that same patient will get PALOVI in subsequent lines.
So we think it's a great opportunity for XENLATA. Obviously, we have Very good risk management profile with a monotherapy too. I think beyond our current indication, we also see opportunity in combination. Obviously, we're studying it With rituximab in the front and second line setting, but also with a number of novel agents, you may have seen also we announced a clinical collaboration with IGM to look At Lonka with their bispecific. So we think there's a lot of potential for Lonka as a monotherapy in our current indication, but also in combination in earlier lines.
Great. Thanks for taking
my questions.
Yes. Thank you. One
moment for our next question. Our next question comes from Kelly Hsieh with Jefferies. Your line is open.
Thank you for taking my questions. My first question is, what are the key launch metrics do you Follow for ZYNOLTA for example like new patients addition per month and how have they evolved since launch And also any noticeable change in Q3? And lastly, how do you think about the growth trajectory going forward? Thanks.
Yes. Thank you, Kelly. Yes, so the kinds of launch metrics, and again, I would just say the reason we don't disclose numbers is more because the sample sizes of the data we get Also, they're good for trends. And as you mentioned, since the launch, we look at a number of different things. One thing we look at is awareness of our product, both aided and unaided.
And while we got to relatively high levels of aided awareness early in launch, unaided awareness was really Far below competitors at the beginning of this year. That's really improved, particularly in Q2 and Q3, we saw a real we've seen improvements in our unaided awareness. Also share of voice we look at, just how competitive are we in terms of reaching physicians and we've maintained a competitive share of voice. The other thing we look at, of course, is our 3rd line plus patient share, which again is directional, but we're increasing share steadily. The last thing we look at is account level performance.
So we look we track every account in the country and look at how we're doing, where we're gaining, where we're losing. What I can tell you is We continue to grow. We continue to have steady growth in the academic segment overall and but with a roughly stable number of ordering accounts. The community was more dramatic. We saw very strong growth in the community in this quarter And a fairly large increase in the number of ordering accounts.
So what that translates into is, whereas before we used to have Roughly 60% of our accounts I'm sorry, 50% of our accounts in the community right now, 60% of our ordering accounts And the volume used to be only about 40% from the community. Now it's about 50% of our total volume. So it's a pretty dramatic shift Given that the academic segment is still growing right now and it's growing at a nice steady clip. If I think about going forward, We're further penetrated into the academic segment given that we drove awareness and uptake very early in the launch, So almost a year and a half ago. And so we think we're going to have steady growth in that segment, but we're a little bit more mature into the launch.
Whereas in the community segment, because our unaided awareness was low and access started to open up really starting in Q2, That's also when we got the J code and other keys went into effect. That community opportunity started opening up in Q2 and into Q3. We've obviously driven much more robust growth. And while we continue to believe that we're going to continue to grow, while it's likely to be more moderate than the growth we saw in Q3 in the Community segment.
Super helpful. I also have a follow-up. So you mentioned the cash runway now extended to 2025, Given the new pipeline progress and the decision, I'm sure the near term will kind of cost reduction on R and D and SG and A in 2023? Thanks.
Yes, we think we'll have roughly similar cost, I would say. I think that's what I would model. I mean, As I said, we have a pretty rich pipeline. So although KAMI costs we're projecting go down, we will next year have 5 assets into the clinic. And really interesting, I would say, investments that we're making on the research area as well in terms of novel antibody constructs and payloads.
So we We think we're going to have a roughly stable cost base given the evolution and honestly the progress that we're making in the R and D side. Thanks.
Great. Thanks, Manav.
Thank you.
One moment for our next question. Our next question comes from Matthew Harrison with Morgan Stanley. Your line is open.
Hi. This is Chris on for Matthew. I have two questions. First question is on ADCT602. Given the Phase 1 results in the abstract published recently, how are you viewing this asset in terms of its priority?
And the second question is on Kami. Did the FDA point to how much enrollment is necessary for the confirmatory Phase 3 trial? Thank you.
Thank you. This is Joe. Yes, the response rates as cited in that abstract are Very intriguing. And so our plan is to do what one would normally do in this situation, optimize the dose and the schedule and that's what we're doing with MD Anderson. It took a while To actually get to a dose that looks like it could be moving forward.
So that's where we are now. We have to expand the population now in that dose and make sure that it is optimal. But we're very interested in this And as is MD Anderson, and yes, I'll just point you to the presentation where there'll be more data. So very promising, very important area, adult ALL can be treated, but there are a lot of patients who still relapse. So So we're looking forward to continued data development there.
With regard to Kami, I will tell you the FDA was very specific with us. They said that we would like your confirmatory Phase 3 trial to be well underway and ideally fully enrolled at Time of the submission, that's pretty clear guidance. And that's the main reason for our reevaluation of the time and cost and future opportunity for the program.
Thank you.
You're welcome.
And I'm not showing any further questions at this time. I'd like to turn the call back over to Amit for any closing remarks.
Yes. Thank you all for joining our call today and thank you so much for your continued support. We look forward to keeping you updated on our progress. Have a nice day everyone.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful