Ladies and gentlemen, welcome to the ADC Therapeutics Q2 Earnings Call. For the first part of this call, all participants are in a listen only mode. Afterwards, there will be a question and answer session. This conference call is being recorded. At this point, I'll hand it over to the speaker.
Please begin your meeting.
Thank you, operator. This morning, we issued our financial results and business highlights press release. This release is available on the ADCT website at ir. Adctherapeutics.com under the Press Releases section. On today's call, Chris Martin, Chief Executive Officer Jen Creel, Chief Financial Officer and Jay Feingold, Chief Medical Officer, will discuss recent business highlights and review our Q2 2020 financial results.
In addition, Jennifer Herron, our Chief Commercial Officer, will be available for questions. As a reminder, this conference call may contain statements that constitute forward looking statements. All statements other than statements of historical facts are forward looking statements. Such statements are subject to risks and uncertainties and actual results may differ materially from those expressed or implied in the forward looking statements due to various factors. We refer you to the section titled Cautionary Statements Regarding Forward Looking Statements in Exhibit 99.2 of our report on Form 6K filed with the U.
S. Securities and Exchange Commission earlier today for further information on forward looking statements. Such statements speak only as of the date of this conference call. We expressly disclaim any obligation or undertaking to update these forward looking statements to do so by applicable law. In addition, during today's call, we will be presenting certain non IFRS financial information that management uses when monitoring and evaluating operational performance, generating future operating plans and making strategic decisions regarding the allocation of capital.
These non IFRS measures have limitations as 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. We refer you to the section titled Use of Non IFRS Financial Measures in Exhibit 99.3 of our report on Form 6 ks filed with the U. S. Securities and Exchange Commission earlier today for further information on non IFRS financial measures, including reconciliation of IFRS to non IFRS financial measures. It is now my pleasure to pass the call over to our CEO, Chris Martin.
Chris? Thanks, Samantha, and thank you all for joining us this morning. I'm pleased to be here today and to have the opportunity to share some of our recent corporate and clinical accomplishments. Before that, I would like to take a moment to thank our team who have shown tremendous resilience and flexibility during these challenging times and who have led the company through one of our most productive years to date. One such accomplishment is our recently completed upside IPO, which we closed in May.
We're excited to have begun this next chapter. And with the proceeds from the offering, we have the financial foundation to support our upcoming regulatory and clinical milestones, and importantly, our commercial build out. We have built a robust clinical pipeline of highly innovative assets to address areas of high unmet medical need. Our lead product candidates, Lonka and Kami, have demonstrated significant clinical activity across broad populations of heavily pretreated patients with manageable toxicity profiles in relapsed and refractory diffuse large B cell lymphoma and Hodgkin's lymphoma respectively. In addition, we have an exciting early stage clinical and preclinical pipeline that further demonstrates the broad potential of our technology to address areas of high unmet need.
It is an exciting time as we prepare to finalize our BLA for Vodka. I'm delighted to be able to tell you that we've recently submitted the CMC module of the BLA filing, and we remain on track to complete the BLA for Lonka later this year. We are focused on ensuring that we execute a successful commercial launch for Lonka, specifically in 3 areas: preparing the market, preparing the product and continuing to build out our commercial organization. In terms of preparing the market, we are actively engaging with U. S.
Hematology oncologists to enhance our understanding in detail of the unmet medical need in relapsedrefractory DLBCL, their assessment of the LONGCA profile to address these needs and how Lonka may fit into their treatment paradigm should it be approved by the FDA. In terms of preparing the product, we are finalizing our global brand strategy for Lonka, including the lifecycle management plan. All the steps needed to ensure successful execution of the U. S. Launch plan remain on track and we have commercial ready supply available.
In terms of the organization, the commercial and medical affairs leadership teams are in place and they are actively building their teams. Despite COVID-nineteen, ADC Therapeutics has recently added over 30 new employees focused on the launch of LONKA in the U. S. And medical affairs have begun a prelaunch engagement with healthcare professionals. We are planning for a mixed virtual and face to face launch, and we can flex this to respond to the COVID situation on the ground at the time of the launch should longer be approved by the FDA.
We look forward to continuing to provide updates on these launch preparations as we approach our BLA filing later this year. With that, I will now hand over the call to our Chief Medical Officer, Jay Feingold, to discuss the data recently presented at EHA and our other clinical progress. Jay?
Thank you, Chris, and good morning, everyone. I'm pleased to present an update today on our lead candidates, Lonka and Kami, as well as a brief overview of our broader pipeline of early stage programs, all of which continue to show promising potential. I will begin with our lead program MANCA. In June, we presented data at the European Hematology Association or EHA Annual Meeting from our pivotal LOTUS-two trial in patients with relapsed to refractory diffuse large B cell lymphoma or DLBCL. This is the data set that will serve as the basis for our BLA submission that we intend to submit to the FDA later this year.
The study evaluated the safety, efficacy and pharmacokinetics of WANCA as a monotherapy in 145 patients with relapsed refractory DLBCL who had failed at least 2 prior lines of therapy. The study included patients who never responded to first line therapy and patients who were refractory to all prior lines of therapy as well as patients who had high grade B cell lymphoma and high risk kinetics. Patients in this study had a meeting of 3 prior lines of therapy. So clearly, these patients have a high unmet medical need. In this study, Lonca demonstrated robust antitumor activity across this broad population, resulting in an overall response rate of 48.3% and a complete response rate of 24.
Importantly, the duration of response in these patients continues to develop with median duration response of 10.25 months. We believe this is a meaningful clinical benefit for these patients. We also saw that patients who refractory to first line or all prior lines of therapy had an overall response rate of 38% and 36% respectively. These data reflect the significant monotherapy activity Blanca can achieve even in difficult to treat patients. The toxicities in this study were manageable and no new safety concerns were identified.
The most common grade 3 and grade treatment emerged to adverse events that occurred in at least 10% of patients of neutropenia, thrombocytopenia, elevated gamma glutamyltransferase or GGT and anemia. You can see the detailed results of the LOTUS-two study on our website. We believe Vida are highly supportive of BLANCA as a transformative single agent treatment option for heavily pretreated and difficult to treat patients, providing an opportunity for durable benefit for those who can achieve response. In addition, Lonca is administered as a convenient 30 minute IV infusion every few weeks. We believe that Lonca based on a strong profile of robust single agent efficacy even in most resistant and refractory patients combined with its tolerable side effect profile and convenience administration has the potential to fill an unmet medical need for relapsed or refractory DLBCL patients.
In addition to data from the LOTUS-two trial, we also presented data at EHA from our LOTUS-three trial evaluating RAGA in combination with Ibrutinib in pivotal Phase III trial of relapsed refractory DLBCL patients and mantle cell lymphoma patients. At the time of data collection in April, 25 patients were enrolled. From this early data, we observed a promising overall response rate of 75% and a complete response rate of 58% at the recommended Phase 2 dose of MANCA 60 micrograms per kilogram. Among patients with non GCV DLBCL, we observed an overall response rate of 73% and a complete response rate of 64%. Again, toxicities were manageable at the recommended dose for Phase 2.
The only grade 3 or higher PEAEs seen in at least 10% of patients with thrombocytopenia and anemia. These early data are encouraging and highlight the potential for molecule combinations in the earlier lines of therapy. In July, we released the first patients in the Phase 2 portion of this trial and we are looking forward to reporting further results in the future. We also plan to initiate the confirmatory Phase 3 Blanca plus rituximab trial at the time of our BLA submission later this year. And we continue to advance plans for our follicular lymphoma program with the intention of commencing a pivotal Phase 2 clinical trial in the first half of twenty twenty one.
Turning now to our 2nd lead program, Tami. We announced in early July that following the FDA's review of information requested, the FDA have lifted its partial clinical hold on the pivotal Phase 2 clinical trial of care in patients with relapsed or refractory Hodgkin lymphoma. This 100 patient Phase 2 multicenter open label single arm clinical trial is evaluating the safety and efficacy of Kami in patients with relapsed or refractory HL who have failed 3 prior lines of therapy including bintuximab vedotin and checkpoint inhibitors approved for HL such as nivolumab and pembrolizumab. There are 47 patients enrolled to date in this clinical trial. And now with this important regulatory feedback, we are assuming a moment and remain on track to announce interim results in the first half of twenty twenty one.
Data from this trial is intended to support the submission of a BLA to the FDA. In addition to our HL program, we continue to advance our Phase 1b clinical trial of KAMI, where we target regulatory T cells in solid tumors known to typically have high levels of infiltrating T cells. We plan to present data from this trial at Scientific Congress later this year. Finally, we remain excited about our earlier stage clinical and preclinical pipeline. We look forward to providing further updates as they progress in development.
This includes ABCT602 targeting CB22, which is being investigated in the Phase onetwo trial in patients with levoxetin refractory ALL. And we are preparing to start the Phase 1b combination trial with ATCT-six zero one targeting AXO in the second half of twenty twenty one in patients with certain select solid tumors. And with that, I will turn the call over to Jen to give a financial update.
Thank you, Jay, and good morning, everyone. As we reported in our press release, we ended the quarter with cash and cash equivalents of approximately $349,000,000 as compared to approximately $116,000,000 as of December 31, 2019. In the Q2 of 2020, we raised approximately $244,000,000 in net proceeds from our IPO. In addition to our IPO, we also received the 1st disbursement from our $115,000,000 convertible loan with Deerfield that we announced earlier this year. Under that agreement, Deerfield has extended the initial $65,000,000 disbursement upon the successful completion of our initial public offering and we will receive another $50,000,000 disbursement upon FDA approval of the BLA filing for NACA, which we anticipate receiving in 2021.
With the proceeds of our IPO and the credit facility, we are well funded at this time. As I mentioned, we had cash and cash equivalents of $349,000,000 at the end of the quarter. We used approximately $73,000,000 in net cash for operating activities in the first half of this year. As we look forward, we see our spend increase over the next few quarters as we prepare for the anticipated launch of Blanca and continue to invest in our pipeline. R and D expense was $26,000,000 for the Q2 compared to $21,800,000 for the same quarter in 2019.
The increase was primarily due to an increased number of employees to support the Lonka BLA submission and multiple Lonka and Kami clinical programs, as well as increased share based compensation expense. G and A expenses were $19,000,000 for the 2nd quarter compared to $4,100,000 for the same quarter in 2019. The increase was primarily due to increased share based compensation expense, which was driven by the one time settlement of private company stock option plans that were settled at the time of the IPO and the impact of expanding our teams, particularly with the hiring of new commercial employees as we prepare for the anticipated launch of MANTA. We also saw an increase in investment in our commercial preparations and professional fees associated with the completion of our initial public offering. Our net loss was $126,600,000 for the Q2 of 2020 compared to $23,300,000 in the same quarter of 2019.
It is important to note that the loss includes a $79,300,000 non cash charge related to the changes in fair value of derivatives associated with the convertible loans under the facility agreement with Deerfield, which resulted from the increase in our share price during the quarter. Going forward, we will be subject to further non cash charges if our stock price appreciates or a non cash gain if our stock price declines as a result of marking to market these derivative instruments. In addition to the non cash impact of the Deerfield facility, net loss for the quarter was also impacted by share based compensation expense of $12,700,000 Our diluted net loss per share was $2.01 in the Q2 of 2020 compared to $0.49 in the Q2 of 2019. Finally, our adjusted net loss, which excludes certain items such as the impact of the Deerfield Convertible and share based compensation expense, was $32,100,000 for the Q2 of 2020 compared to $23,300,000 in the same quarter of 2019. The adjusted diluted net loss per share was $0.51 in the quarter ending June 30, 2020 compared to $0.49 for the same quarter in 2019.
With that, let me turn the call back to Chris to share our upcoming milestones. Chris?
Thanks, Jennie.
This is an exciting time for ADC Therapeutics as we look forward to a number of upcoming milestones. As I mentioned, our team is focused on our BLA submission for Lonker, which would be the first approved product for our company and an important milestone and accomplishment for ADCT. We continue to prepare our organization with the build out of our commercial, market access and medical affairs teams, which are critical to the successful launch that we anticipate next year. We continue to invest in and develop our broad pipeline, including the Phase II study of the combination of Lonka plus ibrutinib, the initiation of the Phase III confirmatory trial of Lonka combined with rituximab at the time of the BLA submission the start of the LONGCA pivotal Phase II trial in follicular lymphoma in the first half of twenty twenty one and interim results with a Kami pivotal Phase II trial in relapsedrefractory HL in the first half of twenty twenty one. I look forward to updating you on our progress in the future.
We will now open the call for your questions. Operator?
The first question is from the line of Tazeen Ahmad from Bank of America Securities. Your line will now be unmuted. Please go ahead.
Hi. Hello, guys. How are you? Thanks for taking my questions. Maybe just a few as it relates to some of the comments that you made in your prepared statements.
So for the commercial size of the DLBCL sales force, how are you thinking about it in terms of the initial size and what you might need to increase it to both in the U. S. And ex U. S. Regions.
And you talked about doing a mix of virtual and in person just based on the COVID environment. How important is it for doctors to have in person contact with the salesperson just given the area of unmet need in the DLBCL to a certain extent do you think that this drug is solid? Thank you.
Thank you, Tazeen. Jennifer, would you care to address those, I think, substantially commercial questions?
Yes, certainly. So thanks, Devine for your questions. Clearly, this is our first priority as we prepare for launch next year if we get to get FDA approval. So as we're thinking about it in the U. S, we do believe that we should have available to us a combination of both multi channel options as well as in person.
We are looking to recruit a field force as I think we've previously disclosed between 4060 sales representatives in addition to other ancillary staff, which we believe will cover greater than 80% of the prescriber base. And that's in the U. S. And we are expanding and we're monitoring very closely the ongoing launches right now in this current COVID-nineteen environment. So, we are planning for a hybrid approach and we will be prepared as well if we need to go 100% virtual.
We'll just have to watch the environment as it unfolds. We do believe that there is there are many unmet medical needs with regard to DLBTL and have received that feedback with regard to our research and our appropriate interactions to date with physicians.
Okay, thanks. How important is the confirmatory study going to be in your view in order to help enhance the commercial opportunity if at all for LOTUS-five? And what is the gating factor here to start that study?
Jay, do you want to talk about the study and the gating factors? And maybe Jennifer can then pick up on the how important it is for the commercial opportunity.
Thanks, it's Neil. So under the requirements of a filing for accelerated approval, we're required to have the confirmatory study started time we submit the BLA. What that exactly means is up for a little bit of interpretation. But our intention is to have sites ready to go, already initiated, hopefully at least to the contract phase of non initiated at the time of the BLA later this year. Jennifer?
Yes. And in terms of the commercial opportunity, I mean, we are confident in the single agent robust profile that we've seen with MANCA from the LOTUS-two trial. We believe that it sets us up very nicely for a successful launch and addressing the areas of unmet medical need in patients with 2 prior therapies. But the combination, the confirmatory study will serve to help unlock earlier lines of therapy and use and address additional unmet medical needs. So, we're very excited to get that study started.
Okay. And then maybe one question, this is my last question on Tami. As it relates to data for the rest of this year, what kind of tumor data should we expect to see and will it be at a medical conference?
Okay. Thank you for your questions again. So in terms of Kami, the Hodgkin lymphoma program, we have we hope to be able to update that ASH. We don't know yet, of course, if our access is accepted, but we are planning to have data at ASH from the CAMI trial on the 47 patients that were enrolled through March. In terms of KAMI and solid tumors, we are we have posted accepted at the virtual annual that's coming up in September to discuss most of the pharmacokinetic clinical dynamic data that we have in that study.
The next question is from the line of Mason Harrison from Morgan Stanley. Please go ahead. Your line will now be unmuted.
Hi, all. Thanks for taking the question. This is Connor on for Matthew. So just a couple from us. Can you talk about how you think the opportunity in follicular lymphoma will be for Lonca and what the population is you want to enroll in the pivotal study?
And then so you mentioned and then so just jumping quickly after that. Actually, if you can just answer that one and then I'll ask a few more if that's okay. Thank you.
Thank you, Kona. Jay, I'll hand that to you.
Sure. So the Phase 2 I'll count the line by the way. The Phase 2 study that was ongoing for KEMI, which we hope to use for approval accelerated approval type of study, the patients who got to have failed 2 prior lines of therapies, which must have included ADCETRIS and one of the approved checkpoint inhibitors. If the patients are not considered by the physicians to be transplant eligible, they only need to have had
2 cases.
Okay. Yes.
Sure. I think Conor's question related to follicular lymphoma for Lonka. I might have misheard. So sorry, Connor, if I missed it.
You said Lonka. I'm sorry. I apologize. Completely missed that. Fluids lymphoma, okay.
I don't know how I got Cammy out of that. Sorry. So, for looking at the form of we have a meeting upcoming with the FDA to discuss Phase 2 trial. Once we get clearance from the FDA, we hope to begin that trial in the beginning of 2021. My apologies for missing the question.
Got it. No problem. And then so just quickly and then this one's on Kami. So you mentioned as a response to a different question that you think you'll have PKPD data at ESMO for Kami. Do you think that'll be enough for you guys to make a decision on what types of tumors you want to prioritize?
That's a good question. Probably not, but we have a plan for the next steps the Phase 1b study for KEMI, which we will implement in the next month or so.
Understood. Thank you. And then, can you just discuss what the steps you need to complete in terms of discussions with the FDA and whatnot before submitting the BLA for Lonca later this year?
We're actually past the discussion studies with the FDA. We already had pre BLA meeting and had some conversations with them. As Chris mentioned, they agreed to accept the CMC modules early, which we've already submitted. So at this point, the team is busy working on that BLA. But we don't anticipate any more discussions with the FDA regarding the BLA until after its
Understood. Thank you.
The next question is from Boris Peaker from Cowen. Please go ahead. Your line will now be unmuted.
Great. My first question is on the Phase 2 LOTUS 3 study of Lonka plus ibrutinib. I'm just curious, will you be providing incremental data update on this study over time or are we just going to get the final data?
We hope to present yes, I'm sorry, I assumed you want data to add. We hope to have data at the upcoming virtual ASH meeting with regard to the lung capacity of study. But that will be on the Phase 1 part of study.
No, I understand that. That's why my question is specifically for the Phase 2 that you're starting just recently. Is that also going to be given incremental data or is that we're just going to have to wait till the end?
Good question. We there is a preplanned interim analysis with futility in that study. So it is a possibility that we may present data from that. But you're thinking way ahead of me.
Okay. Got you. Maybe just from the manufacturing side of things, I know you mentioned that for the CMC filing has been submitted. I'm Just curious how many manufacturing facilities are involved in making Lanka? Kind of where are they located?
And have they been inspected yet or not?
There are 3 main manufacturing facilities. They are in the U. S, Italy and Germany. They have not been inspected by the FDA, but we have carried out, as you might imagine, proprietary work. And as facilities, they do manufacture commercial ADC drug product for other companies.
And in that context, they have all been all of those facilities have been previously, in most cases, quite recently inspected by the FDA.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may now disconnect. Everyone have a great day.