ADC Therapeutics S.A. (ADCT) Q4 2022 Earnings Report, Transcript and Summary

Welcome to the ADC Therapeutics Fourth Quarter and Full Year 2022 Financial Results Conference Call. My name is Andrew, and I'll be your operator for today's call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I will now turn the call over to Amanda Loshbaugh, Investor Relations Manager. Amanda, you may begin.

Thank you, operator. This morning, we issued a press release announcing our fourth quarter and full year 2022 financial results and business updates. This release is available on the ADCT website at ir.adctherapeutics.com under the Press Releases section. On today's call, Ameet Mallik, Chief Executive Officer; Kristen Harrington-Smith, Chief Commercial Officer; Mohamed Zaki, Chief Medical Officer; and Jose Carmona, Chief Financial Officer, will discuss recent business highlights and review our fourth quarter and full year 2022 financial results, before opening the call for questions. Before we begin, I would like to remind listeners that some of the statements made during this conference call will contain forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include those related to our future financial and operating results, our ability to achieve our guidance for 2023, and long-term revenue, operating expenses and cash requirement reductions, future revenue growth, prescription volume, product launches and market share for our products, either alone or through our foreign partners, timing and results of ongoing and future development programs and clinical trials for our products, either alone or in combination with our partner products, FDA and foreign regulatory authorities actions and potential regulatory approval for our products either alone or in combination with our strategic partners products, future strategic partnerships and business development efforts and our ability to repay our outstanding debt obligations. These forward-looking statements are subject to certain risks and uncertainties and actual results could differ materially. They are identified and described in today's press release, in the accompanying slide presentation on Slide 2 and in the company's filings with the SEC on Form 20-F and is updated in ADCT's recent periodic filings on Form 6-K. ADCT is providing this information as of the date of today's conference call and does not undertake any obligation to update any forward-looking statements, contained in this conference call, as a result of new information, future events, or circumstances after the date hereof, except as required by law or otherwise. The company cautions investors not to place undue reliance on these forward-looking statements. Today's presentation also includes non-IFRS financial measures. These non-IFRS measures have limitations as financial measure 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 fourth quarter and full year earnings release for definitional information and reconciliations of historical non-IFRS measures to the comparable IFRS financial measures. It is now my pleasure to pass the call over to Ameet Mallik. Ameet?

Thanks, Amanda, and thank you all for joining us today. 2022 was a year of evolution for ADC Therapeutics, a year in which we laid the groundwork to help optimize and launch its potential, prioritize our pipeline, strengthen our leadership team and bolster our capital position, all with the intention of elevating the company to the next level. We are now positioned to execute our strategic initiatives in 2023 and unlock the tremendous untapped value of the company. We expect to see this value unfold through our three core pillars of growth: maximizing the Zynlonta opportunity, advancing our PBD-based pipeline and expanding our ADC platform. Beginning with the highlights of the quarter, Zynlonta net sales were $19.8 million in the fourth quarter, a 16.5% increase year-over-year and $74.9 million for the full year. We are encouraged to see on underlying trends and have a focused plan in place to help to drive future growth. Kristen will take you through these initiatives momentarily. By executing successfully, we expect to drive Zynlonta net sales by a double-digit percentage year-over-year, even when taking into account, the gross to net headwinds and expected approval of bispecifics. We also expect them not to achieve commercial brand profitability this year, and for its sales to begin funding pipeline development by the end of the year. As a reminder, while success in the third line cost setting is hugely important, we believe this patient segment only represents around 20% of the commercial potential for Zynlonta. The larger opportunity lies in combinations in earlier stage settings. Here we firmly believe that Zynlonta's strong single agent activity and manageable side effect profile make it an ideal combination partner of choice. We are exploring Zynlonta and combination with rituximab in earlier lines of therapy in the LOTIS 5 and LOTIS 9 studies. We are also excited about combining Zynlonta with bispecifics, which we are investigating in the LOTIS 7 study. If we were able to expand our approved indication and capture earlier lines, we believe combination opportunities for Zynlonta have the potential to deliver peak annual sales of between $500 million and $1 billion in the U.S. with additional opportunity through partnerships ex-U.S. Regarding geographic expansion, we were very pleased to see Zynlonta to receive approval in December from the European Commission and the UK MHRA for the treatment of relapsed or refractory DLBCL. Subsequently, on February 7th, our European partner, Sobi received conditional marketing authorization. We are encouraged that the team has made good progress and expect Sobi to launch in Europe in the second quarter of this year. As I turn to the rest of our pipeline, we are looking forward to multiple value driving catalysts across our portfolio in the next 12 to 18 months. Including preliminary data for ADCT-901 targeting CAAG-1 and ADCT-601 targeting AXL. In an effort to prioritize these programs and to potentially capture the full opportunity for Zynlonta, we made a decision not to pursue further clinical development of Cami on our own, but instead to seek a partnership based on its positive Phase II data. We are strategically advancing the rest of our portfolio programs and Mohammed will provide a more detailed update in a few minutes. Touching briefly on the financials. At year end, we had a strong balance sheet with $326 million in cash and with the anticipated milestone payments and lower operating expenses, we expect our cash runway to extend into mid-2025. Moving to recent corporate events and as disclosed in regulatory filings, our largest shareholder, Auven Therapeutics, completed a secondary sale of a significant portion of its holdings to meet a debt obligation. The secondary offering of 12 million shares was placed in the of high-quality investors and has allowed us to broaden and strengthen our shareholder base. Following the completion of the transaction, Auven's holdings has decreased from approximately 28% of outstanding shares in December to roughly 8% after the offering. And its remaining shares are locked up for 12 months. The high level of interest shown by top tier investors during the process was especially encouraging. Last but certainly not least, I'm thrilled that, we have been able to continue to strengthen our management team with the addition of truly high caliber professionals. I would like to take this opportunity to welcome Kristen Harrington-Smith, our Chief Commercial Officer; Mohamed Zaki, our Chief Medical Officer; and Pepe Carmona, our Chief Financial Officer. We believe these new leaders bring the necessary capabilities to unlock the full value of the company and will be critical in advancing us through the next phase of growth. In the next three to five years, we expect to continue to grow Zynlonta sales, advance the pipeline, broaden our scope of new partnerships and move toward profitability. With that, I would like to turn the call over to Kristen for a commercial update. Kristen?

Thanks, Ameet. It is my pleasure to share an update on Zynlonta launch. As Ameet mentioned, we are seeing strong underlying demand trends with have accelerated in the past two quarters. I'm excited by the opportunities we have to build on this momentum, and I want to spend a few minutes outlining how we've refined our strategy and initiatives to deliver Zynlonta’s full potential. It all begins with understanding the products, the market, and the various stakeholders. My focus during my first few months has been I'm listening and learning from the team and key thought leaders. Following this steep dive, it's clear that the key to delivering our growth aspirations for Zynlonta in the near term will be in the quality of our execution and in particular, in doing a few things really well. We are focusing our cross-functional team on three key imperatives. One, driving awareness of Zynlonta is differentiated profile. Two, educating physicians to optimize the patient benefit. And three, continuing to build advocacy with key thought leaders, focusing on clear patient types. Through executing on these three aspects of our strategy, I believe we will capture the opportunity for growth in the third line, third line plus setting both in the near term and over the longer term, recognizing that this is a marathon and not a sprint. Let me now spend a moment expanding on each of these three elements of our strategy. Starting with driving awareness, Zynlonta has a uniquely differentiated product profile, which we believe positions it to become the standard of care in the third line, third line plus setting. First, it has strong single agent activity. It's associated with a rapid time to response with a median of just 41 days. It has a manageable safety profile with no cytokine Release Syndrome and a low incidence of neuropathy. Lastly, it has a relatively patient friendly administration schedule requiring a 30-minute infusion cycle once every three weeks. The second strategic initiative is to educate physicians and nurses on the proper dosing to achieve the best clinical outcome for patients and the manageable safety profile of Zynlonta, what to expect and how to mitigate potential adverse events. We believe Zynlonta's safety profile is favorable in the third line, third line plus setting, and we need to keep reinforcing this important message. Lastly, we need to work closely with our thought leaders and for them to educate and share theirs and wants experience with their peers in the community. The third line, third line plus setting landscape is increasingly complex with the availability of new innovative options. Now, more than ever, the community is looking to the thought leaders to help identify the best options for postcard C patients and for those who don't get to CAR-T. As a reminder, community centers account for roughly 60% of diffuse large B-cell lymphoma patient volume as compared to 40% in the academic centers where Zynlonta is mainly prescribed today. Taking a closer look at the academic versus community setting, we have already established a strong foundation in the academic setting. Here, around 80% of accounts have experienced with Zynlonta. Our focus will be on driving utilization in the post CAR-T patients. Since approximately 60% of these patients will unfortunately relapse. The bigger opportunity for us is in the community where we have the potential to drive much greater breadth of experience. At the start of 2022, roughly 25% of community accounts had tried Zynlonta, and we grew that to almost 35% by the end of the year. Based on the differentiated profile I discussed earlier. We believe Zynlonta is ideal for the community, specifically for the large proportion of patients more than three quarters who are unable to get to car state due to the complexity, toxicity, or lack of assets. Again, we want to reinforce that the community setting is our greatest opportunity to drive growth. We recognize adoption as slower as the market is highly fragmented, but we are making steady progress and are encouraged that once physicians are familiar with Zynlonta, they tend to continue to prescribe it. We have an opportunity to increase awareness of Zynlonta's differentiated profile and the advantages it can bring to patients and physicians. We know from brand impact data that roughly one in three treaters has unaided awareness of Zynlonta, which flags that of other key competitors in the market. We have seen a consistent improvement over the past year, but we can clearly do a lot more. By sharpening our execution, particularly our promotional efforts focusing on Zynlonta's unique profile. We are confident we can drive much higher levels of awareness so that Zynlonta becomes top of mind with community physicians. All our focused initiatives are critical to expanding adoption and utilization, and what is really important here is that when healthcare systems tries Zynlonta, they continue to order it. In fact, at the end of 2022, we saw 84% place repeat orders. To close, we are very encouraged by the recent trends in Zynlonta uptake and utilization, and we have fine-tuned our strategy to fully capture the opportunity for this important medicine in the third line, third line plus setting. Now I'll turn the call over to Mohamed to provide an update on our pipeline. Mohamed?

Thank you, Kristen. It is my pleasure to share an update on the pipeline. First, I want to discuss the lifecycle management program for Zynlonta. We see potential for the treatment to be a key player in select indication. As you see here, despite current treatment options and emerging therapies, distinct unmet need remains in all lines of therapy. Having spent my entire career in the Hematology and Oncology space, I appreciate what Zynlonta can do for patients. And at this point, I believe we have barely scratched the surface. As Kristen described earlier, Zynlonta has already demonstrated a compelling and uniquely differentiated profile in the third line setting, and our strategy here is to maximize patient utilization. The larger opportunity, however, lies in earlier lines and in combinations. Zynlonta is the only approved T-19 directed treatment option outside of CAR-T to have demonstrated single Asian activity in the DLBCL and no known overlapping toxicities in combinations currently being studied. We believe Zynlonta has the potential to become the combination agent of choice, and eventually a backbone therapy in all lines of DLBCL. When we think about the second line DLBCL setting, the current treatment includes stem cell transplant, CAR-T, targeted therapies, and, chemo-based regimens. Going forward, we expect to see increasing use of CAR-Ts. But even with this, there will still be unmet medical need and opportunity for those, who are not eligible or cannot access transplant or CAR-T. Here, we are exploring the combination with rituximab, in our ongoing LOTIS 5 study, for second line plus DLBCL patients not eligible for transplant. This combination could benefit patients, even if they received prior CAR-T or if they are not eligible for CAR-T. The notified safety run-in produced early encouraging efficacy data, and the enrollment of approximately 350 patients is expected to be completed next year. Another potential application for the rituximab combination is in the frontline therapy, where there is a great need among unfit or frail patients, not able to tolerate full doses of R-CHOP. While approximately 85% of patients received R-CHOP and there is an acuity in about 60% of patients, this leaves a significant population that is unable to deliver at R-CHOP and has poor outcome. Physicians are looking for monthly systemic infusion with better outcomes in this setting. Based on this unmet need and the de-risk profile of Zynlonta, we are conducting the Phase II LOTIS 9 study. This is an open label study in the onset and failed patients with results expected next year. We believe the potential benefit is supported by encouraging data from LOTIS 2. The data showed Zynlonta has a similar overall response in patients over and under 75 years of age, with no notable safety issues in the older patients. In addition, data from safety run-in portion of LOTIS 5 further supports the use of this non-systemic combination and increases the likelihood of success. Beyond the combination with rituximab, we are exploring novel combinations. We are particularly excited about possibility of combining the -- bispecifics with their distinct mechanism of action and toxicity profile. In the LOTIS 7 study, we are evaluating the combination with glofitamab and mosunetuzumab as well as polatuzumab. We expect to have early data from these studies next year. We also have a collaboration with IGM to combine with by specific input amount. Beyond our own clinical studies, we are intelligent to see substantial interest from investigators to explore the long term in different combinations, including by specific in different treatment setting and in other indications. We are closely following those studies to further understand the amount of potential. Investigators are keen to see whether then launch a stronger profile in the challenging DLBCL indication could potentially translate into other areas of CVA-T in disease biology. Such as CLL Follicular lymphoma, and Mantle cell lymphoma. On my final slide, I would like to discuss our robust pipeline beyond the long, starting with our company sponsor program, ADCT-901 targeting KAAG1 is a novel first-in-class that targets various solid tumors. The Phase 1 dose escalation is proceeding, and we have not yet reached the max tolerated dose. We have decided to amend the protocol to explore different dosing schedule to optimize the potential clinical outcomes for patients and to prepare for regulatory interactions, as part of project aspects. We now expect to share preliminary data in the first half of 2024. Now looking at ADCT-601 targeting AXL, AXL is a validated target over expressed in many solid tumors including sarcoma and non-small cell lung cancer. The Phase 1 study to optimize the combination with gemcitabine and to explore single activity is progressing. and IHC assay for possible biomarker approach is being finalized. Preliminary data from the Phase 1 dose escalation and expansion study are expected in the first half of 2024. ADCT-212 is in Next-generation PBD-based ADC targeting PSMA, validated target over-expressed in the majority of Metastatic Castration Resistant Prostate Cancers. We expect to initiate the Phase 1 study in the first half of 2024. Now for our programs in collaboration, ADCT-602, target CD22 MD Anderson cancer center presented some encouraging signs of activity from the Phase 1 study at ASH in a small number of acute lymphoblastic leukemia patients. The Phase 1 dose expansion study is expected to complete in the first half of 2024. And finally, ADCT-701 targeting DLK1, a collaboration with NCI in neuroendocrine malignancies. We expect the Phase 1 study to be initiated in the second half of the year. I am really excited about the robust pipeline we have developed with multiple catalysts over the next 12 to 18 months. This is one of the reasons I came to the company. I look forward to reporting on the evolving news flow from our pipeline over the coming month. With that, I will turn the call over to Pepe to give a financial update. Pepe?

Thank you, Mohamed. Starting with our balance sheet, as of 31st of December, we had cash and cash equivalent of $326 million, representing a $55 million reduction from our position at the end of the third quarter. Subsequent to the year-end, we receive a $50 million milestone from Sobi given European approval of Zynlonta, and we also expect to receive a $75 million milestone from HealthCare Royalty Partners on first commercial sales in Europe expected in the second quarter of the year. As Ameet noted, based on our business plan, the milestone payment I mentioned and further productivity initiatives underway, we expect that our cash runway now extend into mid-2025. Turning to the P&L, Zynlonta net sales were $19.8 million in the fourth quarter, up 16.5% versus Q4 2021. While full year net sales more than doubled to $74.9 million with the first full year of sales compared to $34 million in a partial year in 2021. License revenues amounted to $50 million in the fourth quarter, which reflected the milestone from Sobi. For the full year, license revenue of $135 million also included $85 million in app from payments from our partners Sobi, Mitsubishi Tanabe. Cost of product sales amounted to $0.5 million in the fourth quarter and $4.6 million for the full year. In addition to a full year of commercial activity, this expense line reflected impairment charges for products, intermediates, and antibodies that did not meet the company's specifications. Importantly, these specifications issues did not and are not expected to impact our ability to supply commercial products. Our largest expense line, of course, continues to be r and b [ph], where as you heard today, we're committed to invest behind Zynlonta and our promising early stage pipeline programs. R&D expenses was $48.7 million in the fourth quarter and $187.9 million for the full year sales and marketing expenses was $16.2 million in the fourth quarter and $69.1 million for the full year. This reflected a full year professional expenses relating to the commercial line Zynlonta partially offset by lower share-based compensation in the fourth quarter. G&A expense was $15.1 million in the fourth quarter and $72 million for the full year. This reflected higher professional fees and cost associated with the C-suite transition, partially offset by a lower share base compensation in the fourth quarter. Moving to the bottom of the P&L, on an adjusted basis, we reported a net loss of $7.9 million for the fourth quarter, a $0.10 per deleted share. For the full year, our adjusted net loss was $81.7 million or $1.05 per diluted share. Now turning to our guidance. Based on the market dynamics and the growth initiatives which Kristen highlighted, we expected to grow ZYNLONTA net product sales by double-digit percentage points year-over-year. This takes into account significant gross-to-net headwinds compared with 2022. Specifically, we expect a negative gross to net impact of approximately two to three percentage points from our GPO contracting, together with a negative impact of mid-to high single-digit percentage point to reflect the new Medicare Part B wastage policy regarding discarded unit that was implemented at the beginning of 2023. In terms of total operating expenses, we expect a decrease in 2023 and 2024 as compared to 2022, reflecting prioritization and productivity efforts across all expense categories. Finally, moving to the upcoming catalysts. We have a number of different value-driving catalysts over the next 12 to 18 months and well within our cash runway. Starting with ZYNLONTA this year. In addition to double-digit growth, we also expect to achieve a commercial brand profitability, meaning we will more than offset the total cost of commercialization, medical affairs and all related costs so that ZYNLONTA, by the end of the year, starts to pay for the development of new indications and the pipeline. Following European approval of ZYNLONTA, we expect our partners Sobi, launch in the second quarter of this year. In the second half of the year, we expect to initiate the Phase I study of ADCT-701 targeting DLK 1. Next year, we will complete the enrollment of our LOTIS-5 confirmatory study in the second-line setting. We will also share some preliminary results from our LOTIS-9 and LOTIS-7 studies next year. In terms of the pipeline, in the first half of 2024, we expect to share preliminary data from ABCT-901 targeting CAG 1 and ADCT-601, targeting AXL. We also expect to initiate the Phase I study of ADCT-212, targeting PSMA and for our partner, MD Anderson to complete the Phase I dose expansion study for ADCT-602 targeting CD22. So, a number of different milestones across the company, both with ZYNLONTA and our pipeline. And of course, we're continuing to advance our technology platform. With that, I will turn the call back to Ameet for closing remarks. Ameet?

Thank you, Kristen, Mohamed and Pepe. To conclude, we have a clear road map and the capabilities to execute in 2023 and to build ADC therapeutics for years to come. We are uniquely positioned in the growing ADC space with specialist capabilities from discovery through to commercialization and have over a decade of experience. We have a validated technology platform, a rich pipeline of hematological and solid tumor programs and an innovative toolbox to develop next-generation assets with novel antibody constructs and payloads. And last but not least, we have a strengthened and highly talented team in place to execute on our strategies. We look forward to keep updated on our ongoing progress. Now the team will be available for questions. Operator?

[Operator Instructions] Kelly Shi with Jefferies is online with a question. Please go ahead.

Thank you, for taking my question. The first is regarding the OpEx. Can you share more details on the OpEx reduction in 2023? And where do you plan to cut the cost from? And how should we think about magnitude of the planned cost reduction? And I have a follow-up.

Hi, Kelly, thanks for the question. So, we expect to reduce costs compared to 2022 for both years 2023 and 2024. On the R&D line, you should expect a reduction because we are focusing our resources in the most impactful and higher return on investment projects that we have in the pipeline. As you know, we have discontinued several projects that will could see the less attractive. Some of them might end up being potentially partner like coming. And on the SG&A side, we are driving productivity. We have an entire new team that have looked at the company cost structure with fresh eyes. So, we believe there's significant opportunity to reduce costs year-over-year. The second question, I couldn't hear you. Tie on something else.

Thank you. Yes. I also have a question regarding the ADCT-601 program targeting AXL. Do you plan to screen patients with positive AXL expression level for the dose escalation phase for also a sarcoma and non-small cell lung cancer custodies only applied to other tumor indications? And also, what is the rationale for the combo arm with gemcitabine in sarcoma? And also, what information do we have regarding 601 profile at the moment? Thank you.

Thanks for the question. And we do or are planning to collect biopsies for all patients currently enrolled in the study in order for us to possibly test retrospectively for AXL expression. The current protocol right now does not select patients, and the assay is being developed in parallel. As I mentioned, what is ready, we'll be able to test patients for expression. In terms of the combination with gemcitabine and gemcitabine is very active and considered one of the standard of care used in sarcoma. So, it's naturally to combine as an add-on strategy in the combination and see that we can improved standard of care for hopeful future studies, from a regulatory perspective to be able to isolate the effect of the drug. So, what was the third question, sorry?

The safety profile of 601?

The safety profile? We are currently going into the escalation phase of the protocol. And so far, we have not reached the maximum titrated dose.

Thank you, very much.

[Operator Instructions] Our next question comes from Gregory Renza with RBC Capital Markets. Please go ahead.

This is Sudan Loganathan on for Gregory Renza. Thanks for taking my question. Congrats on the great quarter with ZYNLONTA and great year going forward. Specifically, I wanted to ask on how the competitive landscape may potentially change as you go forward with LOTIS-5, LOTIS-7, LOTIS-9 programs, and look for label expansion in the earlier lines of DLBCL therapy? Are there kind of developments occurring kind of tandem at this point that may change how a compare arm has looked at or what standard of care may be that should be a comparator arm for the ZYNLONTA trials? And then are these things developments that could occur in the one year to five-year time frame. And just wanted to get your take on how that's going to play out in the years to come.

Yes. So, I think I'll start and then Mohamed and Kristen can feel free to add on to it. As you said, the DLBCL market is quite dynamic, and there has been a lot of change. I mean, for example, CAR-Ts are moving pretty clearly, particularly the academic institutions from third to second line setting. That's, I would say, in the academic setting, shrinking some of the population that's not either going to get a CAR-T or a transplant. Now of course, in the community, CAR-T is much more limited. And so there still remains quite a sizable nontransplant non-CAR-T population in the second lab population. In terms of the comparator arm, which is R- GemOx, we don't anticipate any change. I mean, that's been discussed obviously with the FDA from a regulatory standpoint. And we feel like we still have the right comparator arm, the right study design to move towards approval on a broader label in that second-line setting. With the front-line setting, there is also a lot of competitive dynamics going on. As you know, 85% of patients can tolerate full dose of R-CHOP. And R-CHOP has very good outcomes. I mean, 60% of patients are going to get cured. So, it really is the standard of care. And when you look at a lot of trials, whether it be with Polivy or the bispecifics, many of them are trying to augment R-CHOP, and to try to deliver even better outcomes for those 85% of patients who can target R-CHOP. But for the 15% of patients who are frail and unfit, these are pacing 80 years and above with or without comorbidities. These patients oftentimes can't tolerate full doses of R-CHOP and are getting mini R-CHOP or other chemotherapy regimens, and their optimism are much more. This is where we're playing right now with ZYNLONTA plus rituximab with our LOTIS-9 study. And in this population, it's a single-arm study. So, it's not really a comparator at this point. If we were to move forward, obviously, the comparator for this is really mini R-CHOP, and that hasn't changed. So, we don't think the competitive landscape is going to alter what our current development plans are. I think the big thing could be the introduction of bispecifics where they have the chance to start to, over time, potentially change the treatment landscape across all lines of therapy. And we think we're actually well positioned to partner with bispecifics. As the only targeted CD19 therapy with single-agent efficacy and manageable side effect profile, and we believe has the potential even to be not overlapping, of course, has to be tested. We are uniquely positioned to combine across different bispecifics, and we're doing that in our LOTIS-7 study as well as in partnership with IGM with our imbodimab compound. So, we think we actually have a chance to combine and actually ride with one of the biggest competitive changes that I think will affect DLBCL over the coming years.

[Operator Instructions] Our next question comes from Matthew Harrison with Morgan Stanley. Please go ahead. [Operator Instructions] Our next question comes from Naureen Quibria with Capital One Securities. Please go ahead.

Congrats on the progress. Thanks for taking my question. So first one, I guess it's very basic. Are you able to comment on ZYNLONTA's market share now in the third line, third line plus DLBCL? And what fraction have you penetrated to date? And how do you see that penetration with respect to, obviously, Polivy moving to the front line?

Yes. I can just say we still believe that there's a lot of potential, but I'm going to let Kristen comment further on some of the details.

Sure. So, I've worked in the DLBCL space for years now, and there really is no good source of data for market share, especially in the later lines. It's just a very dynamic and fragmented space. However, when we look at our research and we use brand impact data. What we're seeing is that we're leading a new patient share in the third-line setting, and we are really encouraged by this and confident in our potential to continue to further penetrate the third line space and become the standard of care here. When you also look at market penetration, one of the things that I shared upfront, was that where we see our greatest opportunity is in the community setting, where only 35% of community sites have tried in Manta. The good news is we know that when they try it, they continue to repeat orders. So that is our greatest opportunity to continue to grow that share in the third-line setting.

Okay. Great. That's helpful. So, two more. I guess the next 1 is probably for Pepe. Are you able to provide a bit more color on the Sobi launch, like which countries might be targeted first? And if you might be able to give any guidance for that trajectory?

We haven't provided net for guidance there, but what we can tell you is that because it's with a single agent and with a single arm, it's -- the market access process is going to take longer to have approvals throughout Europe. So, it's going to be a gradual growth. I'm going to see if Ameet want to add something.

Yes. No, as you know, Naureen, I mean, market access is country by country in Europe, and it could take up to 12 months. And as Pepe said, given that it's approved with a single-arm study, it's going to result in very favorable reimbursement in some countries and more challenging reimbursement in other countries. So, I see the launch in Europe as kind of Phase I with this current study. LOTIS-5, when we have a comparative study will open up the full opportunity in Europe. But if you think more longer term about the European opportunity, I think the volume potential in Europe may be even greater than it is in the U.S. because CAR-T penetration is much less.

Okay. That's very helpful. And if I could just squeeze one more in for Mohamed. With respect to the CAG-1 -- 901, can you talk a bit more about the amendment to the protocol and the different dosing schedules? What's the rationale behind the decision? And given that sort of shift, how many patients should we expect with -- in the upcoming update that will come up? With the dose levels.

Yes. Thank you for the question. Actually, as you know, I came to the company, was it weeks ago with a fresh perspective. And looking at the CAG-1 a novel agent, actually. So, we also have quite an experience with discussion with the agency about Project Optimus, which technically agencies asking exploring multiple doses and schedules. So, we took a decision to post installations and amend the protocol to explore the redosing schedule to maximize the experience for patients with patient utilization to prepare for possible future meeting with the regulators and also to prepare for the most convenient dose ready for the pivotal study. So, as you know also, Project Optimus guide just got published in January 2023, so many companies around the world right now are preparing and adjusting the protocol to accommodate for the requirements -- the new requirements, as I say, for regulators to come to them with multiple doses with a number of patients in each dose in each indication. So, I hope that explains your question.

Yes, it does.

Yes, I think Naureen, that we expect that dose escalation is going to be probably in general, I like their process because you're going to have to dose-escalation expansion, you're going to have to expand at multiple doses.

[Operator Instructions] Our next question comes from Matthew Harrison with Morgan Stanley. Please go ahead.

This is Chris on for Matthew. Thank you for taking my question. I know someone earlier asked about the potential impact of kind of new treatment paradigms entering the market, specifically for bispecifics. Can you help us think about kind of the near-term impact of that entering the market as they penetrate the 3L plus DLBCL market? Thank you.

Sure. So, we expect bispecifics to play a role in the third-line setting upon approval. We do think that uptake in the community will take longer. In general, the community is slower to adopt new therapies. And given the risk of CRS and icam [ph] with bispecifics, we think initial uptake will be limited to the academic centers. When it comes to competing in that space in the academic centers, we've been competing with bispecifics for years now in that setting, given the multiple bispecifics that are being studied in clinical trials.

Okay. Thank you.

I would just add that the penetration of any agent in the third-line setting is still relatively low. So, there's clearly room for bispecifics to penetrate, particularly magnetic sensing, and for, continues to grow in both the academic and the community setting.

Great. Thanks.

[Operator Instructions] Our next question comes from Boris Peaker with Cowen. Please go ahead.

Great. This is Nick on for Boris. Thanks for taking my question. I just have a couple for ZYNLONTA and the LOTIS trials. For the LOTIS-5 trial, I know this is a confirmatory trial from the single arm, but can this be used for an SNDA or regulatory submission for DLBCL in both the U.S. and EU? And then also second, for LOTIS-7, which lines of therapy are you guys looking at? And is that different based on which combination approaches or whatnot? Thank you.

So, regarding LOTIS - 5 you're absolutely correct. It is a regulatory study for both U.S. and next U.S. It is a confirmatory study with a potential also to get and SNDA for the second line-plus setting. Remember, ZYNLONTA is in the third line-plus setting at a single agent. we are maximizing that and getting into the second line-plus agent with a substantial number of patients in that setting, and the plan is to go worldwide with that approval. Both what -- I'm sorry, you want…

Yes. For LOTIS-7.

We're actually have multiple agents in combination, including polatuzumab, glut and mocituzumab. We are trying to be the drug of choice in combination with or bispecific, not to mention also that we have a collaboration with IGM with their bispecific. So pretty much we're combining with all bispecifics to be a backbone, whoever any of them gets approved and become in the landscape, we'd be able to combine with. I hope that's answered your question.

Yes. And in terms of lines of therapy, I mean, I think it will be an earlier amount of therapy. Particularly second line, I think there's an opportunity to really change the landscape. And particularly if the combination works in a way that has a manageable side effect profile and lead to even better outcomes, deeper responses and more durable responses, you can imagine is starting to change and expand the opportunity for targeted therapy combinations in that second-line setting.

Great. Thank you, very much.

[Operator Instructions] Our next question comes from Brian Cheng with JPMorgan. Please go ahead.

Thank you for taking my question. My first question is for Kristen. What was the split of academic versus community used in the last quarter for ZYNLONTA. And as you emphasize that community market's where you see a lot of growth, near term, how long do you think that it will take you to get more traction there? And how do you think about just the changes with bispecific coming in? And I have a follow-up. Thank you.

Okay. So, in terms of the split of academic versus community youth, it's roughly 50-50. We just started to see -- as we said, the penetration in the community is consistently growing. And we've just started to match the use from an academic perspective in terms of volume. Your second question was how long -- to penetrate the community. They are -- what we see is community treaters are generally slower to adopt new therapies for most new oncology launches, it probably takes about four to five years to really start to hit a peak market share. But what we do see for communities is community treaters is that because they're slower to adopt it could take longer in that setting. But we will continue to chip away since we're at about 35%. Our goal is to really match what we're seeing in the academic setting.

And I'd also add, Brian, that there's a long tail. So, there's a lot of fragmentation in the community centers. A lot of community doctors are seeing a patient every few months. But they also tend to be a lot stickier. So behavior changes works both ways. It's takes longer to adopt, but we see is the accounts that are adopting are repeating and sticking with the product. And so -- and we keep growing penetration month-over-month. So, I think as that happens, this is a great opportunity, and that's a place where you had asked about bispecifics, and I'll let Kristen comment further. Bispecifics are going to have a much more challenging time, we believe, in the community initially just given the safety profile. In the academic spending, where we've penetrated about 80% of accounts there's still room for death, we think, even with bispecifics. But I'll let Kristen comment on the bispecific point.

Sure. I don't have much else to add to that, but we just -- we see the safety profile of bispecifics being one where the initial uptake will be in the academic setting. CRS, ICANS those are not adverse events that the community generally accustomed to treating right now. That's why CAR Ts are reserved for the academic setting. So, we feel it will take time. And again, that is where we have our greatest opportunity right now to grow ZYNLONTA.

Great. And then looking at your LOTIS 5 in second line in combo wit rituxan, do you have a sense of when we could see the data from that study? And can you remind us whether there is an interim analysis built into this trial?

Thanks for the question. We expect enrollment of 350 patients to be completed next year. There will not be an interim analysis for the study, it's not built in the protocol. And we'll update when we get closer to the end of the study.

Yes. And obviously, any time lines post the enrollment depends -- it's an event-driven study. So, in some ways, the longer close to peers, but it also depends on events. Once we complete enrollment and the study starts reading out, we'll share information.

Thank you. We have no further questions at this time. I'd now like to turn it back to Ameet for closing remarks.

Well, thank you all for joining so much the webcast, and thanks for all the thoughtful questions. we're really excited about our ability to unlock the value of this company by maximizing ZYNLONTA, by advancing our PBD-based pipeline and by expanding our ADC platform. We have multiple value-driving catalysts over the next 12 to 18 months, and we look forward to continuing to update you on our progress. Thank you so much for joining.

Thank you for your participation in today's conference. This concludes the program. You may now disconnect.