ADC Therapeutics SA Q1 2023 Earnings Call
Okay.
Yeah.
Okay.
Welcome to the a B C Therapeutics first quarter 2023 financial results Conference call.
My name is Antoine Alexander and I will be your operator for today's call.
At this time, all participants are in listen only mode.
Later, we will conduct a Q&A session.
During the Q&A session. If you would like to ask a question. Please press star one one on your Touchtone phone.
I would now like to hand, the call over to Amanda Lockbox.
Investor Relations manager Amanda you may begin.
Thank you operator. This morning, we issued a press release announcing our first quarter 2023 financial results.
Great.
This release is available on ABC.
With your web site at IR that ADC therapeutics Dot com under the Petrobras detection.
On today's call are neat Malik Chief Executive Officer.
I think the Chief commercial Officer, Mohamed Zaki, Chief Medical Officer.
<unk> <unk> Chief Financial Officer will discuss recent business highlights and review our first quarter 2023 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 provision 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 the impact of our updated strategic path forward, including our commercial field strategy portfolio prioritization and capital allocation and restructuring plan, our ability to achieve our guidance for 2020 threes and lots of revenue.
And operating expenses.
Well as our future cash requirement projection future revenue growth prescription volume product launches and market share for our products either alone or there are 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 product.
SBA and foreign regulatory authorities actions and potential regulatory approval for our products either alone or in combination with our strategic partner products.
Future strategic partnerships and business development efforts and our ability to repay our outstanding debt obligation.
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 and the accompanying slide presentation on slide two and in the company's filings with the SEC on form 20-F and is updated in Adp's recent periodic filings on form 6K.
<unk> 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.
Company cautions investors not to place undue reliance on these forward looking statements.
Today's presentation also includes non <unk> financial measures.
Non I FRS 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 IRS you should refer to the information contained in the company's first quarter earnings release for definitional information and reconciliations of historical.
Non <unk> measures to the comparable <unk> financial measure. It is now my pleasure to pass the call over to our CEO Alex Amit.
Thanks, Amanda and thank you all for joining US we will provide you with details regarding our progress during the first quarter, but I want to spend most of my time today, focusing on some important changes to our corporate and capital allocation strategy.
These changes follow a comprehensive assessment of the business by the executive team and take into account our current status.
The evolving <unk> treatment landscape.
And the reality of the current capital markets environment.
By successfully executing our updated strategy, we believe we can optimize our operations and maximize value for all of our stakeholders.
There are three main components to our updated strategy.
One we are implementing a new go to market model to help drive growth in both academic and community centers.
Two we are prioritizing our pipeline our nearer term clinical programs.
Which we believe have the greatest potential to drive value over the next 12 to 15 months.
And three we are increasing efficiencies across the organization to reduce operating expenses.
Now I'd like to expand on each of these three elements starting with the commercial organization supporting some mantra, which delivered net sales of $19 million in the first quarter up 15% year over year, and a slight decline versus prior quarter.
We remain confident in the uniquely differentiated product profile as a marker, but we know that we can do better communicating this to physicians, particularly those in the community setting.
Since Kristin joined as Chief Commercial Officer last November she would have the opportunity to carefully assess the existing go to market model from every angle to figure out areas of improvement as a result, we have decided to change our model to better align with how prescribers make treatment decisions and how healthcare is delivered locally.
We know that in local geographies academic centers are expanding into the community.
The centers are consolidating and the influence across the two is growing.
Our new model is in line local teams with the right skills to address these shifts in the marketplace.
I worked with Kristen for over a decade and I've seen her successfully lead her teams to maximize the value of product launches.
I'm confident in her ability along with the commercial team to take on this new phase of growth for us or not.
Turning to the pipeline, we have decided to focus our resources on our more advanced programs, which we believe have the highest potential to drive value in a reasonable timeframe.
These include doesn't launch of lifecycle management program as well as our clinical programs targeting actual <unk> and CD 22.
We are encouraged by the progress of these programs to date and after a thorough review of the protocol and plans of action.
We have agreed with Muhammad to increase investments to either expand <unk> accelerate the pace of patient enrollment for these programs.
At this time as part of our prioritization exercise, we are halting investments and our preclinical programs targeting <unk> and BLK one Mohammed will elaborate on this a little later.
Finally, after a comprehensive business assessment conducted by the executive team, we are streamlining the organization and optimizing efficiencies.
As Ted will discuss later the cost reductions derived primarily from the prioritization of our R&D activities at.
A 17% reduction in the workforce.
Greater operating efficiencies across the company.
With these savings we are redeploying capital to fund the prioritized programs taken.
Taken together the key elements of our updated corporate strategy will better position us to maximize the tremendous commercial and patient opportunity with <unk> and to progress our most advanced pipeline programs.
All while being fully funded through mid 2025.
With that I'd like to turn the call over to Christian for a commercial update Chris.
Kristen Thanks.
It is my pleasure to share an update on <unk>, including our plans to reorganize the commercial field team to optimize the opportunity we have with this differentiated therapy.
As you've already heard first quarter net sales have been lines over 19 million, a 15% increase year over year and a slight decline versus Q4 2022, which includes the gross to net headwinds.
While we are encouraged to see increased awareness and trial, there's much more we can do to embed <unk> into prescribing patterns, particularly in the community.
Establishing leadership in the third line and third line plus setting as a <unk>.
Single agent, we believe we will be well positioned for growth and potential combinations and in earlier lines of therapy.
Consequently, I wanted to spend my time today sharing our assessment of the evolving market dynamics and how we are adapting by implementing a new go to market model to optimize performance.
Okay.
I have spent the last few months analyzing the <unk> market and in particular, the interplay between the thought leading academic setting and the community setting.
What is clear is that <unk> unique product profile.
Distinguished from other products used in the third line third line plus the LPC offsetting.
Furthermore, the profile is even more attractive for community treaters Gibbons in lines that strong single agent activity manageable safety profile and ease of administration.
The relapse refractory <unk> market is highly fragmented with no standard of care in the third line third line plus setting and a large portion of patients still receive systemic chemo based therapy.
We believe these dynamics present, a tremendous opportunity to gain breadth and depth in the market.
Let me now explain the market dynamics from a competitive and treatment setting perspective.
On the competitive front, we are fully aware that the <unk> market is a fast moving space with new treatment paradigm.
Prove or near approval.
In terms of emerging treatments.
<unk> was just approved for the frontline setting and we are anticipating the approval of bi specifics within the coming months.
This represents an opportunity as much as a challenge for us.
For example, <unk>.
Many physicians will not retreat with Pahlavi after they use it in the frontline setting.
Which potentially opens up more opportunity for us in landfill.
And while the anticipated approval of bi specifics will increase competition.
We believe that based on feedback from certain experts they used by specifics maybe limited primarily to academic centers that are best equipped to provide this treatment.
In the long run we believe that the entrance in bi specifics.
It's also an opportunity for us in Monza.
The potential of these two powerful single agents in combination could provide a benefit to a large patient population with unmet medical needs.
As Mohammed will explain the combination of <unk> with bi specifics being studied in Lotus Devon and other studies has the potential to transform the treatment paradigm.
Now, let's move on to the shifting treatment dynamics that we must address in order to optimize the Atlanta adoption and uptake today.
One <unk>.
Academic centers continue expanding into the community through acquisition and partnerships.
Soon the community practices are consolidating in a more centralized in decision making.
Three the interplay between the two settings is stronger than ever.
Particularly in the later lines of <unk>.
In some cases community physicians refer to academic physicians for complex therapies, such as car T.
And in the majority of cases, where they don't refer their patients the community physicians will often consult with a local expert.
These market dynamics require tighter coordination across local teams to leverage advocacy and ultimately drive depth of prescribing.
Given the combination of these competitive trends and the evolving treatment setting dynamics in the <unk> market I would like to discuss how we can best capture the Atlanta opportunity to transforming our go to market model.
By evolving our commercial model, we believe we will more effectively target and manage key accounts and we will unless key thought leaders as advocates in both academic and community centers.
Key changes in our new field model include the following.
One we have defined the territories that naturally work together between the academic and community centers.
Two we are implementing a structure in which the entire field force has the customer facing role.
Three we are realigning the field force to smaller local teams based around two key roles and account manager with experience in navigating complex institutions.
And hematology specialists focused on community centers.
Now let me give you an example of how this will work in practice.
Florida is a critically important region with a mix of top tier institutions, such as Moffett University of Miami, and Florida cancer specialist.
As well as their satellite offices and surrounding community practices.
Until now we had three hematology sales specialists splitting the state equally but no clear account ownership and suboptimal coordination across different sites of care.
Under the new model, we will have one account manager who acts as the lead for these institutions and two hematology sales specialists, who will leverage the relationship with the main treatment center to pull throughs and Linda and the satellite offices in surrounding community sites.
All three work together as one local team with shared objectives.
This reorganization is to.
Designed to increase the effectiveness of the commercial team matching the right people with the right roles and improve overall execution. So that we optimize the curve of adoption and uptake for this important medicine.
We plan for overall customer facing head count to be relatively stable as we implement the new structure and we will continue to cover over 90% of the potential market the.
The change was announced internally mid April and will be finalized by the end of May.
Once the reorganization is complete we will have a results oriented empowered and fully accountable organization that is better aligned with the intricacies of their local market.
The team will be focused on the top accounts in each geography, while driving influence and pull through to the community.
You have heard us describe the commercial opportunity in the third line third line plus setting of <unk> is around 20% of an ultimate $500 million to $1 billion opportunity for us in landfill.
I'm confident that we will deliver with this new model, while laying the foundation prison, Linda as the combination agent of choice.
Now I'll turn the call over to Mohammed.
Thank you Kristen.
It is my pleasure to share an update on the Firefly as amused mention.
We have conducted a deep dive on all parts of the business.
And as part of our update of the strategy, we have decided to.
Further prioritize our R&D pipeline.
Our intention is to focus our efforts and resources on our more advanced programs, which have the highest potential to drive value.
We will be continuing with the lifecycle management and long term, including Lucas five seven and nine.
And with the clinical development of <unk> hundred one targeting <unk> nine one.
One six or to see if we need to.
Bill.
Our prioritization efforts.
Halting investments in our preclinical programs <unk>.
<unk> two targeting PSM.
701 targeting <unk>.
There's other things that have loans that lifecycle management program.
All of the studies remain on track.
Each is designed to address unmet.
The unmet needs that demand in all lines of therapy in <unk>, despite new and emerging treatment options.
A closer look at the lifecycle program.
We continue to expect enrollment completion of our ongoing phase III confirmatory <unk> study next year.
This trial examine.
The combination of them onto Andrew talks about in second line plus the bcl patients not eligible for transplant and has produced early encouraging data.
The safety lead in data was released at Soho Dwayne sees with you soon.
We continue to make good progress on the fees to notify the study and unsafe or for Ed patients.
This open label studies also utilizes a combination of the longer a reduction in frontline therapy.
With significant unmet needs among unfit or for any patients not able to tolerate full doses of R. Chop.
Our previous guidance.
Has been that we would release initial data on this program in the first half of 2024.
I am pleased to report that we have seen an acceleration in patient enrollment for this trial.
Consequently, we are now expecting to share initial data by the end of this year.
Beyond the Rituximab combination.
We are exploring several novel combinations and expect to have early next year.
We are particularly excited about the possibility of combining the Atlanta with bi specifics given the distinct mechanism of action and non overlapping toxicity profiles.
700, <unk> if any recent combine issue was rush's class CTO Mark Wilson, just a map.
We also have a collaboration with ICM to combine with spy specific important marker.
Turning to the rest of the pipeline beyond <unk>.
Starting with <unk> <unk>, one targeting <unk>.
This is that it is a part of it which has been shown to be well suited for an ADC approach.
We have made the decision to initially focus the phase one study of 601 explore single agent activity rather than completion activity.
We are implementing an amendment to focus the current monotherapy arm one patient with sarcoma.
And adding second monotherapy are focused solely on patients with non small cell lung cancer.
In parallel.
In CSA for possible biomarker approaches being finalized.
Initial data from the phase one trial is expected in the first half of 'twenty one before.
Turning to <unk> nine or one targeting tag one.
This is a novel first in class Asia, the targets various solid tumors.
As previously announced we are finalizing the protocol amendment explore different dosing schedules scopes that miles the potential clinical outcomes for patients.
So far there have been no dose limiting toxicities and.
And we have not yet reached the maximum tolerated dose.
Once I agreed with real authority. It usually soon we will advance to the next dosing level.
We are also completing validation of the ICSC we.
We expect to share initial data in the first half of 2024.
Now I would like to discuss <unk>, six or <unk> targeting <unk> in patients with relapsed or refractory.
Our program in collaboration with MD Anderson.
Considering the encouraging initial data shared at ash, showing <unk> negative complete responses.
And how are you going to frankly population.
The plan is to continue expanding the current dosing level as well as to dose escalate.
In addition, new sites will be added to the study to enhance enrollment and we expect additional data from phase one study to be shared in the first half of 2024.
Lastly, let me say few words on our research approach.
Clearly, we have a long history and tremendous scientific expertise in the ADC space.
While our early success was built exclusively on PPD Diamond technology.
We will be focusing our efforts going forward on next generation <unk> Technology, Inc.
Including new antibody construct and payloads.
I look forward to providing further updates on the progress of our pipeline over.
The coming months with that I will turn the call over to <unk>, who will give a financial update.
Thank you Mohammad.
Before I review of the financials for the first quarter.
I want to elaborate on our efforts to increase operating efficiencies.
During my first few months in coordination with Empire Excitative team and key leaders of the company, we have carefully evaluated the capital allocation strategy, including every line item of the income statements on operational process to assess where we have the greatest potential to create value.
Streamline operations and reduce operating expenses.
We have conducted this exercise to find the most critical areas in which we can create value through a holistic approach to unlock the potential of the company.
The result is that we have identified a number of key areas, where we will drive incremental efficiencies.
This include external expenditures for example on vendor procurement consultancy as well as internal expenditures, notably on the earlier stage pipeline assets that Mohammed highlight.
There will also be an approximate 17% workforce reduction across the company.
Clearly fulltime employees and full time contractors as we focus our resources on the key value drivers for the company.
As Christian noted overall head count in the customer facing footprint behind in loans that will remain relatively stable as we seek to optimize this tremendous opportunity.
Turning now to the financials for the quarter, starting with our balance sheet as of March 31.
Cash and cash equivalents of $310 $5 million.
Representing a $15 $9 million reduction from our position at the end of 2022.
As a reminder, we expect to receive a $75 million milestone in the second quarter from healthcare royalty partners on the first commercial sales of <unk> in Europe , our partner Sony.
Including these payments and thinking okay.
Our updated business plan.
Including the increased cost efficiency I, just highlighted we expect our cash runway will extend to meet 2025.
We are increasing investments in our near term catalyst most of which are open label and anticipate having data to share with the market and the scientific community over the next 12 to 15 months.
Moving to the P&L.
Already shared the Lumpiness sales were $19 million in the first quarter.
15% versus Q1 2022.
Moving down the P&L, our combined operating expenses on a non <unk>.
Basis, which excludes stock based compensation were down 14% year on year.
This mainly reflected reduced R&D expenditures due to the discontinuation of a number of clinical studies during 2022 and already realized operating efficiencies.
Commercial expenses for them long term, we're broadly maintained year over year.
Moving to the bottom of the P&L on a non adjusted basis, we reported a net loss of $42 $5 million for the first quarter or <unk> 53 per basic and diluted share.
Turning to our full year guidance, we're reiterating what we previously announced in February we continue to expect <unk> net product sales to grow by a double digit percentage year over year.
In terms of total operating expenses, we expect a decrease in 2023 and 2024 as compared to 2022.
Finally, I would like to share the important value driving milestones over the next 12 to 15 months.
Starting with really long term in addition to delivering double digit growth. This year, we expect to achieve commercial brand profitability.
This means that by the end of 2023 been lumpy will start to pay in park for the development of new indications and the pipeline.
Outside the U S. We expect our European partner to launch and launched in the coming quarter.
By the end of the year, we expect to share initial results from the lot of nine study.
Pete and frail <unk> patients.
In 2024, we expect to complete enrollment of our modest five confirmatory study in the second line setting.
And we also expect to share some initial results from our lot of seven study.
In terms of the pipeline in the first half of 'twenty 'twenty four we expect to share initial data from AVP 901 targeting tack one on <unk> 601 targeting Isa.
We also expect additional data from the phase one study for <unk> 602 targeting CD 22 in the first half of 2024.
So a number of important milestones both for Zimmer <unk> on our pipeline.
With that I will turn the call back to Amit for closing remarks Amit.
Thank you Kristen Muhammad pathway.
To conclude we believe that we have a clear roadmap and the capabilities to execute on our new strategy to help create future value for all of our stakeholders.
We are excited about the numerous opportunities, which lie ahead and look forward to keeping you updated on our ongoing progress.
Now the team will be available for questions operator.
Thank you.
At this time, we will conduct a Q&A session. As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one again, please standby, while we compile the Q&A roster.
Yeah.
Okay.
Our first question comes from Gregory Renzo from RBC capital markets. Please go ahead.
Great Good morning, Jamie and team thank.
Thank you for taking my questions.
Maybe just a couple for me just first it's helpful to hear your views on the competitive landscape in bi specifics I'm just curious on the car T front.
You see car T in earlier lines and packing impacting the market opportunity for <unk> launch.
And maybe more specifically what is the ability to use and long term as a bridging therapy without impacting the.
Efficacy of car T and <unk>.
I'll just get in my second question as well just on the updated corporate strategy. Just have you contemplated the reductions and optimization I'm curious what range of scenarios did you and the team consider just in order to arrive at what is that current level.
Of impact with the changes thanks, so much.
Alright, well thanks, Craig Thanks for all the questions I'm going to start by turning to Kristen could you just talk about the competitive landscape you asked both about.
The impact of Biospecifics, but also in terms of car T. Moving to earlier lines. So to address that first and then I'm going to turn it to Mohammad next to talk about the market potential for hedging therapy sure. Thanks. Thanks Sami Thanks Gregory.
So when we when we look at the <unk> market is highly fragmented and quickly evolving that's for sure.
We believe that the Atlanta is well positioned in the third line setting as we see the evolving landscape shake out. So for instance, with car T. We definitely see increasing utilization in the second learning and this really opens up opportunity more opportunity for us in the third line therapy.
Plus setting as you know 60% of car T patients will relapse.
And about 25% of community patients actually.
Get get to car T, whether it's because of that complexity toxicity or lack of access.
So again as car T moved up it definitely opens up an opportunity for the Atlanta.
Your question about bi specifics.
We anticipate they provoked by specifics in the next month.
And overtime, we expect bi specifics will have access in earlier lines.
However, initially we do see their used really in the academic centers, where they're best equipped.
To manage these agents.
When we think about the competitive landscape, we've actually been competing against by specific because they've been studied in so many clinical trials that we already we already feel the competition does that makes sense.
At the same time over the long run because of our Lotus seven study and other studies that we have we.
We do see an opportunity potentially for us in line to be combined with the bi specifics.
And this is a great opportunity for us given the differentiated mechanisms and non overlapping toxicity.
So I will turn it to Mohammed the second one.
Yes.
Great. Thanks, so much for your question.
Currency actually assessing.
Use of.
The possibility of using us in the long term as a bridging therapy for car T.
And this is an issue of the study that addressing that with side both in the U S. Europe .
Now what do we have now in terms of information.
What we know that there is.
<unk> patients and the Lotus too.
After receiving the long that went on.
It received car T therapy.
The median time between them long term.
Dosing and using car T was about 120 days at around four months.
The efficacy of car T. In these patients was.
Overall response of 50% and complete response of 43% most.
Most importantly, all.
Of those patients.
<unk> was created in the <unk> and Tim Altus tonnage was positive for Seabee.
19.
It's also worth saying that the IAC I mentioned or just gives us as I mentioned, we'll be testing for all patient post the four season at IAC and before we go to our team.
Thank you Mohammad and then Greg to your question around the different scenarios adjusted book.
Some possibilities.
Starting with the mantra, we think it has tremendous opportunity.
Having said, we're right now playing in the smallest part of where we're going to aggressively in the market because we're in the third line third line setting there is no clear standard of care here the market's evolving quickly, but we think we can position ourselves to become a standard of care.
Get to our peak sales estimate in that indication of water.
Now longer term, we think the bigger opportunity. There is first move into earlier lines of therapy first whether we're talking about combinations.
And then eventually potentially with the boxes of the combination. So I think there's a lot of essentials. So that was clearly a guard its already an approved product. So even combination data and we think it's more de risked.
Let's say a new asset secondly, we focused on was.
Our three phase one clinical programs, we have strong belief in all three of them.
And we're going to see data readouts within the next 12 to 15 months on all three of the programs and so we wanted to play the best out of course, we're going to be data driven in terms of how we invest moving forward with any of those programs.
We wanted to play those out and then we knew we needed to prioritize further on some of the earlier work to make sure that we maintain a cash runway into the middle of 2025.
And so that's how we derived our prioritization, we feel like we have a lot of shots on goal and I was involved with our three phase one assets.
All while maintaining a strong cash runway, but still more than two years out.
Thanks for your questions Greg.
Thanks, guys I appreciate all the color.
Thank you.
One moment for our next question.
Okay.
Our next question comes from Jeff Hung from Morgan Stanley . Please go ahead.
Thanks for taking my questions.
With the new go to market model in place by the end of May how long do you think that it will take before you start to see the full impact of the updated commercial strategy and then I guess, besides actual sales what kinds of metrics might you be looking at to gauge that progress over time.
A follow up.
Okay, great. Yeah. Thanks for the question I'm going to turn to Christian to talk about that.
Sure. So we were really thoughtful in our approach with this change and we wanted to handle this as quickly as we possibly could to minimize disruption to the changes announced them in April .
That'll be completed by the end of this month and with the restructured sales force I'm confident that we'll start seeing the benefits of this new model in the second half of this year.
When you ask about how we'll measure success the true measure of success for US is the net sales and again, we anticipate seeing the benefits from this in the second half of this year.
Great. Thanks, and then just for the 17% risk can you talk about where these are coming from is it a mix of your field force in R&D or we're more focused from a particular part of the organization.
Okay.
Yes, so I'll now turn to <unk> to talk about the 17% reduction.
Yes, thanks for the question Jeff.
Just for clarity the footprint the commercial footprint is stable so we're not impacting our.
Customer facing.
Workforce.
The reduction is mostly attributed to the portfolio prioritization. So you will see that.
We have impacts in clinical.
In CMC type of efforts on in G&A, So its back office support.
That's where the.
Workforces taking place.
Okay. Thank you.
Thanks, Jeff.
Okay.
Okay.
Okay.
Operator are there any other questions.
Our next question comes from Kelly <unk> from Jefferies.
Please go ahead.
Hi, This is Shawn on the call for Kelly, Thanks for taking our questions.
Regarding your first line study Lotus <unk> excited to see now the initial data is expected by year end.
So we're just wondering will the initial data be sufficient to support a potential label expansion.
The next steps thank you.
Yes, im going to Turkey Muhammad answer that question.
As a reminder, Lucas lines, an open label study expected to enroll 40 patients vertical for a total of 80 patients in frontline.
Patient population.
It is by design not adding it up.
In Abilene study however, it will guide us for any possible future regulatory pathways.
We will we are very excited to say that we will be sharing data by the end of this year instead.
Mid next year or somewhere next year. The data we'll be sharing later this year would be meaningful that is in the medical community and the the overall.
Community.
It is also pleased to see that the enrollment has been accelerated mainly because of the physicians and kols orientations to study here.
Yeah.
Thanks Robert.
Yes, so just a quick just just to add on Sean it won't be complete by the end of this year, but will have meaningful data to share by the end of this year and then the fourth study would.
Fleet readout next year.
Okay. Thanks for the color.
Yes.
Thank you.
For our next question.
Okay.
Okay.
Our next question comes from <unk> <unk>.
From.
Capital One securities. Please go ahead.
Hi, good morning, Thanks for taking the question.
Just two from me.
Regards to the entries of the bi specifics near term do you think the shift in the landscape that might affect for instance, recruitment in your loaded seven trial.
Do you think it'll impact that trial in any way.
With regards to the patient type you know getting later latter patients or something.
Yes, yes.
Norrie Thanks for the question.
I don't think so I think there is excitement around bi specifics I think.
I think there is excitement about the combination I can say.
We see now <unk> had approved the Biospecifics and Jim <unk> will be the two most potent single agent therapies approved on the market outside of car T and <unk>.
I think everyone is looking at earlier lines as our possibility to move away from systemic chemo free regimen and to move from.
Therapies that require really complex that upside car T. In the academic centers, it's not really available in the community. So there really is a need for more potent combination.
We've seen a lot of interest I would say in low to seven and we think there's a lot of excitement amongst the medical community around this possibility of the combination.
Great. That's helpful. And then with regards to 602 N. A L. L. I mean, that's currently an investigator sponsored trial so.
Is there anything that will sort of trigger from your point of view.
What will it take for you to launch a company sponsored trials.
Sure.
Yes, so thanks for the question.
We want to continue to see data I mean, we would agree with MD Anderson to expand the sites we're going to.
MD Anderson Citicorp's already in it as well and where we're going to be adding some more sites to there.
Yes.
Within this we want to see continue to see more data both of the current dosing cohort as well as expanding to higher dosing tours as well and then based on some additional data we will decide if we.
Previous analysis to try to do a company sponsored.
Study.
But we're moving forward I would say no.
With.
More intensity in terms of more sites and faster enrollment on that study as well.
Okay, great. Thank you.
Thank you.
One moment for our next question.
Our next question comes from Boris <unk> from PB Cowen. Please go ahead.
Hi, Good morning, I guess is the foundation for <unk>. Thank you for taking my questions. So based on your carton sales and you are new implemented model.
What market share do you think the long term penetrated.
Okay.
So I'll answer this question and then I'll make sure some feel free to US yes, we don't disclose market share what I can say is in the whole third line setting. There is no dominant player. There is not a player that has 20% more share of the market I mean, it's a very fragmented segment of the population that we think there is still.
All clear opportunities for the product to grow so.
As you probably saw we've reiterated our guidance for the year of double digit growth, but also.
We are reiterating that we think the peak sales potential in this indication is somewhere between $100 million to $200 million.
I don't have much to add to that just reinforcing the fragmented market and we truly see an opportunity to embed the Atlanta as the standard of care in the third line third line plus setting.
Thank you for that color and then just a follow up question. What is the additional addressable market size is the Lotus five seven or nine if theyre successful.
You gave a little color on that.
Yes, so I would say if you look at it.
Lotus five it should roughly double the opportunity that we have.
In our current indication when you look at the second line population.
A good amount that's not either getting car.
Car T. Our transplant I mean, almost all patients aren't getting either one when you look at how low the penetration of car T has been granted so that at least double the opportunity Lotus nine could again be similar size opportunity to our current indication that modified in a court loaded <unk> could be the biggest opportunity.
It works you can start potentially transforming earlier lines of therapy and even <unk>.
Essentially again weird to see data potentially even competing with some of our carrier type products. If the data looks good. So that's obviously the largest potential opportunity. That's what adds up to our peak sales estimate of if they all work of getting to profitability of the $1 billion in detail.
But thank you very much if I could I'm going to ask this question for the discontinued preclinical P SMA targeting ADC could.
Could you give a little color did you just continue just due to the fundamental technical reason or some cost optimization here.
Yes, that's a great question and I appreciate that this is purely a capital allocation decision.
When you want to make sure that we're focusing on expertise that can unlock shareholder value in the near term and so that's why we're focusing our resources on really maximizing the Atlanta.
As well as <unk>.
Maximizing the potential of our near term pipeline all of which are going to have data readouts in the next 12 to 15 months.
Great program. So this is purely.
Capital allocation decision when I look at the scientific rationale and I look at the preclinical data for 701 and two are too.
Very strong so if we are in a difficult capital markets environment right. Now we would continue to fund both of them, but we know we need to make tough choices right now in this market and we're prioritizing.
Our clinical depth that we think have the highest chance of success as well as the better the nearest term.
Got it thank you very much.
Thank you.
As a reminder, if you would like to ask a question. Please press star one on your telephone.
Our next question.
Our next question comes from Brian Chin from JP Morgan. Please go ahead.
Hey, Tim Thanks for taking my question this morning.
First question is on salons or sale.
Wondering if you can provide a bit more color on the sales trajectory this quarter that you've seen.
Given that you have you talked about the gross to net and also the Medicare Discarnate Chuck policy impacts.
Do you see in the baseline growth.
Other words if you.
The fact that there is these policy and pack in place.
How much quarter to quarter of growth in terms of ious and a cat prescriber account that you are seeing and I have one follow up thank you.
Hello.
Let me, let me start with that so.
Zim.
As we have guided before.
Gross to net impact this year compared to last year because.
Yes.
Wasted flawlessly for Mega Puppy.
The contracting of GPO so both.
And in fact, we have guided that the GPO impact us between two to three points over 2022, Medicare part B wasted policy is in the mid single to high single digits.
<unk> already started impacting in Q1 quarter over quarter.
Volume was slightly down.
And the mix of the two elements.
Is taken that revenue to be slightly down versus Q4 of 2020.
Okay.
Okay.
Yes go ahead.
Yeah, and maybe one for.
Crystal Kristen.
Are these local teams in your new go to market plan already familiar with the doctors that are in these new carved out regions.
And if you can elaborate on that point that would be great and then how long do you think we will attempt to see an inflection point in adoption in this new go to four <unk>.
Market strategy and see more of this local network in fact that you mentioned thank you.
Yes. Thanks for that question. So these local teams the one what we see when we when we took a step back and looked at that and we've got the changing market dynamics.
And.
We also know that we've got a differentiated product and we know our field force is right sized and when we look at that and then look at the observation we see across the nation in terms of performance. There is variations by geography, right. Then we have our top performing.
Graffiti, they're already adopting some core elements of this model right. So like you said where they have.
They have worked with these local networks in influenza and leverage them for the community and in those satellite offices. So what we need to do now is really formalize. This model a press across the nation you asked about familiarity with the physicians.
Of course, all of our folks who are who are in the market that that's what they work to do it.
Really work with these top thought leaders.
And their customers in terms of delivering the clinical education around <unk>.
What we want to do with this model is how that tighter coordination between the academic and the community setting and these local teams will enable that coordination you asked about the inflection point, we are confident that we will deliver with this model and start to see the benefit in the second half of this year.
Thank you.
Thank you.
I am showing no further questions I will now hand, the call back over to Amit for closing remarks.
Well. Thank you all so much for joining really appreciate all the thoughtful questions and look forward to engaging in keeping you updated.
In the future months. Thank you all so much.
Thank you for your participation in today's conference. This does.
This does conclude the program you may now disconnect. Thank you.
Okay.
[music].
Okay.