Hello, and welcome to the ADC Therapeutics Second Quarter 2023 Financial Results Conference Call. My name is Corey, and I'll be your operator for today's call. [Operator Instructions] Please be advised that today's conference call is being recorded.

I would now like to turn the call over to Eugenia Litz, Vice President of Investor Relations and Corporate Communications. You may begin..

Thank you, operator. This morning, we issued a press release announcing our second quarter 2023 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 Herrington-Smith, Chief Commercial Officer; Mohamed Zaki, Chief Medical Officer; and Pepe Carmona, Chief Financial Officer, will discuss recent business highlights and review our second 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 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, the impact of our updated strategic plan forward, including our commercial field strategy, portfolio prioritization and capital allocation and restructuring plan, our ability to achieve our guidance for 2023 ZYNLONTA revenue and operating expenses, as well as our future cash requirement projections, future revenue growth, market acceptance, competition and volume growth for our products, 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 for 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, our ability to repay our outstanding debt obligations and future access to capital.

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 and the accompanying slide presentation on Slide 2 and in the company's filings with the SEC on Form 20-F and as 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 the 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 measures and should be considered in addition to and not in isolation or as a substitute for the information prepared in accordance with IFRS.

You should refer to the information contained in the company's second quarter 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 our CEO, Ameet Mallik.

Ameet?.

Thanks, Eugenia, and thank you all for joining us. It's my pleasure to provide an update on our progress during the second quarter. Starting with ZYNLONTA, we delivered net sales of $19.2 million, up 11% year-over-year. The growth was slightly offset by higher gross to net, including the new Medicare discarded drug policy and GPO contracting.

Compared with the prior quarter, dollar sales were up slightly and volume grew by just over 3%. Importantly, during Q2, we implemented our new commercial go-to-market model to better align with local healthcare ecosystems and the evolving treatment dynamics.

We completed the staffing of the organization by the end of June, and we expect to see a progressive benefit from these changes in the coming months and to exit 2023 with a healthy run rate. As for geographic expansion, our partner, Sobi, completed the first European commercial sales of ZYNLONTA with the launch in Germany.

This sale triggered a $75 million milestone payment under our purchase and sale financing agreement with HealthCare Royalty Partners. In China, NMPA accepted the BLA submission for ZYNLONTA and granted priority review. Finally, in Japan, our partner, Mitsubishi Tanabe initiated the Phase 1/2 bridging study.

Turning to our clinical development program for ZYNLONTA. We proactively took the tough decision to discontinue the Phase 2 LOTIS-9 clinical trial as we did not see a clear regulatory path forward. This is an example of our data-driven approach to clinical development decisions and our disciplined capital allocation strategy.

We are nevertheless disappointed that we are unable to offer these patients a potential new option. Separately, our ongoing Phase 3 LOTIS-5 confirmatory trial of ZYNLONTA and Loncastuximab in second-line, second-line plus and our Phase 2 LOTIS-7 clinical trial of ZYNLONTA in combination with bispecifics continue to progress as planned.

As a reminder, both of these trials include very different patient populations from LOTIS-9. Turning to the remainder of our pipeline, we enhanced investments in our focused portfolio during the quarter, taking the opportunity to accelerate and expand our prioritized development programs.

As a result, we look forward to several potential value-creating data readouts in the next 12 months. In particular, we expect to share initial Phase 1 data from ADCT-601 targeting AXL and from ADCT-901 targeting KAAG1. We also expect to share additional Phase 1 data from ADCT-602 targeting CD22.

To summarize the quarter, overall, I am pleased with how we executed on the new corporate and capital allocation strategy we announced three months ago.

Our new commercial model is now ramping up, our pipeline has potential meaningful catalysts over the next 12 months, and our expected cash runway continues to provide us with the ability to execute on our business plan.

I remain confident that we are on a path to unlock the tremendous value to my executive team and I see in the coming months and years. With that, I'd like to turn the call over to Kristen for a commercial update.

Kristen?.

one, an account manager with experience in navigating complex institutions; and two, hematology specialists focused on the community centers.

As the landscape evolves, we continue to believe that ZYNLONTA has a clear long-term role to play in the treatment of third-line, third-line-plus DLBCL, which I remind you is a highly fragmented market with no standard of care. Community physicians have been slow to adopt newer therapy and continue to use older rituximab-based regimens.

With respect to the recent launch of bispecifics, there is clearly some excitement about use in monotherapy, particularly in the academic setting.

HCPs are working to determine the appropriate patients for these products, given their efficacy, but also their unique safety profile with potential CRS and ICANS and the recommendation for inpatient administration.

The team is focused on ensuring thought leader advocacy and reinforcing the unique clinical attributes of ZYNLONTA to help drive long-term growth.

We believe ZYNLONTA is ideally suited across different treatment settings, particularly the community given its durable efficacy, short time to response, manageable safety profile with no CRS and simple dosing without REMS or inpatient day recommendation.

In fact, recent data from EHA and ICML reinforced the durable efficacy of ZYNLONTA in a heavily pretreated patient population. Specifically, we reported at the two-year follow-up, the median duration of response was not yet reached for patients who achieved a complete response.

As we deliver improved execution with our new commercial model, we believe we are poised for growth and our longer-term opportunity remains unchanged. We expect ZYNLONTA to exit 2023 with a strong run rate, setting us up for success in the years ahead. With that, I'll turn the call over to Mohamed..

Thank you, Kristen. It is my pleasure to share an update on the pipeline. Over the last quarter, through the prioritization of our R&D pipeline, we have been able to focus our efforts and resources on our more advanced programs, which we believe have the highest potential to drive value.

First, as Ameet mentioned, we made the decision to discontinue the LOTIS-9 study. While this is a disappointing to all of us at the company and in the treatment community, I strongly believe it was the right thing to do.

It is important to note that the treatment emergent adverse events seen in LOTIS-9 have not been seen in other studies with the [launch] (ph) to date, including monotherapy trials, LOTIS 1 and 2. In addition, the LOTIS-5 IDMC reviewed unblinded data and noted at a regularly scheduled meeting in late July that the study should proceed as planned.

We also recognize that the LOTIS-9 and LOTIS-5 trials target very different patient populations. We continue to expect completion of enrollment in LOTIS-5 next year. As a reminder, this trial examines the combination of ZYNLONTA and rituximab in second-line plus DLBCL patients not eligible for transplant and has produced early encouraging data.

The safety lead-in data was released at SOHO 2022, and we expect to provide an update at a medical meeting in the second half of the year. Moving to LOTIS-7. This is our study to explore novel combinations of ZYNLONTA with Roche's biospecifics glofitamab and mosunetuzumab in relapsed or refractory non-Hodgkin lymphoma.

Here, we see the potential for significant patient benefit and, if successful, we believe LOTIS-7 could change the non-Hodgkin lymphoma treatment paradigm. In the future, we believe novel, novel combinations will be the cornerstone of non-Hodgkin lymphoma treatments in place of systemic chemo-based treatments.

In terms of hypothesis, we know that malignant B-cells demonstrated broad and consistent expression of both CD20, which is targeted by the two Roche bispecifics, and CD19, which is targeted by the ZYNLONTA.

Consequently, we believe that combining ZYNLONTA with either one of the bispecific antibodies have the potential to have additive or even synergistic efficacy as well as manageable toxicity in patients with relapsed or refractory non-Hodgkin lymphoma.

Our excitement at this novel approach is also reflected in the physician community, which has shown a high level of interest to explore these combinations. We continue to expect to share early data from LOTIS-7 next year.

I would also like to note that beyond our own clinical studies, we are encouraged to see substantial interest in the investigator community to explore ZYNLONTA in novel combinations and across multiple types of B-cell malignancies. Turning to the rest of the pipeline beyond ZYNLONTA, starting with ADCT-601 targeting AXL.

AXL is a validated target that has been shown to be well suited for an ADC approach. We have successfully amended the Phase 1 study of ADCT-601 to focus on monotherapy treatment for patients with sarcoma and patients with non-small cell lung cancer.

Patients are currently being treated in the Phase 1 study and the maximum tolerated dose has not yet been reached. In parallel, we are working towards finalization of an IHC assay for a possible biomarker approach. As we have previously indicated, initial data from this Phase 1 trial expected in the first half of 2024.

Turning to ADCT-901 targeting KAAG1, this is novel, first-in-class agent that target various solid tumors. The protocol amendment to explore different dosing schedules have been finalized and submitted to regulatory authorities. Once approved, we plan to advance the next dosing level.

As with 601, we are completing validation of the IHC assay, and we expect to share initial data in the first half of 2024. Finally, I would like to discuss the ADCT-602, a Phase 1 study which targets CD22 in patients with relapsed or refractory acute lymphoblastic leukemia.

As a reminder, we are conducting this program in collaboration with MD Anderson Cancer Center. The trial is ongoing and new clinical trial sites have been selected to help accelerate enrollment. Encouraging initial data was presented at ASH in December 2022, which showed MRD negative complete responses in highly refractory patient population.

As we have previously highlighted, we expect additional data from the Phase 1 study of 602 to be shared in the first half of 2024. 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 Pepe to give a financial update..

Thank you, Mohamed. Before I review the financials for the second quarter, I want to provide an update on our efforts to increase operating efficiencies. Over the past few months, we have reduced external expenditures on vendor procurement and consultancy, and we have prioritized our pipeline.

We also reduced workforce across the company by approximately 17% while maintaining a relatively stable headcount in our customer-facing footprint behind ZYNLONTA.

Taken together, we expect these organizational efficiencies will help ensure that our operating expenses remain below 2022 levels, both this year and next despite the enhanced investment in our focused portfolio that Mohamed described.

Going forward, our decisions on the development of our pipeline will be data-driven and we will continue to be disciplined with our capital allocation. We believe these initiatives will ensure that we maintain a cash runway to meet 2025. Turning now to the financials for the quarter, starting with our balance sheet.

As of June 30, we had cash and cash equivalents of $347.5 million, representing a $37 million increase from our position at the end of the first quarter. The increase reflects the receipt of a $75 million milestone payment from HealthCare Royalty Partners on the first commercial sales of ZYNLONTA in Europe by our partner Sobi. Moving to the P&L.

As you already heard, ZYNLONTA net sales were $19.2 million in the second quarter, up 11% versus Q2 2022, and slightly ahead of the prior quarter. Moving down the P&L. Our combined operating expenses on a non-IFRS basis, which excludes stock-based compensation, were down 20% compared to the same period in 2022.

This mainly reflected the operating efficiencies I referred to earlier, together with a reduced R&D expenditure due to the discontinuation of a number of clinical studies in the prior year as well as fluctuations in our share price. Commercial expenses for ZYNLONTA were broadly maintained year-over-year.

As a reminder, you can find the reconciliation of IFRS measures to non-IFRS measure in the accompanying financial tables of the press release issued earlier today and in the appendix of this presentation. Moving to the bottom of the P&L.

On an IFRS basis, we reported a net loss of $47.1 million for the second quarter or $0.58 per basic and diluted share. Finally, I would like to share some potential value-driving milestones which we expect over the next 12 months. Starting with ZYNLONTA, we expect double-digit growth this year and to achieve commercial brand profitability.

This means that by the end of 2023, ZYNLONTA will start to pay in part for the development of new indications and the pipeline. We expect to share updated data from the safety-leading portion of the confirmatory Phase 3 LOTIS-5 study in the second-line setting at a medical meeting later this year.

In 2024, we expect to complete the enrollment of LOTIS-5, and we also expect to share some initial results from our LOTIS-7 study. In terms of the pipeline, in the first half of 2024, we expect to share initial data from ADCT-601 and ADCT-901 and additional data from the Phase 1 study for ADCT-602.

So, we anticipate a number of important milestones, both for ZYNLONTA and our pipeline. With that, I will turn the call back to Ameet for closing remarks.

Ameet?.

Thank you, Kristen, Mohamed and Pepe. To conclude, we are confident we have a clear roadmap as well as the capabilities to execute on our strategy to help drive future value creation for all our stakeholders. We are excited about the future and look forward to keeping you updated on our progress. Now, the team will be available for questions.

Operator?.

[Operator Instructions] Our first question comes from the line of Kelly Shi of Jefferies..

The first one is on commercial side.

As your EU partner launching ZYNLONTA, do you think the region is more restrictive on the use of CAR-T and the bispecific agents due to higher drug price? And do you expect the ZYNLONTA's penetration in the long term to exceed what is in the U.S.?.

Thank you, Kelly. I appreciate the question. We do expect there to be some more limited penetration of CAR-T as we've seen to date in Europe than in the U.S. And I would expect the same to be the case for bispecifics. Also, when you look at it from a pure volume standpoint, the market actually in Europe is slightly bigger.

So overall, the volume opportunity, we believe, in the long term for ZYNLONTA is even more significant in Europe. Of course, there's pricing differentiation. And pricing will obviously be market-by-market base, and will be lower than the U.S. in general in Europe.

We expect the launch to be sort of progressive in Europe, because, as you heard, in the second quarter, Sobi launched in Germany. It is starting to launch in a number of other countries, particularly in Northern Europe. Reimbursement, of course, is a country by country -- occurs on a country-by-country basis. And so that will occur over time.

And over the course of the next year, progressively Sobi will launch in more countries over the course of Europe..

And also for the second half of the year, do you expect the gross-to-net level to stay stable or continue to increase?.

Gross-to-net. Sorry, I couldn't hear you, Kelly. Thanks for the question. We expect to be reasonably stable. There's going to be always fluctuations depending on the mix of business and how prior accruals behave versus estimate, but in general, we see a stable gross-to-net over the year..

And then lastly, on the pipeline, for 601 and 901, you just announced the data will be in first half from next year.

And should we expect the data at a medical meeting or through press release? And also for KAAG1, could you remind us what triggered the protocol amendment? And could you also elaborate on how this will impact the clinical outcome?.

For the first question regarding when we announced, we haven't made a decision. It depends on how the evolving data set get prepared and the timing of that. And so, we will update the market as we go forward. We will be obviously transparent and share all the data we have at the time of disclosure..

And then Mohamed, do you want to take the second question on KAAG1 on the reasons for the protocol amendment?.

Yes. There's three main reasons for the protocol amendment. First, to proactively satisfy the requirements of Project Optimus with relation to the FDA, also to improve patient experience and increase probability of success in targeting KAAG1 in a clinically effective way.

The Phase 1 study protocol amendment explore different dosing schedule has been actually finalized and submitted to the FDA and will be submitted shortly through regulatory authorities in Europe. Once approved by the IRBs, the company plans to advance to the next dosing level.

I want also to add there's an immunohistochemistry assays under final validation and could possibly be used for patient selection if we see the need for that..

[Operator Instructions] Our next question comes from the line of Gregory Renza of RBC Capital Markets..

This is [indiscernible] for Gregory. I'm most curious about the commercial fee strategy with regard to the dynamics with bispecific. Do you anticipate having more of a head-on competition with bispecifics? Or do you see there are certain fragment of the market that's up for grab and less competitive? Then, I have a follow-up..

Thank you for the question. Yes. So we saw both bispecifics launch in mid to late Q2 and have seen negligible impact for us in the second quarter.

Since then, we have heard of some excitement from the physician community, but we really believe that bispecifics will be limited to the academic centers, consistent with our long-held view based on the safety profile and the recommendation for inpatient administration.

For us, the key opportunity for ZYNLONTA or the untapped potential is really driving growth in the community. In the long term, of course, we're excited about the opportunity to possibly combine ZYNLONTA with the bispecifics due to their distinct mechanisms of action as well as non-overlapping toxicity profile..

And then my second question, I'm just curious if you can comment on what the percentage of patients who received ZYNLONTA has been previously treated with CD19 CAR-T.

I'm just curious because if there is any preference for a different target post CD19 or not, basically?.

Sure. So I don't have the exact percentage. I can say that in the academic centers when we ask physicians their ideal patient type for ZYNLONTA, the majority, it is the post CAR-T patients, because they do see the efficacy, and it's an option for those patients. So, I don't think they're concerned about CD19 to CD19. We haven't heard that yet..

Yes. No, I agree. I mean, I think if you look, it's very different dynamics playing out in the academic and community setting. Obviously, in the community setting, most of our third-line, third-line plus uses is not post CAR-T because CAR-T is much more limited in that setting. So it's after a number of other different therapies.

In the academic setting, the majority of our use is post CAR-T, just given the penetration of CAR-T that's increased in the second-line setting..

[Operator Instructions] Next question comes from Tazeen Ahmad at BofA..

This is [indiscernible] on for Tazeen. Just a quick question from us on your new go-to-market strategy.

Can you highlight any specific targets for the team in the first six to 12 months? And should we expect specific metrics on the new strategy's benefits at future earnings calls?.

Sure. Thanks for the question. So really, the team -- I would say the teams are now in place. There was significant disruption in Q2. And in our case, 50% of our customer-facing field force was either entirely new or in new roles. So effectively, half of our team is not in front of customers.

But now that the team is in place and ramping up, I can say that we have confidence that with the changes that we've made, that will continue to build on the foundation and the academic centers as well as drive the real untapped opportunity for ZYNLONTA, which is in the community setting and drive continued adoption there. So more to come..

And then your question around metrics, we'll, of course, show the relevant metrics just to show progress about growth, for example, the community versus academic as we've done in the past. Again, we believe the big opportunities to continue to grow in the community.

The biggest competitor in the community is actually our based -- older are based chemo regimens. And inertia in terms of behavior change is one of the things we have to overcome. But we'll -- we believe with the new model, we can steadily make progress against that goal..

[Operator Instructions] Our next question comes from the line of Naureen Quibria from Capital One Securities..

So, I just have -- I'm curious about LOTIS-9 as you sort of wind down that study.

Is there anything that can be drawn from that, that you would be able to share down the line? And since there were those respiratory related events in the older frail population, do you think the label -- current label would be impacted by that?.

Sorry, go ahead..

Maybe, Mohamed, I'll just start and then I'm going to hand it to you, Mohamed. Yes, we don't believe there's any impact on our current label or on any other trials. And Mohamed will go through a little bit more specifics.

But just when you look at the population, both in terms of age and underlying comorbidities and the individual investigator assessments of the deaths have happened, which all accept one exception, whether it was a potential relation to the treatment, they were all deemed as likely unrelated.

So, we don't believe this has to do with the regimen most likely. And we don't plan on providing any more updates, because we made the choice to stop the study. But we don't believe there will be any spillover, any impact on the rest of ZYNLONTA. But Mohamed, you can go into more detail..

Yes. Thanks, Naureen, and that's an excellent question. First, I want to make sure it is clear that we do not think there's a likely relationship between the fatal events and the treatment of ZYNLONTA plus rituximab, for many reasons.

I want to remind you that the patient on LOTIS-9 by definition were fail or unfit, many of which are 80 years of age or above with an active and significant underlying comorbidities when enrolled in the study.

Of course, as a consequence, it is highly unlikely they would have qualified for enrollment to LOTIS 5 or 7 and really very different population than where our label is.

Also important to highlight that two weeks ago, in a planned PMC meeting for LOTIS-5, there was no notable safety signals observed and the recommendation was to proceed with the study as planned or no changes. As Ameet mentioned, we do not believe there is any readthrough to LOTIS-5 or LOTIS-7 or the label at this time..

All right. Terrific. Thanks. Very helpful. And so obviously, everybody has been mentioning the launch of [indiscernible]. So, with regard to LOTIS-5, since there are so many DLBCL studies, I'm just wondering -- and they're also pursuing expansion strategies.

Has that impacted enrollment for LOTIS-5? And are you employing any strategies to sort of ensure continued recruitment for the study?.

As a matter of fact, we have not seen any impact on enrollment of LOTIS-5 or LOTIS-7, due to the mainly again for the fact that the population being studied is very different and investigators understand very well the difference between the population study and LOTIS-9 and LOTIS-5. So, we did not see an impact on enrollment in those studies.

And we continue to believe that we will complete enrollment of LOTIS-5 in 2024..

With regards to the bispecifics, these studies have been going on for a while, right? So I don't think much has changed. If anything, to be honest, we've actually seen -- since Mohamed joined and he implemented a number of changes to give him credit on the clinical operations side, we've seen an acceleration overall in the recruitment of LOTIS-5.

So, we're well on track to complete the study next year, as we've said..

One more also for Mohamed. In the press release, you mentioned that you're going with the AXL product candidate 601, you're moving forward in non-small cell lung cancer and sarcoma. I believe we knew about sarcoma before.

Can you talk about the rationale for the -- selecting these two?.

It's really based on -- and thanks again for the question. It's really based on preclinical models and testing of the target expression on those models showing a higher -- the highest expression in sarcoma and non-small cell lung cancer. With other tumor types, but those are the highest two that we based our selection on.

Also, if you know about the BioAtla work, they also studied and showed efficacy on both tumor types. So, it kind of validated the AXL as a target, and we believe those are the two first study. And if that looks positive, we will be exploring definitely other tumor types..

[Operator Instructions] Our next question comes from the line of Boris Peaker at TD Cowen..

This is Nick on for Boris. Just two for me. The first one, you mentioned that you anticipate a stable gross-to-net throughout the rest of 2023.

So, I was just wondering, is that -- do you plan for that to continue throughout 2024 as well? Or is that going to increase, decrease or what? And then, on the clinical side, for LOTIS-7, do you plan to continue forward with multiple different combinations? I know that you're running LOTIS-7 with ZYNLONTA plus a few different types of combinations.

If positive, would you pick the best one? Or what's your approach to that?.

On the gross-to-net side, we don't expect, at this moment, any change in gross-to-net from this year to next year. So basically, from last year to this year, we had an increase, as we explained before, and then it should stay stable going forward..

Yes.

And then Mohamed, do you want to take the question?.

Yes. With regard to LOTIS-7, which bispecific to move forward for, it's really -- will be a data-driven decision, seeing how the two combinations look like or defer, if any. And in terms of, of course, any possible, although we believe there is no overlap [indiscernible], but we'll see how the safety profile looks like between the two agents.

And in addition, the efficacy, the clinical pharmacology, the durability of responses observed, and based on that, we'll be either making a selection of one or maybe in different tumor types. It could be DLBCL [indiscernible].

So there could be different ways of exploring the two, but we remain agnostic to any bispecific meaning that we would believe that ZYNLONTA is the -- an agent's choice to be combined with almost any bispecific currently being in development..

[Operator Instructions] Our next question comes from Jeffrey Hung of Morgan Stanley..

Hi. This is Michael Riad on for Jeff Hung.

On the first one, so with the new field model, to what extent does covering topic accounts exclude the academic and community centers? And how could they be targeted to raise awareness and drives ZYNLONTA take?.

What is the....

So you're saying with the new model, how are we targeting the big academic and community accounts? Is that your question?.

Yes, that's correct..

Yes. Okay. So maybe you could describe the model in the two different roles..

Sure. So we have two roles in the new model. One that is focused on the top-tier accounts, and we staffed it with folks who have extensive experience navigating complex institutions. The other role is really to focus primarily on the community.

So, you have clear lines of accountability, but they're organized into smaller local teams to really take advantage of strong knowledge of the local dynamics and referral patterns and so on. I want to make sure that answered your question..

Just the big -- our managers are focused on large academic institutions, but also large community accounts, whether it's Texas Oncology, Tennessee Oncology, Florida Cancer and New York Blood and Cancer, all these big institutions the account managers focused on the big account, whether it be academic or community, and then that specialist -- the sales specialist focuses on the satellite centers of those big accounts and other community centers.

Knowing that the dynamics, particularly in DLBCL, are very interrelated..

That's really helpful. Thanks. And then maybe as a follow-up for 601 and 901.

Do you have any added color on the biomarker approach? What sort of IHC data would you want to see to have confidence in its ability to guide development? And how soon could we see that implemented?.

At this stage, we are -- as I mentioned earlier, we are developing the immunohistochemistry assay. We have an assay that we will be testing first retrospectively in samples in the Phase 1 study.

And if we see a need and a clear differentiation in terms of level of expression of the target that correlates with a response, we will be possibly preselecting patients.

However, it is a little bit early to tell right now if that will be needed or not, but that's the overall thinking of what could be the possibility of using an immunohistochemistry assay..

[Operator Instructions] Our next question comes from the line of Brian Chan at JPMorgan..

Maybe on sales, just wondering what you're seeing from your sales force since the frontline approval for Polivy plus R-CHP back in April.

Any potential impact there or readthrough that we should factor in for the sales trajectory of ZYNLONTA for the rest of the year?.

Sure. So, we have seen uptake of Polivy. And what we do here, whether it's from primary market research or just in speaking with customers is that folks are eager to use it in the frontline setting for appropriate patients.

And what we also know is that the majority will not [indiscernible] with Polivy once they've used it in the frontline setting, and we see this as potentially opening up an opportunity for ZYNLONTA later lines and third-line, third-line plus..

And then on the European launch, can you elaborate on how the country-by-country launch will progress for the rest of the year?.

Yes, sure. I mean, as you know, I mean, reimbursement is a country-by-country thing. And so, Germany is obviously the first country. Typically, pricing is better there. Sobi is also launching in Northern European markets. Of course, in certain markets like Italy or Spain, where you have regional reimbursement, it just takes longer.

And so they're well underway with a lot of the market access procedures in those countries across Europe. They are also, as you know, have rights even beyond Europe to most international territories outside of Greater China and Japan. So, they're also actively preparing for launches in those territories as well.

So, we see really strong progress from our partner, Sobi, and we think that they're executing the launch well right now..

Thank you. I would now like to turn the conference back over to Ameet Mallik for closing remarks..

Well, I just want to thank all of you for joining our call today. I appreciate your interest in the company, and thanks for your continued support. We look forward to keeping you updated on our progress, and I hope that you all have a very nice day. Thank you..

This concludes today's conference call. Thank you for participating. You may now disconnect..