NASDAQ:ADAP
Anthony Kraus: Hello and welcome to Virtual Investor Conferences. My name is Anthony Kraus, and on behalf of OTC Markets, as well as our co-host, Zacks Small-Cap Research. We’re very pleased you have joined us for our next live presentation from Adaptimmune Therapeutics. This session will be moderated by Michael Kim, senior Analyst at Zacks Small-Cap Research. Please note, you can submit questions for the presenter in the box to the left of the slides. You can also view a company’s availability for one-on-one meetings through the Schedule Meetings tab found on the conference platform. At this point, I’m very pleased to welcome Adrian Rawcliffe, Chief Executive Officer of Adaptimmune Therapeutics, which trades on NASDAQ under the symbol ADAP. Welcome, Adrian and Michael.
Adrian Rawcliffe: Thank you.
Michael Kim: Great. Thanks Anthony, and good afternoon, everyone. Thank you for joining us today. Again, I’m happy to have with us Adrian Rawcliffe, Chief Executive Officer of Adaptimmune, a company that we initiated coverage on earlier this year with a $3 price target. I’m sure Adrian will get into this, but Adaptimmune is a Biopharmaceutical company focused on designing, developing, manufacturing, and delivering innovative cell therapies to treat cancers across multiple solid tumor types. So with that Ad, great to see you. Thank you again for taking the time.
AR: Good to see you, Michael.
MK: Great. So we’ve got a few topics that I think are probably top of mind with investors. So with that, maybe just to start for those who may be a bit newer to the story, it might be helpful if you could provide a brief history of the firm just in terms of the capabilities and the infrastructure that you’ve been able to build up over time. Then if you could maybe spend a bit of time discussing T-cell therapies and how you’re positioned within that market.
AR: Certainly. Adaptimmune was founded about 16 years ago, and it’s founded on the premise that cell therapy will revolutionize the treatment of cancers. But the challenge with other approaches, in particular the CAR-Ts, which have been very successful in the HemOnc space, is that they can’t target targets that are routinely found in the solid tumor space. Since solid tumors make up over 90% of the burden of cancer morbidity and mortality, it seemed key that if cell therapy was to have this transformative effect, we needed platforms and approaches that could address solid tumors. Our TCR or T-cell receptor engineering platform enables us to engineer the native targeting protein of the T-cell.
AR: The things that T-cells normally use to recognize what they want to kill in your body, which are normally foreign pathogens. We can engineer that T-cell receptor to recognize targets that are routinely presented on a wide range of solid tumors. By doing so, we can generate engineered cell therapies that will target that wide range of solid tumors. It was also key to us that in order to do that, in order to discover, develop, and ultimately deliver autologous cell therapies, so cell therapies made from the patient’s own cells, it would be important to have a set of capabilities that were different to those capabilities in normal drug discovery and development that were particular for cell therapy. And so we set out to build those. We started as a protein engineering house, and we built forward and integrated the capabilities necessary to develop pre-clinically and then clinically to manufacture cell therapies.
AR: We built a pipeline of cell therapies using these engineered T-cell receptors that target a broad range of tumors. At the very front end of that pipeline, is our most advanced product, which was approved by the FDA for the treatment of synovial sarcoma in August this year, called TECELRA, and that is the first engineered cell therapy for a solid tumor and the result of that investment in capabilities and pipeline over the last decade.
MK: That’s great. Very helpful. Maybe just as it relates specifically to treating sarcomas, it seems like there haven’t been a lot of new drugs that have come to market for quite a while. So patients unfortunately face a lack of options when first-line Therapies prove ultimately ineffective. So perhaps you could speak to TECELRA’s efficacy in terms of the clinical trials and differentiated treatment approach that have seemingly sparked a fair amount of interest within the sarcoma space.
AR: Yeah, you are correct. Sarcomas and soft tissue sarcomas generally is a name that’s given to actually a collection of quite a range of different types of sarcoma, types of cancer. Synovial sarcoma is a cancer of connective tissue. It’s typically diagnosed in patients in their 30s. It’s a young person’s disease. You are correct that what normally happens is a patient will be diagnosed. Maybe they may be amenable to potentially curative intent resection or surgery if the cancer is discovered when it’s localized. But if it’s spread, if it’s metastasized, then systemic therapies are required. The first-line of that is anthracycline-based chemotherapy. That has a reasonable response rate, but most of those responses are transient. After that, there really has been nothing. The last drug approved in this space was a drug called Pazopanib.
AR: That had a response rate that was measured from somewhere around 4% to about 14%. So it’s in that sort of range. Now, it’s important to note that TECELRA was not developed in a head-to-head study against Pazopanib because there really isn’t an accepted standard of care in the second-line setting. TECELRA was developed in a single-arm trial with advanced synovial sarcoma patients. In that trial, we demonstrated a response rate, per the FDA analysis in the label of 43%. This is very different from the historic experience of those patients, which would be response rates in the teens. Those responses are really durable as well. Something like, 40% of those responses continue longer than 12 months. Those in that clinical trial, and we published the data from that in the Lancet earlier this year, responders had a two-year survival probability of 70%.
AR: This is a fantastic transformation for those patients. The last thing that I’ll say about TECELRA is that I think it is critical to understand this for how patients view it is it’s a one-off treatment. The patient’s experience in the sarcoma space is of a series of debilitating treatments, be that radiotherapy, surgery to remove individual tumor masses, chemotherapy, or various other debilitating clinical trial agents. Those need to be given frequently over periods of time. The patient experiences this constant engagement with the healthcare system, with therapies that make them feel really bad and have actually relatively marginal effect on their tumor. You contrast that with the opportunity to get an essentially one-off cell transplant almost of engineered cells. Then, to whatever benefits those patients experience over what can be quite a prolonged time, that’s it, they do not have any other therapies to treat their cancer. That is a profoundly different experience. And I think that’s why the efficacy, the fact that this is the first drug in the space for a very long time, is why there is so much excitement within the sarcoma community by both patients and physicians.
MK: Yeah. Makes a lot of sense, for sure. You alluded to this a bit earlier, Ad, but I think another somewhat unique aspect of synovial sarcoma is the patient profile. Could you maybe speak to sort of the target population in terms of underlying demographic survival rates and sort of the potential of the treatment market, if you will?
AR: Yes. So, receiving a diagnosis of synovial sarcoma is pretty devastating. You have to imagine you are probably in your 20s or 30s when you’re diagnosed. About a third of patients are diagnosed below the age of 30. This is a young person’s cancer. Typically if you end up with a pain in your shoulder or limb, and you are 30, I’m just about able to remember that myself. You sort of say, well, it’ll probably go away. You probably do nothing. By the time it doesn’t go away and you go to the doctor and the doctor says, well, it’s probably some sporting thing here, have some physio. It takes a long time for it to actually, for many of these patients to be diagnosed because you don’t think I’m 30 and I’ve got cancer.
AR: When you are diagnosed with a scan, sometimes with a biopsy, then you are hit with this diagnosis of synovial sarcoma, and you don’t know a single person who’s ever been diagnosed with that. Your oncologist probably hasn’t seen a patient with synovial sarcoma, rarely, if at all. I is imperative that these patients get treated in sarcoma centers of excellence, and most of them tend to make their way there. Once you are diagnosed, if you are diagnosed locally, yes, there is curative surgery. Most patients are diagnosed with metastatic disease. Then, five year survival and diagnosis for metastatic disease is 20%. it’s a devastating diagnosis in a young population. Now, what that means for us is that that is a very high agency population.
AR: These are patients who are incredibly motivated to be able to find effective treatments. There are about up to 1300 cases of synovial sarcoma diagnosed each year. Of that, we estimate about 400 will have the correct biomarkers to be able to go after with TECELRA. This is a rare disease, but it’s a rare disease where there really isn’t anything else. We anticipate being able to get to a very high percentage of these patients over time. This, therefore, is very much a rare disease commercialization model as opposed to a sort of more mass market approach. There isn’t really any competition. We think that with this therapy, and with the one that’s following it by about 24 months, which is called Lete-cel at the moment, which targets a slightly different patient population. There’s about a thousand patients there that we can go after in our sarcoma franchise and who would benefit from those treatments. We think that that has the potential to give us a franchise in the US in these lead indications. That’s about $400 million, which is a nice commercially viable franchise for a company like Adaptimmune. And the one that we can address readily with the network that we have in place.
MK: Maybe just to follow on to those points, the narrative has certainly shifted now that the FDA has approved TECELRA, the focus is on commercialization, as you pointed out. Just curious in your mind, what are some of the potential risks from an operational standpoint, as it relates to the rollout? And then, on the flip side, might there be opportunities for potentially a quicker uptake, particularly given the market dynamics and your position within the market that you alluded to?
AR: Yeah. So, I think you are right. The perspective has certainly shifted. Now we’re a commercial company. I think there are a few things that we think we have going for us. First, this is a community, the sarcoma community, that we’ve been working with for approximately the last decade. Developing medicines for sarcoma. This is a very concentrated treatment community. There’s something like a 100 Sarcoma Centers of Excellence. It’s well understood if you have a rare sarcoma that, you should be treated in a Sarcoma Center of Excellence. Patients get referred to the Sarcoma Centers of Excellence. Within the centers, it’s concentrated at the top end. So we anticipate launching in the first 90 days after launch will be in 6 to 10 centers, and we’ll grow that to a network of 30 treatment centers.
AR: Those 30 treatment centers are the treatment centers that cover about 80% of the patients in the Sarcoma Centers of Excellence. It’s very concentrated. These are centers that not only are very experienced sarcoma centers, but they’re also leading cancer centers that you all recognize. If you go to the website TECELRA.com, you can see that we have seven centers working to bring patients through. We have two centers fully up and running at this point in time. That’s the starting point. About half of the centers are centers that we used in our clinical trials, in particular, in the spearhead of one trial. We know them well, and they know our product well.
AR: That concentration is one area of de-risking and why we think we are well-placed to commercialize this medicine. We understand the market and the centers, and it’s a relatively modestly sized footprint for us. The other piece that I think a lot of companies with cell therapies have struggled with and where a lot of the challenges sort of lie is in the manufacturing of these cells. These are autonomous products. I take a patient’s own cells; I engineer them, and we return them to that patient. Each patient is its own manufacturing run. This is obviously a logistically complex thing to do. It’s also scientifically complex as well. We have been doing this in our center in the Navy Yard with TECELRA, previously Afami-cel, in clinical trials.
AR: This center was reviewed, audited, and inspected by the FDA. We feel very confident in our ability to manufacture TECELRA for every patient that comes through from the 30 centers we’ll have up and running. I think the key is that we will, with TECELRA, get these centers up and running, and where we have established all the processes to do that. When Lete-cel comes through, the interesting thing about it is that it will go into all of those 30 centers at launch. If we want to think about the uptake of these products and commercial opportunities, I think there’s an uptake for strong, possible potential for stronger uptake of Lete-cel because it would just be going through the full network that we will have established.
MK: Great. Beyond the number of treatment centers onboarded, I know you’ve pointed to the number of patients as a key leading indicator for the ramp-up of TECELRA sales. So, maybe you could just talk a bit about the process regarding timelines and what you might expect correlations to be related to sales. Then related to that, just a question from the audience. I am just curious if we will get information on when the first patients will be treated commercially, which I think you’ve talked about, with the fourth quarter potentially the starting point.
AR: Yeah. So, the talk about why we picked patients, we think that’s a fairly concrete point where the patient has already cleared the testing, the biomarker testing, and they will also have gained reimbursement for that, for their treatment. It will proceed with patient dosing by the manufacturing period plus whatever period it takes to get the patient in and then lymph depleted and treated. From the history of these products, some drop off between apheresis and the number of patients dosed.
AR: There are some patients that the companies have been unable to manufacture for. In our clinical trial, we had a manufacturing success rate north of 90%. But we don’t know what that will be with the commercial patient group. There’s that, and then there’s the time element you referred to. Our manufacturing time period is anywhere from four to six weeks. Then you’ve got a little bit more for the patients to be lipid depleted and then treated. That’s why we’re saying that even though we launched in August, by the time we test the patients, get clearance for reimbursement, and a apherese manufacturing dose, we anticipate the first commercial patients will be treated in Q4 this year. That’s when we’ll have our first sales recognition, and we look forward to being able to update you on that. But I think for the first, given that patient dosing is when we’re going to have sales, we will, while we reserve the right to inform people about the first patient, yes, we will wait until we’ve got those sales booked. We’ll be updating on sales quarterly. Until we start updating at our quarterly calls about sales, the patients apheresed will be the surrogate for what’s happening in that patient flow.
MK: Great, very helpful. Maybe shifting gears a bit to Lete-cel, as you alluded to. Just curious to get your perspective on the commercialization opportunity. Seems like there’s a lot of overlap and synergies with TECELRA. You talked about the distribution footprint. Any insights into potentially driving a quicker ramp-up in sales once you receive FDA approval?
AR: Yeah, so we anticipate that Lete-cel, which has completed its pivotal trial, the Ignite ESO trial, completed that positively. It was positive actually at the interim read. We will have the final read, and we plan to make available those data at Cetos this year in November for the full trial. That has been a positive trial, and we anticipate that it will form the basis of the clinical evidence for approval, which we anticipate in 2026. You’re correct that the commercial footprint for Lete-cel almost exactly overlaps the commercial footprint for Famicol. These are the same sarcoma centers of excellence.
AR: These are largely the same physicians. A lot of that infrastructure that we build for TECELRA will be 100% applicable to the commercialization of Lete-cel. And because we’ll have all of those 30 centers in our network open at the point where Lete-cel is launching, we anticipate that the patients will find access to that more rapidly than they will for TECELRA. We think the opportunity for Lete-cel is probably about one and a half times the size, maybe slightly more than TECELRA. There are about 400 patients that are the addressable patient population for TECELRA, and about incrementally 600 patients are the addressable patient population for Lete-cel. So still a rare disease, still dealable within the footprint that we will have built, and just a great opportunity for us in these rare sarcomas.
MK: From an economic perspective, I know you mentioned the 400 million target for peak year sales here in the US for TECELRA and Lete-cel. But just given sort of the manufacturing and distribution infrastructure that has already been built up, as well as the lack of alternative treatments that you referenced earlier, I am just curious to get any perspective or insights into the potential slope of the sales curve as we look out over the next few years.
AR: Yeah, so I think the way to think about this is we think about both products together. We also think about peak patient numbers approximately two to three years after the launch of Lete-cel. So you’ve got a slope between now and two to three years after Lete-cel’s launch to where we are now. We anticipate substantial penetration. We’ve talked about the pricing that we anticipate. And so if you think about that, it’s clear that we’re targeting at peak, getting to about half of the patients that are addressable in that space. So, could it be better than that? Yes, it could be better than that because 50% of the patients is a strong number. But I’ll point out that Communicators KIMMTRAK for uveal melanoma, which in many ways is a similarly sized population to one of these rare sub-tissue sarcomas.
AR: That is already at more like two-thirds of the patients, maybe a bit more of the patients are, that is, eligible for, KIMMTRAK, are on drug or have received the drug. We think that in these rare tumor types, because it is more of a rare disease model, it’s more of a patient identification and getting them to a treatment center model than it is a competitive cell against something else that also has robust efficacy. Because there isn’t anything else. We anticipate fairly deep penetration and fairly steep curves over time. However, I want to temper that a little bit with this is a cellular therapy and we will be growing and expanding the footprint over the next 18 months or so. That will affect the front end of that slope.
MK: Yeah. Next question. There may be a bit of uncertainty regarding the recently announced collaboration with Galapagos in connection to Uza-cel specifically. So, maybe you could provide a bit of a high-level overview of the relationship, just in terms of the roles, for the two parties in terms of clinical trials, different indications, and then, maybe, be helpful just to outline sort of the various, structures as it relates to upfront payments versus incremental payments and potential, the potential for royalties down the road.
AR: Yes. We were delighted to partner with Galapagos earlier this year because it seems obvious to them and us. I think to anybody paying attention to this space that the opportunity to pair a product like Uza-cel, which has shown incredibly robust response rates in very late-stage patients with very difficult-to-treat tumors, with a seven-day vein-to-vein manufacturing process, has the potential to change the dynamic for what this cell therapy could represent to patients. In particular, the starting point of head and neck cancer is a really good example of that because we’ve treated five patients with Uza-cel with head and neck cancer. Every single patient had a profound reduction in their target lesions. For every single patient, four of the five patients were bona fide resist responses, confirmed responses.
AR: This is, therefore, a highly active product. And yet, at the same time, head and neck cancer patients develop and progress rapidly and sometimes precipitously. And so, the opportunity to shorten the manufacturing time from the four to six weeks that we, are on our platform currently to seven day turnaround time, seven-day vein-to-vein time, I think it has the opportunity to make that available to many more patients and to get to those patients earlier. It’s that opportunity that we seek to prosecute initially in collaboration with Galapagos. So, what’s going to happen is we will conduct a clinical trial, a phase one clinical trial using the Galapagos’s distributed manufacturing platform and Uza-cel. We’ll conduct that in the US and Europe. That will enable us to demonstrate the advantages of the short manufacturing turnaround and the efficacy of the Uza-cel product.
AR: Based on that, Galapagos then has a choice about whether they want to take that forward, and then they pay us money to be able to do that. We received $85 million upfront, of which 15 were R&D expenses, and the remainder was an upfront payment. We’ll get another $15 million when we dose the first patient in R&D expenses. Then there’s up to 100 million in an option fee on positive proof of concept, downstream milestones and royalties that got double digits. It’s economically attractive to us. But most importantly, really important, is the opportunity to make this therapy the best version of it, particularly in cancers that rapidly progress.
AR: So, that was the rationale for that deal. In the meantime, we have Uza-cel on our platform in ovarian cancer. That’s quite advanced. That’s in the past three trials. In ovarian cancer, we’ve not seen a drop off in patients. We’ve been able to manufacture for the patients, and we are getting into that trial. That trial is recruiting quite well at the moment. That has the potential to be a registrational trial. We’ll have the first interim reads of that data once we’ve enrolled the full patient group. So, at some point next year and, final data in 2026, for that, and Uza-cel on that platform in ovarian on our platform in ovarian cancer could be our third product to market after TECELRA and Lete-cel.
MK: Got it. Well, great. It’s been very helpful. I appreciate the time. I look forward to continuing to follow the company’s progress and learning more about the great work you guys are doing. Thank you, everyone, for joining the conference today. I appreciate it. Have a great day.
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