ADC Therapeutics SA (NYSE: ADCT), a commercial-stage global leader
and pioneer in the field of antibody drug conjugates (ADCs), today
reported financial results for the second quarter ended June 30,
2024, and provided operational updates.
“We continue to make progress on multiple fronts, including
reaching a key milestone as ZYNLONTA achieves commercial
profitability in the first half of the year. We are excited about
the potential to further our growth as we move toward expanding
into the second line setting of DLBCL and indolent lymphomas,” said
Ameet Mallik, Chief Executive Officer of ADC Therapeutics.
“Additionally, we have now passed futility analysis with LOTIS-5
and expect to complete enrollment this year, while also planning to
deliver updates on the LOTIS-7 trial and on ADCT-601 targeting AXL.
With our expected cash runway extended into mid-2026, we are well
positioned to execute our strategy and advance multiple
value-generating catalysts before year-end.”
Second Quarter 2024 Operational Updates & Recent
Highlights
- ZYNLONTA: Reached commercial profitability in
the first half of 2024, generating net product sales of $17.0
million in the second quarter of 2024, a 5% decrease as compared to
revenue of $17.8 million in the first quarter of 2024. Demand was
impacted in part by variability in ordering patterns in the second
quarter.
- LOTIS-7: During the second quarter, the
Company announced the completion of dose escalation in LOTIS-7, a
Phase 1b open-label clinical trial evaluating ZYNLONTA in
combination with bispecific antibodies glofitamab or mosunetuzumab
in heavily pre-treated patients with relapsed/refractory B-cell
non-Hodgkin lymphoma (r/r B-NHL). Enrollment in the Part 2 dose
expansion is progressing and completion is expected by year-end. An
update on safety and efficacy in evaluable patients is expected by
year-end, with data on all patients anticipated in the first half
of 2025.
- LOTIS-5: The Phase 3 confirmatory trial for
ZYNLONTA in combination with rituximab in patients with 2L+ diffuse
large B-cell lymphoma (DLBCL). An Independent Data Monitoring
Committee (IDMC) conducted a prespecified interim analysis of
unblinded data and has recommended that the trial continue as
planned without modifications. Enrollment is nearing completion in
the randomized portion of the trial with full enrollment expected
before year-end 2024.
- Investigator-initiated trial in marginal zone lymphoma
(MZL): Partial data from an investigator-initiated Phase 2
clinical trial evaluating ZYNLONTA for the treatment of
relapsed/refractory (r/r) MZL were presented on May 6, 2024 at the
Lymphoma Research Foundation’s 2024 Marginal Zone Lymphoma
Scientific Workshop by the trial’s lead investigator. Initial data
from the first 15 evaluable patients showed 13 achieved a complete
response and 1 achieved a partial response. The multi-center study
is designed to enroll 50 patients. Additional data publications and
presentations at medical congresses are expected in 2024 or
2025.
- Investigator-initiated trial in follicular lymphoma
(FL): The investigator-initiated Phase 2 clinical trial
evaluating ZYNLONTA in combination with rituximab in patients with
relapsed/refractory follicular lymphoma is currently being
conducted at the Sylvester Comprehensive Cancer Center at the
University of Miami Miller School of Medicine. Additional updates
are expected at medical congresses in 2024 or 2025.
- ADCT-601 (targeting AXL): The Phase 1b trial
in ADCT-601 targeting AXL continues enrolling patients in both the
sarcoma and pancreatic cancer arms, optimizing dose and schedule.
We plan to share an initial update from the Phase 1 trial in
patients in the second half of 2024.
- Early-stage pipeline: Progress continues in
the IND-enabling studies for the Company’s PSMA, NaPi2b and
Claudin-6 targeting ADCs. ASCT2 targeting ADC is in drug candidate
selection stage and is still on track to complete this year. The
Company has selected one target to move forward toward IND which we
expect to disclose in 2025.
Second Quarter and First Half 2024
Financial Results
- Cash and cash equivalents: As of June 30,
2024, cash and cash equivalents were $300.1 million, compared to
$278.6 million as of December 31, 2023. In May 2024 the Company
completed an underwritten offering resulting in net proceeds of
approximately $97.4 million, extending the expected cash runway
into mid-2026.
- Product Revenues: Net product revenues were
$17.0 million for the second quarter ended June 30, 2024 and $34.9
million for the first six months of 2024 as compared to $19.2
million and $38.2 million for the same periods in 2023. The
quarter-over-quarter decrease is primarily due to lower sales
volume, partially offset by a higher price. The year-to-date
decrease is primarily due to lower sales volumes, as well as higher
gross-to-net deductions primarily due to the discarded drug rebate
accrual partially offset by a higher price.
- Research and Development (R&D) Expense:
R&D expense was $24.3 million and $50.0 million for the three
and six months ended June 30, 2024, respectively. This compares to
R&D expense of $31.3 million and $69.7 million for the same
periods in 2023. The decrease is due primarily to implementation of
productivity initiatives and focused investment in prioritized
development programs.
- Selling and Marketing (S&M) Expense:
S&M expense was $10.7 million and $22.1 million for the three
and six months ended June 30, 2024, respectively. This compares to
S&M expense of $14.5 million and $29.8 million for the same
periods in 2023. The decrease in S&M expense was primarily due
to lower marketing and advertising costs and personnel related
expenses.
- General & Administrative (G&A)
Expense: G&A expense was $10.2 million and $22.3
million for the three and six months ended June 30, 2024,
respectively. This compares to G&A expense of $12.0 million and
$27.5 million for the same periods in 2023. The
quarter-over-quarter decrease in G&A expense was primarily
related to lower legal and audit fees, insurance and IT expenses
while the year-to-date decrease was primarily related to lower
insurance and IT expenses, partially offset by higher legal and
audit fees.
- Net Loss: Net loss for the quarter ended June
30, 2024 was $36.5 million, or a net loss of $0.38 per basic and
diluted share, as compared to net loss of $48.9 million, or a net
loss of $0.60 per basic and diluted share for the same period in
2023. Net loss for the six months ended June 30, 2024 was $83.2
million, or a net loss of $0.93 per basic and diluted share, as
compared to net loss of $108.3 million, or a net loss of $1.33 per
basic and diluted share for the six months ended June 30, 2023. The
decrease is primarily due to lower operating expenses.
- Adjusted Net Loss: Adjusted net loss, which is
a non-GAAP financial measure, was $24.4 million, or an adjusted net
loss of $0.25 per basic and diluted share for the quarter ended
June 30, 2024 as compared to adjusted net loss of $32.1 million, or
$0.39 per basic and diluted share, for the same period in 2023.
Adjusted net loss for the six months ended June 30, 2024 was $55.5
million, or an adjusted net loss of $0.62 per basic and diluted
share, as compared to net loss of $73.9 million, or an adjusted net
loss of $0.91 per basic and diluted share for the six months ended
June 30, 2023. The decrease in adjusted net loss is primarily
attributable to lower operating expenses.
Conference Call Details
ADC Therapeutics management will host a
conference call and live audio webcast to discuss second quarter
2024 financial results and provide a company update today at 8:30
a.m. Eastern Time. To access the conference call, please register
here. Registrants will receive the dial-in number and unique PIN.
It is recommended that you join 10 minutes before the event, though
you may pre-register at any time. A live webcast of the call will
be available under “Events & Presentations” in the Investors
section of the ADC Therapeutics website at ir.adctherapeutics.com.
The archived webcast will be available for 30 days following the
call.
About ZYNLONTA®
ZYNLONTA® is a CD19-directed antibody drug
conjugate (ADC). Once bound to a CD19-expressing cell, ZYNLONTA is
internalized by the cell, where enzymes release a
pyrrolobenzodiazepine (PBD) payload. The potent payload binds to
DNA minor groove with little distortion, remaining less visible to
DNA repair mechanisms. This ultimately results in cell cycle arrest
and tumor cell death.
The U.S. Food and Drug Administration (FDA) and
the European Medicines Agency (EMA) have approved ZYNLONTA
(loncastuximab tesirine-lpyl) for the treatment of adult patients
with relapsed or refractory (r/r) large B-cell lymphoma after two
or more lines of systemic therapy, including diffuse large B-cell
lymphoma (DLBCL) not otherwise specified (NOS), DLBCL arising from
low-grade lymphoma and also high-grade B-cell lymphoma. The trial
included a broad spectrum of heavily pre-treated patients (median
three prior lines of therapy) with difficult-to-treat disease,
including patients who did not respond to first-line therapy,
patients refractory to all prior lines of therapy, patients with
double/triple hit genetics and patients who had stem cell
transplant and CAR-T therapy prior to their treatment with
ZYNLONTA. This indication is approved by the FDA under accelerated
approval and in the European Union under conditional approval based
on overall response rate and continued approval for this indication
may be contingent upon verification and description of clinical
benefit in a confirmatory trial. Please see full prescribing
information including important safety information about ZYNLONTA
at www.ZYNLONTA.com.
ZYNLONTA is also being evaluated as a
therapeutic option in combination studies in other B-cell
malignancies and earlier lines of therapy.
About ADC Therapeutics
ADC Therapeutics (NYSE: ADCT) is a
commercial-stage global leader and pioneer in the field of antibody
drug conjugates (ADCs). The Company is advancing its proprietary
ADC technology to transform the treatment paradigm for patients
with hematologic malignancies and solid tumors.
ADC Therapeutics’ CD19-directed ADC ZYNLONTA
(loncastuximab tesirine-lpyl) received accelerated approval by the
FDA and conditional approval from the European Commission for the
treatment of relapsed or refractory diffuse large B-cell lymphoma
after two or more lines of systemic therapy. ZYNLONTA is also in
development in combination with other agents and in earlier lines
of therapy. In addition to ZYNLONTA, ADC Therapeutics has multiple
ADCs in ongoing clinical and preclinical development.
ADC Therapeutics is based in Lausanne (Biopôle),
Switzerland and has operations in London and New Jersey. For more
information, please visit https://adctherapeutics.com/ and follow
the Company on LinkedIn.
ZYNLONTA® is a registered trademark of ADC Therapeutics SA.
Use of Non-GAAP Financial
Measures
In addition to financial information prepared in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP), this document also contains certain non-GAAP financial
measures based on management’s view of performance including:
- Adjusted total operating
expenses
- Adjusted net loss
- Adjusted net loss per share
Management uses such measures internally when
monitoring and evaluating our operational performance, generating
future operating plans and making strategic decisions regarding the
allocation of capital. We believe that these adjusted financial
measures provide useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management and facilitate operating performance
comparability across both past and future reporting periods. These
non-GAAP 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 GAAP.
When preparing these supplemental non-GAAP measures, management
typically excludes certain GAAP items that management does not
believe are indicative of our ongoing operating performance.
Furthermore, management does not consider these GAAP items to be
normal, recurring cash operating expenses; however, these items may
not meet the GAAP definition of unusual or non-recurring items.
Since non-GAAP financial measures do not have standardized
definitions and meanings, they may differ from the non-GAAP
financial measures used by other companies, which reduces their
usefulness as comparative financial measures. Because of these
limitations, you should consider these adjusted financial measures
alongside other GAAP financial measures.
The following items are excluded from adjusted
total operating expenses:
Shared-Based Compensation Expense: We exclude share-based
compensation expense from our adjusted financial measures because
share-based compensation expense, which is non-cash, fluctuates
from period to period based on factors that are not within our
control, such as our stock price on the dates share-based grants
are issued. Share-based compensation expense has been, and will
continue to be for the foreseeable future, a recurring expense in
our business and an important part of our compensation
strategy.
The following items are excluded from adjusted net loss and
adjusted net loss per share:
Shared-Based Compensation Expense: We exclude
share-based compensation expense from our adjusted financial
measures because share-based compensation expense, which is
non-cash, fluctuates from period to period based on factors that
are not within our control, such as our stock price on the dates
share-based grants are issued. Share-based compensation expense has
been, and will continue to be for the foreseeable future, a
recurring expense in our business and an important part of our
compensation strategy.
Certain Other Items: We exclude certain other
significant items that we believe do not represent the performance
of our business, from our adjusted financial measures. Such items
are evaluated by management on an individual basis based on both
quantitative and qualitative aspects of their nature. While not
all-inclusive, examples of certain other significant items excluded
from our adjusted financial measures would be: changes in the fair
value of warrant obligations and the effective interest expense
associated with the senior secured term loan facility and the
effective interest expense and cumulative catch-up adjustments
associated with the deferred royalty obligation under the royalty
purchase agreement with HealthCare Royalty Partners.
See the attached Reconciliation of GAAP Measures
to Non-GAAP Measures for explanations of the amounts excluded and
included to arrive at the non-GAAP financial measures.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. In some cases you can identify
forward-looking statements by terminology such as “may”, “will”,
“should”, “would”, “expect”, “intend”, “plan”, “anticipate”,
“believe”, “estimate”, “predict”, “potential”, “seem”, “seek”,
“future”, “continue”, or “appear” or the negative of these terms or
similar expressions, although not all forward-looking statements
contain these identifying words. Forward-looking statements are
subject to certain risks and uncertainties that can cause actual
results to differ materially from those described. Factors that may
cause such differences include, but are not limited to: the
expected cash runway into mid-2026 the Company’s ability to grow
ZYNLONTA® revenue in the United States; the ability of our partners
to commercialize ZYNLONTA® in foreign markets, the timing and
amount of future revenue and payments to us from such partnerships
and their ability to obtain regulatory approval for ZYNLONTA® in
foreign jurisdictions; the timing and results of the Company’s or
its partners’ research and development projects or clinical trials
including LOTIS 5 and 7, ADCT 601 and 602 as well as early research
in certain solid tumors with different targets, linkers and
payloads; the timing and results of investigator-initiated trials
including those studying FL and MZL and the potential regulatory
and/or compendia strategy and the future opportunity; the timing
and outcome of regulatory submissions for the Company’s products or
product candidates; actions by the FDA or foreign regulatory
authorities; projected revenue and expenses; the Company’s
indebtedness, including Healthcare Royalty Management and Blue Owl
and Oaktree facilities, and the restrictions imposed on the
Company’s activities by such indebtedness, the ability to comply
with the terms of the various agreements and repay such
indebtedness and the significant cash required to service such
indebtedness; and the Company’s ability to obtain financial and
other resources for its research, development, clinical, and
commercial activities. Additional information concerning these and
other factors that may cause actual results to differ materially
from those anticipated in the forward-looking statements is
contained in the “Risk Factors” section of the Company's Annual
Report on Form 10-K and in the Company's other periodic and current
reports and filings with the U.S. Securities and Exchange
Commission. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results,
performance, achievements or prospects to be materially different
from any future results, performance, achievements or prospects
expressed in or implied by such forward-looking statements. The
Company cautions investors not to place undue reliance on the
forward-looking statements contained in this document.
ADC Therapeutics
SACondensed Consolidated Statements of Operation
(Unaudited)(in thousands, except for share and per
share data)
|
|
For the Three Months Ended June 30, |
|
For the Six Months Ended June 30, |
|
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Revenue |
|
|
|
|
|
|
|
|
Product revenues, net |
|
$ |
17,030 |
|
$ |
19,197 |
|
$ |
34,878 |
|
$ |
38,150 |
License revenues and
royalties |
|
380 |
|
86 |
|
585 |
|
125 |
Total revenue,
net |
|
17,410 |
|
19,283 |
|
35,463 |
|
38,275 |
Operating expense |
|
|
|
|
|
|
|
|
Cost of product sales |
|
(1,217) |
|
(1,132) |
|
(3,727) |
|
(1,105) |
Research and development |
|
(24,295) |
|
(31,342) |
|
(50,030) |
|
(69,717) |
Selling and marketing |
|
(10,701) |
|
(14,456) |
|
(22,091) |
|
(29,807) |
General and administrative |
|
(10,238) |
|
(12,002) |
|
(22,269) |
|
(27,505) |
Total operating expense |
|
(46,451) |
|
(58,932) |
|
(98,117) |
|
(128,134) |
Loss from
operations |
|
(29,041) |
|
(39,649) |
|
(62,654) |
|
(89,859) |
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
|
|
|
|
|
|
Interest income |
|
3,253 |
|
2,372 |
|
6,201 |
|
4,547 |
Interest expense |
|
(12,679) |
|
(10,309) |
|
(25,175) |
|
(20,600) |
Other, net |
|
2,754 |
|
(5,067) |
|
159 |
|
(4,234) |
Total other expense, net |
|
(6,672) |
|
(13,004) |
|
(18,815) |
|
(20,287) |
Loss before income
taxes |
|
(35,713) |
|
(52,653) |
|
(81,469) |
|
(110,146) |
Income tax (expense) benefit |
|
(234) |
|
4,498 |
|
(397) |
|
3,980 |
Loss before equity in
net losses of joint venture |
|
(35,947) |
|
(48,155) |
|
(81,866) |
|
(106,166) |
Equity in net losses of joint venture |
|
(597) |
|
(767) |
|
(1,284) |
|
(2,130) |
Net loss |
|
$ |
(36,544) |
|
$ |
(48,922) |
|
$ |
(83,150) |
|
$ |
(108,296) |
|
|
|
|
|
|
|
|
|
Net loss per
share |
|
|
|
|
|
|
|
|
Net loss per share, basic and diluted |
|
$ |
(0.38) |
|
$ |
(0.60) |
|
$ |
(0.93) |
|
$ |
(1.33) |
Weighted average shares outstanding, basic and diluted |
|
95,691,245 |
|
81,471,127 |
|
89,121,783 |
|
81,140,287 |
|
|
|
|
|
|
|
|
|
ADC Therapeutics
SACondensed Consolidated Balance Sheet
(Unaudited)(in thousands)
|
|
June 30, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
|
Current
assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
300,119 |
|
$ |
278,598 |
Accounts receivable, net |
|
22,868 |
|
25,182 |
Inventory |
|
15,191 |
|
16,177 |
Prepaid expenses and other current assets |
|
17,181 |
|
16,334 |
Total current
assets |
|
355,359 |
|
336,291 |
Non-current
assets |
|
|
|
|
Property and equipment, net |
|
5,483 |
|
5,622 |
Operating lease right-of-use assets |
|
9,685 |
|
10,511 |
Interest in joint venture |
|
260 |
|
1,647 |
Other long-term assets |
|
992 |
|
711 |
Total
assets |
|
$ |
371,779 |
|
$ |
354,782 |
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS’ EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
Accounts payable |
|
$ |
10,708 |
|
$ |
15,569 |
Accrued expenses and other current liabilities |
|
46,924 |
|
52,101 |
Total current
liabilities |
|
57,632 |
|
67,670 |
|
|
|
|
|
Deferred royalty obligation, long-term |
|
316,211 |
|
303,572 |
Senior secured term loans |
|
113,673 |
|
112,730 |
Operating lease liabilities, long-term |
|
9,309 |
|
10,180 |
Other long-term liabilities |
|
6,624 |
|
8,879 |
Total
liabilities |
|
503,449 |
|
503,031 |
|
|
|
|
|
Total shareholders’
equity (deficit) |
|
(131,670) |
|
(148,249) |
|
|
|
|
|
Total liabilities and
shareholders’ equity (deficit) |
|
$ |
371,779 |
|
$ |
354,782 |
|
|
|
|
|
|
|
ADC Therapeutics SA
Reconciliation of GAAP Measures to
Non-GAAP Measures (Unaudited)(in thousands, except
for share and per share data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(in thousands) |
2024 |
|
2023 |
|
Change |
|
% Change |
|
2024 |
|
2023 |
|
Change |
|
% Change |
Total operating
expense |
(46,451) |
|
(58,932) |
|
12,481 |
|
(21)% |
|
$ |
(98,117) |
|
$ |
(128,134) |
|
$ |
30,017 |
|
(23)% |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation
expense (i) |
1,988 |
|
1,118 |
|
870 |
|
78% |
|
2,146 |
|
9,192 |
|
(7,046) |
|
(77)% |
Adjusted total
operating expenses |
(44,463) |
|
(57,814) |
|
13,351 |
|
(23)% |
|
$ |
(95,971) |
|
$ |
(118,942) |
|
$ |
22,971 |
|
(19)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
in thousands (except for share and per share
data) |
2024 |
|
2023 |
|
2024 |
|
2023 |
Net loss |
$ |
(36,544) |
|
$ |
(48,922) |
|
$ |
(83,150) |
|
$ |
(108,296) |
Adjustments: |
|
|
|
|
|
|
|
Share-based compensation
expense (i) |
1,988 |
|
1,118 |
|
2,146 |
|
9,192 |
Deerfield warrants obligation,
change in fair value (income) expense (ii) |
(2,230) |
|
(20) |
|
838 |
|
(636) |
Effective interest expense on
senior secured term loan facility (iii) |
4,413 |
|
4,480 |
|
8,816 |
|
9,020 |
Deferred royalty obligation
interest expense (iv) |
8,266 |
|
5,829 |
|
16,359 |
|
11,575 |
Deferred royalty obligation
cumulative catch-up adjustment (income) expense (iv) |
(263) |
|
5,417 |
|
(526) |
|
5,288 |
Adjusted net
loss |
$ |
(24,370) |
|
$ |
(32,098) |
|
$ |
(55,517) |
|
$ |
(73,857) |
|
|
|
|
|
|
|
|
Net loss per share, basic and
diluted |
$ |
(0.38) |
|
$ |
(0.60) |
|
$ |
(0.93) |
|
$ |
(1.33) |
Adjustment to net loss per
share, basic and diluted |
0.13 |
|
0.21 |
|
0.31 |
|
0.42 |
Adjusted net loss per
share, basic and diluted |
$ |
(0.25) |
|
$ |
(0.39) |
|
$ |
(0.62) |
|
$ |
(0.91) |
Weighted average shares
outstanding, basic and diluted |
95,691,245 |
|
81,471,127 |
|
89,121,783 |
|
81,140,287 |
(i) Share-based compensation expense represents the cost of
equity awards issued to our directors, management and employees.
The fair value of awards is computed at the time the award is
granted and is recognized over the requisite service period less
actual forfeitures by a charge to the statement of operations and a
corresponding increase in additional paid-in capital within equity.
These accounting entries have no cash impact.
(ii) Change in the fair value of the Deerfield warrant
obligation results from the valuation at the end of each accounting
period. There are several inputs to these valuations, but those
most likely to result in significant changes to the valuations are
changes in the value of the underlying instrument (i.e., changes in
the price of our common shares) and changes in expected volatility
in that price. These accounting entries have no cash impact.
(iii) Effective interest expense on senior secured term loans
relates to the increase in the value of our loans in accordance
with the amortized cost method.
(iv) Deferred royalty obligation interest expense relates to the
accretion expense on our deferred royalty obligation pursuant to
the royalty purchase agreement with HCR and cumulative catch-up
adjustments related to changes in the expected payments to HCR
based on a periodic assessment of our underlying revenue
projections.
CONTACTS:
InvestorsMarcy GrahamADC
TherapeuticsMarcy.Graham@adctherapeutics.com+1 650-667-6450 |
Media:Nicole RileyADC
TherapeuticsNicole.Riley@adctherapeutics.com+1 862-926-9040 |
ADC Therapeutics (NYSE:ADCT)
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