1Q 2023 ZYNLONTA®1 net sales increased 15% and
operating expenses decreased 19% year-over-year2; FY 2023 guidance
reaffirmed for ZYNLONTA double-digit net sales growth and reduction
in operating expenses as compared to FY 2022
Implementing new go-to-market model to help
drive growth in both academic and community centers
Later-stage pipeline programs continue to
progress with several initial data readouts expected in the next
12-15 months and supported by cash runway to mid-2025
Portfolio prioritized to nearer-term clinical
catalysts; reducing workforce by 17% to enhance investments in the
focused portfolio to accelerate and expand these programs
Company to host conference call today at 8:30
a.m. EDT
ADC Therapeutics SA (NYSE: ADCT) today reported financial
results for the first quarter 2023 and provided an updated
corporate strategy.
“2023 is a pivotal year for positioning ADC Therapeutics to
capture the full potential value of our assets. Our later-stage
pipeline programs continue to progress, with several initial data
readouts expected in the next 12-15 months. Following a
comprehensive review of the business by our executive team, we are
implementing a new corporate and capital allocation strategy which
we believe will allow the Company to focus on the most advanced and
highest-potential clinical value drivers,” said Ameet Mallik, Chief
Executive Officer of ADC Therapeutics.
“After a comprehensive DLBCL market review including
interactions with top academic and community centers, we are
implementing a new commercial go-to-market model to better align
with the market construct. Through our new strategy, we expect to
optimize our commercial execution against ZYNLONTA’s unique and
valuable market opportunity,” said Kristen Harrington-Smith, Chief
Commercial Officer of ADC Therapeutics.
“By focusing our resources and executing on our new portfolio
and commercial strategy, I am confident that we will deliver on our
objectives and unlock value for all of our stakeholders,” added Mr.
Mallik.
(1)
loncastuximab tesirine-lpyl; (2)
14% on an adjusted basis (non-IFRS measure excluding stock-based
compensation)
Updated Corporate Strategy
Following a comprehensive assessment by the leadership team of
the status of the business and the evolving market, the Company is
adjusting its corporate strategy to optimize operations and
prioritize potential key value drivers:
- Implementing a new go-to-market model to help drive growth and
optimize local area influence. The Company will continue to cover
over 90% of the potential market opportunity with a team of account
managers and community specialists that will foster tight
coordination within referral networks and bring deep clinical and
therapeutic experience.
- Re-prioritizing R&D pipeline to focus resources on the most
advanced, lower risk value-generating programs:
- The Company will continue the LOTIS-5, LOTIS-9 and LOTIS-7
studies which, if successful and support future regulatory
approvals, have the potential to significantly increase ZYNLONTA’s
market opportunity in earlier lines of therapy and with multiple
combination partners.
- The Company will continue the clinical-stage programs: ADCT-601
targeting AXL, ADCT-901 targeting KAAG1, ADCT-602 targeting
CD22.
- The Company will halt investments in its two preclinical
programs ADCT-212 targeting PSMA and ADCT-701 targeting DLK-1.
- Increasing efficiencies through a 17% workforce reduction
driven primarily by functions affected by the portfolio
prioritization and back-office efficiencies, while maintaining the
customer-facing footprint. This reduction is effective today and
includes full-time employees, vacant roles and contractors. Along
with decreasing additional operating expenses, this will allow the
Company to re-deploy capital in programs with the highest
value-generating potential.
Recent Highlights and
Developments
ZYNLONTA (loncastuximab tesirine-lpyl)
- ZYNLONTA generated net sales of $19.0 million in the first
quarter of 2023, representing a 15% increase over first quarter of
2022 and a slight decline from fourth quarter 2022. This includes
higher gross-to-net sales deductions due to Group Purchasing
Organization (GPO) contracting and the new Medicare Part B
discarded drug policy effective January 1, 2023.
- The pivotal Phase 2 clinical trial in China, led by Overland
ADCT BioPharma, achieved its primary objective and demonstrated
efficacy and safety data consistent with prior clinical trial
results. Based on these positive results, Overland ADCT BioPharma
is preparing to submit its marketing authorization application to
the China National Medical Products Administration (NMPA) for
relapsed or refractory diffuse large B-cell lymphoma (DLBCL).
Pipeline
- ADCT-901 (targeting KAAG1): The Company is finalizing
the protocol amendment to explore different dosing schedules to
optimize the potential clinical outcomes for patients. Once
finalized, the Company plans to advance to the next dosing level.
The IHC assay is under final validation.
- ADCT-601 (targeting AXL): Dose escalation in the Phase
1b trial is progressing and a monotherapy cohort has been added for
patients with non-small cell lung cancer (NSCLC) in addition to a
monotherapy cohort focused on sarcoma. In parallel, the IHC assay
is under final validation.
- ADCT-602 (targeting CD22): Dose escalation and expansion
in the Phase 1 trial is progressing and the number of sites is
being expanded.
- ADCT-212 (targeting PSMA): The Company is halting
investments in this program to focus on nearer-term value
drivers.
- ADCT-701 (targeting DLK-1): The Company is halting
investments in this program to focus on nearer-term value
drivers.
Guidance
The Company reaffirms the following guidance based on its
current business plan:
- ZYNLONTA FY 2023 net product sales expected to grow by a
double-digit percentage year-over-year. This includes a
gross-to-net increase as compared to 2022 of:
- Approximately 2 to 3 percentage points related to Group
Purchasing Organization (GPO) contracting
- Mid to high single-digit percentage points resulting from the
Infrastructure Investment and Jobs Act’s requirement for
manufacturers of certain single-source drugs separately paid for
under Medicare Part B and marketed in single-dose containers to
provide annual refunds for discarded drug, effective January 1,
2023
- Continued decrease in total operating expenses expected in 2023
and 2024 as compared to 2022 as a result of the implementation of
the new corporate strategy
- Expected cash runway extended into the middle of 2025
Upcoming Expected
Milestones
ZYNLONTA
- Grow ZYNLONTA net sales by a double-digit percentage
year-over-year and achieve commercial brand profitability in
2023
- European phased launch by partner Sobi beginning in 2Q
2023
- Initial safety and efficacy data from the LOTIS-9 study by the
end of 2023
- Complete enrollment of the LOTIS-5 study in 2024
- Initial safety and efficacy data from the LOTIS-7 study in
2024
Pipeline
ADCT-901 (targeting KAAG1)
- Initial data from Phase 1 study in 1H 2024
ADCT-601 (targeting AXL)
- Initial data from Phase 1 study in 1H 2024
ADCT-602 (targeting CD22)
- Additional data from Phase 1 study in 1H 2024
First Quarter 2023 Financial
Results
Cash and Cash Equivalents
Cash and cash equivalents were $310.5 million as of March 31,
2023, compared to $326.4 million as of December 31, 2022. Based on
the Company’s business plan and expected $75.0 million milestone
from Healthcare Royalty Partners, triggered by the first EU
commercial sale, the Company expects its cash runway to extend into
the middle of 2025.
Product Revenues
Net product revenues were $19.0 million for the quarter ended
March 31, 2023, compared to $16.5 million for the same quarter in
2022. Net product revenues are for U.S. sales of ZYNLONTA. The
increase of $2.5 million for the quarter was primarily due to
higher sales volume, partially offset with higher gross-to-net
deductions.
Research and Development (R&D) Expenses
R&D expenses were $39.5 million for the quarter ended March
31, 2023, compared to $49.0 million for the same quarter in 2022.
R&D expenses decreased due to less investment in Cami and other
programs.
Selling and Marketing (S&M) Expenses
S&M expenses were $15.4 million for the quarter ended March
31, 2023, compared to $18.4 million for the same quarter in 2022.
The decrease in S&M expenses for the quarter was primarily due
to lower share-based compensation expense.
General & Administrative Expenses
G&A expenses were $15.1 million for the quarter ended March
31, 2023, compared to $19.0 million for the same quarter in 2022.
G&A expenses decreased during the first quarter of 2023
primarily due to lower share-based compensation expense.
Net Loss and Adjusted Net Loss
Net loss was $59.4 million, or a net loss of $0.74 per basic and
diluted share, for the quarter ended March 31, 2023. This compares
to a net loss of $16.7 million, or a net loss of $0.22 per basic
and diluted share, for the same quarter in 2022.
Adjusted net loss was $42.5 million, or an adjusted net loss of
$0.53 per basic and diluted share, for the quarter ended March 31,
2023. This compares to an adjusted net loss of $27.7 million, or an
adjusted net loss of $0.36 per basic and diluted share, for the
same quarter in 2022.
The increase in net loss and adjusted net loss for the quarter
ended March 31, 2023, as compared to the same quarter in 2022, was
primarily due to license revenue of $30.0 million arising from the
Mitsubishi Tanabe Pharma Corporation (MTPC) agreement, other
financial income arising from a cumulative catch-up adjustment
associated with the valuation of the deferred obligation with
Healthcare Royalty Partners and from changes in the fair value of
our convertible loan derivatives, all of which were recognized in
the first quarter of 2022. This increase in net loss was partially
offset by higher product revenues, as well as lower R&D
expenses and share-based compensation expense during the first
quarter of 2023.
Conference Call Details
ADC Therapeutics management will host a conference call and live
audio webcast to discuss first quarter 2023 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® (loncastuximab tesirine-lpyl)
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) has 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 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.
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
biotechnology company improving the lives of those affected by
cancer with its next-generation, targeted antibody drug conjugates
(ADCs). The Company is advancing its proprietary PBD-based ADC
technology to transform the treatment paradigm for patients with
hematologic malignancies and solid tumors.
ADC Therapeutics’ CD19-directed ADC ZYNLONTA (loncastuximab
tesirine-lpyl) is approved by the FDA 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. 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, the San Francisco Bay Area and New
Jersey. For more information, please visit
https://adctherapeutics.com/ and follow the Company on Twitter and
LinkedIn.
ZYNLONTA® is a registered trademark of ADC Therapeutics SA.
Use of Non-IFRS Financial Measures
In addition to financial information prepared in accordance with
IFRS, this document also contains certain non-IFRS financial
measures based on management’s view of performance including:
- Adjusted net loss and income
- Adjusted net loss and income 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-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. When
preparing these supplemental non-IFRS measures, management
typically excludes certain IFRS items that management does not
believe are indicative of our ongoing operating performance.
Furthermore, management does not consider these IFRS items to be
normal, recurring cash operating expenses; however, these items may
not meet the IFRS definition of unusual or non-recurring items.
Since non-IFRS financial measures do not have standardized
definitions and meanings, they may differ from the non-IFRS
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 IFRS financial measures.
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
derivatives and warrant obligations and the effective interest
expense associated with the Facility Agreement with Deerfield and
the senior secured term loan facility and the effective interest
expense and a cumulative catch-up adjustment associated with the
deferred royalty obligation under the royalty purchase agreement
with HealthCare Royalty Partners.
See the attached Reconciliation of IFRS Measures to Non-IFRS
Measures for explanations of the amounts excluded and included to
arrive at the non-IFRS 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. 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 success
of the Company’s updated corporate strategy including operating
efficiencies, capital deployment and portfolio prioritization; the
Company’s ability to achieve the 2023 net product sales guidance
for ZYNLONTA® and the decrease in total operating expenses for 2023
and 2024, the expected cash runway into the middle of 2025, the
effectiveness of the new commercial go-to-market strategy and the
Company’s ability to continue to commercialize ZYNLONTA® in the
United States and future revenue from the same; Swedish Orphan
Biovitrum AB (Sobi®) ability to successfully commercialize
ZYNLONTA® in the European Economic Area and market acceptance,
adequate reimbursement coverage, and future revenue from the same;
our strategic partners’, including Mitsubishi Tanabe Pharma
Corporation and Overland Pharmaceuticals, ability to obtain
regulatory approval for ZYNLONTA® in foreign jurisdictions, and the
timing and amount of future revenue and payments to us from such
partnerships; the Company’s ability to market its products in
compliance with applicable laws and regulations; the Company’s
expectations regarding the impact of the Infrastructure Investment
and Jobs Act; the timing and results of the Company’s or its
partners’ research projects or clinical trials including LOTIS 5, 7
and 9, ADCT 901, 601 and 602, the timing and outcome of regulatory
submissions and actions by the FDA or other regulatory agencies
with respect to the Company’s products or product candidates;
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 repay such
indebtedness and the significant cash required to service such
indebtedness; the Company’s ability to obtain financial and other
resources for its research, development, clinical, and commercial
activities and other statements regarding matters that are not
historical facts, and involve predictions. 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. 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. 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 20-F and in the Company's other periodic reports and
filings with the Securities and Exchange Commission. The Company
cautions investors not to place undue reliance on the
forward-looking statements contained in this document. The Company
undertakes no obligation to revise or update these forward-looking
statements to reflect events or circumstances after the date of
this press release, except as required by law.
ADC Therapeutics SA
Condensed Consolidated Interim
Statement of Operations (Unaudited)
(in KUSD except for per share
data)
For the Three Months Ended
March 31,
2023
2022
Product revenues, net
18,953
16,498
License revenues and royalties
39
30,000
Total revenue
18,992
46,498
Operating expense
Cost of product sales
(590
)
(529
)
Research and development expenses
(39,480
)
(48,952
)
Selling and marketing expenses
(15,351
)
(18,370
)
General and administrative expenses
(15,143
)
(19,011
)
Total operating expense
(70,564
)
(86,862
)
Loss from operations
(51,572
)
(40,364
)
Other income (expense)
Financial income
2,304
18,308
Financial expense
(10,417
)
(9,217
)
Non-operating (expense) income
(3
)
13,442
Total other (expense) income
(8,116
)
22,533
Loss before taxes
(59,688
)
(17,831
)
Income tax benefit
262
1,170
Net loss
(59,426
)
(16,661
)
Net loss attributable to:
Owners of the parent
(59,426
)
(16,661
)
Net loss per share, basic and diluted
(0.74
)
(0.22
)
ADC Therapeutics SA
Condensed Consolidated Interim
Balance Sheet (Unaudited)
(in KUSD)
March 31, 2023
December 31,
2022
ASSETS
Current assets
Cash and cash equivalents
310,547
326,441
Accounts receivable, net
24,037
72,971
Inventory
18,250
18,564
Other current assets
27,173
28,039
Total current assets
380,007
446,015
Non-current assets
Property, plant and equipment
4,484
3,261
Right-of-use assets
11,224
6,720
Intangible assets
13,586
14,360
Interest in joint venture
29,533
31,152
Deferred tax asset
27,605
26,757
Other long-term assets
1,233
903
Total non-current assets
87,665
83,153
Total assets
467,672
529,168
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities
Accounts payable
8,694
12,351
Other current liabilities
57,412
73,035
Lease liabilities, short-term
1,447
1,097
Senior secured term loans, short-term
13,533
12,474
Total current liabilities
81,086
98,957
Non-current liabilities
Senior secured term loans, long- term
97,011
97,240
Warrant obligations
516
1,788
Deferred royalty obligation, long-term
216,551
212,353
Deferred gain of joint venture
23,539
23,539
Lease liabilities, long-term
10,955
6,564
Other long-term liabilities
329
—
Total non-current liabilities
348,901
341,484
Total liabilities
429,987
440,441
Equity attributable to owners of the
parent
Share capital
7,312
7,312
Share premium
1,007,843
1,007,452
Treasury shares
(645
)
(679
)
Other reserves
163,501
155,683
Cumulative translation adjustments
(215
)
(356
)
Accumulated losses
(1,140,111
)
(1,080,685
)
Total equity attributable to owners of
the parent
37,685
88,727
Total liabilities and equity
467,672
529,168
ADC Therapeutics SA
Reconciliation of IFRS
Measures to Non-IFRS Measures (Unaudited)
(in KUSD except for share and
per share data)
Three Months Ended March
31,
in KUSD (except for share and per share
data)
2023
2022
Net loss
(59,426
)
(16,661
)
Adjustments:
Share-based compensation expense (i)
8,074
13,910
Convertible loans, derivatives, change in
fair value income (ii)
—
(15,855
)
Senior secured term loans, warrants,
change in fair value income (ii)
(656
)
—
Effective interest expense on convertible
loans (iii)
—
3,022
Deerfield warrants obligation, change in
fair value income (ii)
(616
)
—
Effective interest expense on senior
secured term loan facility (iii)
4,540
—
Deferred royalty obligation interest
expense (iv)
5,746
6,142
Deferred royalty obligation cumulative
catch-up adjustment income (iv)
(129
)
(18,288
)
Adjusted net loss
(42,467
)
(27,730
)
Net loss per share, basic and diluted
(0.74
)
(0.22
)
Adjustment to net loss per share, basic
and diluted
0.21
(0.14
)
Adjusted net loss per share, basic and
diluted
(0.53
)
(0.36
)
Weighted average shares outstanding, basic
and diluted
80,805,770
76,821,726
(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, including any market and other
performance conditions, and is recognized over the vesting period
of the award by a charge to the income statement and a
corresponding increase in other reserves within equity. These
accounting entries have no cash impact.
(ii)
Change in the fair value of the
convertible loan derivatives, senior secured term loan facility
warrants and 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
convertible loans and 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 adjustment income relates to changes in
the expected payments to HCR based on a periodic assessment of our
underlying revenue projections.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230509005395/en/
Investors Eugenia Litz ADC Therapeutics
Eugenia.Litz@adctherapeutics.com +44 7879 627205 +1
908-723-2350
Amanda Loshbaugh ADC Therapeutics
amanda.loshbaugh@adctherapeutics.com +1 917-288-7023
Media Mary Ann Ondish ADC Therapeutics
maryann.ondish@adctherapeutics.com +1 914-552-4625
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