LAUSANNE, Switzerland--(BUSINESS WIRE)--ADC Therapeutics SA (NYSE: ADCT) today reported financial results for the second quarter ended June 30, 2022 and provided business updates.
“The ZYNLONTA® launch is advancing steadily as we continue to increase awareness and advocacy. There is significant opportunity ahead and we have a focused plan in place to achieve continued growth in the coming quarters,” commented Ameet Mallik, Chief Executive Officer of ADC Therapeutics. “Our pipeline of hematology and solid tumor programs is progressing well with impressive Cami Phase 2 data in Hodgkin lymphoma presented at the EHA Congress in June. Our recent license agreement with Sobi® in Europe gives us worldwide access for ZYNLONTA. We have a strong cash runway extending into early 2025 which makes us well-positioned to execute on our key objectives.”
Recent Highlights and Developments
Corporate Update
- Announced an exclusive license agreement with Swedish Orphan Biovitrum AB (Sobi) for the development and commercialization of ZYNLONTA for all hematologic and solid tumor indications outside of the United States, greater China, Singapore and Japan.
- Appointed David Gilman as Chief Business & Strategy Officer.
- Elected veteran oncology drug developer Jean-Pierre Bizzari, MD, and CEO Ameet Mallik to the Company’s Board of Directors.
Hematology Franchise
ZYNLONTA (loncastuximab tesirine-lpyl)
- ZYNLONTA generated net sales of $17.3 million in the second quarter of 2022.
- Initiated LOTIS-9, the Phase 2 clinical trial of ZYNLONTA in combination with rituximab in unfit or frail first-line diffuse large B-cell lymphoma (DLBCL) patients.
- Initiated LOTIS-7, the Phase 1b clinical trial of ZYNLONTA in combination with other anti-cancer agents.
- Terminated LOTIS-6, the Phase 2 clinical trial of ZYNLONTA in patients with relapsed or refractory follicular lymphoma.
- The Overland ADCT BioPharma joint venture enrolled the first patient in China in the global LOTIS-5 confirmatory Phase 3 clinical trial of Lonca and rituximab in second-line or later transplant ineligible DLBCL patients.
- Overland ADCT Biopharma completed enrollment of the single-agent bridging study in third-line+ DLBCL, which forms the basis for submission of a marketing application in China.
Cami (camidanlumab tesirine) in Hodgkin lymphoma
- Released results from the Phase 2 Hodgkin lymphoma (HL) registrational trial at the European Hematology Association (EHA) 2022 Congress in June. These results showed an overall response rate (ORR) of 70%, a complete response (CR) rate of 33% and a median duration of response (DOR) of 13.7 months. Safety data confirmed the manageable tolerability of Cami in these patients.
Solid Tumor Franchise
ADCT-601 (targeting AXL)
- Initiated the Phase 1b combination trial in multiple solid tumors.
Upcoming Expected Milestones
Hematology Franchise
ZYNLONTA
- Present LOTIS-5 safety lead-in data at an upcoming medical meeting in 2H 2022
- Receive a regulatory decision for third-line DLBCL from the Committee for Medicinal Products for Human Use (CHMP), a committee of the European Medicines Agency (EMA), by 1Q 2023
Cami
- Meet with the U.S. Food and Drug Administration (FDA) for HL pre-Biologics License Application (BLA) meeting in September 2022
- Complete BLA submission for HL to the FDA in 2H 2023
Solid Tumor Franchise
Cami (targeting CD25)
- Preliminary results of safety and clinical activity are anticipated in 2023 for the Phase 1b solid tumor trial of Cami in combination with pembrolizumab
ADCT-901 (targeting KAAG1)
- Preliminary results of safety and tumor response for the Phase 1 dose escalation trial in multiple solid tumors are anticipated in 2023
Second Quarter Financial Results
Cash and Cash Equivalents
Cash and cash equivalents were $376.8 million as of June 30, 2022, compared to $466.5 million as of December 31, 2021.
Product Revenue
Product revenue (net) was $17.3 million for the quarter, compared to $3.8 million for the same quarter in 2021. Net revenues are for U.S. sales of ZYNLONTA, which received accelerated approval from the FDA on April 23, 2021.
Cost of product sales
Cost of product sales was $2.3 million for the quarter, compared to $0.1 million for the same quarter in 2021, an increase of $2.1 million associated with $1.9 million of impairment charges primarily related to the manufacturing of antibodies that was not within the Company's specifications. The specification issues did not, and are not expected to, impact the Company’s ability to supply commercial product. In addition, cost of product sales increased due to a full second quarter of sales activity in 2022 as compared to the same period in 2021 due to the commencement of ZYNLONTA sales in May 2021.
Research and Development (R&D) Expenses
R&D expenses were $48.5 million for the quarter ended June 30, 2022, compared to $39.5 million for the same quarter in 2021. As a result of FDA approval of ZYNLONTA in April 2021, the Company reversed $6.8 million of previously recorded impairment charges during the three months ended June 30, 2021, relating to inventory costs incurred for the manufacture of product prior to FDA approval. In addition, R&D expenses increased due to clinical activities to expand ZYNLONTA’s potential market opportunities in earlier lines of therapy and advance the Company’s portfolio of solid tumor programs.
Selling and Marketing (S&M) Expenses
S&M expenses were $17.7 million for the quarter ended June 30, 2022, as compared to $15.2 million for the same quarter in 2021. The increase in S&M expenses is related to the ongoing launch of ZYNLONTA.
G&A Expenses
G&A expenses were $18.2 million for the quarter ended June 30, 2022, compared to $19.4 million for the same quarter in 2021. G&A expenses decreased primarily due to lower share-based compensation expense.
Net Loss and Adjusted Net Loss
Net loss was $64.4 million, or a net loss of $0.84 per basic and diluted share, for the quarter ended June 30, 2022. This compares to a net loss of $72.6 million, or a net loss of $0.95 per basic and diluted share, for the same quarter in 2021. The decrease in net loss for the quarter ended June 30, 2022, as compared to the same period in 2021, was primarily due to higher product revenue, partially offset by the increase in cost of product sales, R&D and S&M expenses. In addition, net loss decreased for the second quarter of 2022 as a result of income arising from changes in the fair value of derivatives associated with our Deerfield Facility Agreement, partially offset by higher interest expense associated with the deferred obligation with Healthcare Royalty Partners.
Adjusted net loss was $56.3 million, or an adjusted net loss of $0.73 per basic and diluted share, for the quarter ended June 30, 2022. This compares to $53.7 million, or an adjusted net loss of $0.70 per basic and diluted share, for the same quarter in 2021.
Conference Call Details
ADC Therapeutics management will host a conference call and live audio webcast to discuss second quarter 2022 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 and Presentations” in the Investors section of the ADC Therapeutics website at www.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. Cami (camidanlumab tesirine) is being evaluated in a pivotal Phase 2 trial for relapsed or refractory Hodgkin lymphoma and in a Phase 1b clinical trial for various advanced solid tumors. In addition to ZYNLONTA and Cami, 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
- 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-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 the effective interest expense associated with the Facility Agreement with Deerfield, transaction costs associated with debt or equity issuances that are expenses pursuant to IFRS, 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 statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business and commercialization strategy, market opportunities, products and product candidates, research pipeline, ongoing and planned preclinical studies and clinical trials, regulatory submissions and approvals, projected revenues and expenses and the timing of revenues and expenses, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including those described in our filings with the U.S. Securities and Exchange Commission. No assurance can be given that such future results will be achieved. Such forward-looking statements contained in this document speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this press release to reflect any change in our expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements.
| ADC Therapeutics SA | |||||||
| Condensed Consolidated Interim Statement of Operations (Unaudited) | |||||||
| (in KUSD except for share and per share data) | |||||||
| For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||
2022 |
2021 |
2022 |
2021 |
||||
| Product revenues, net | 17,291 |
3,760 |
33,789 |
3,760 |
|||
| License revenue | - |
- |
30,000 |
- |
|||
| Total revenue | 17,291 |
3,760 |
63,789 |
3,760 |
|||
| Operating expense | |||||||
| Cost of product sales | (2,266) |
(121) |
(2,795) |
(121) |
|||
| Research and development expenses | (48,537) |
(39,533) |
(97,489) |
(78,705) |
|||
| Selling and marketing expenses | (17,659) |
(15,221) |
(36,029) |
(29,132) |
|||
| General and administrative expenses | (18,240) |
(19,367) |
(37,251) |
(36,949) |
|||
| Total operating expense | (86,702) |
(74,242) |
(173,564) |
(144,907) |
|||
| Loss from operations | (69,411) |
(70,482) |
(109,775) |
(141,147) |
|||
| Other income (expense) | |||||||
| Financial income | 16 |
15 |
18,324 |
30 |
|||
| Financial expense | (8,801) |
(2,555) |
(18,018) |
(4,555) |
|||
| Non-operating income (expense) | 12,875 |
693 |
26,317 |
21,923 |
|||
| Total other income (expense) | 4,090 |
(1,847) |
26,623 |
17,398 |
|||
| Loss before taxes | (65,321) |
(72,329) |
(83,152) |
(123,749) |
|||
| Income tax benefit (expense) | 947 |
(240) |
2,117 |
(347) |
|||
| Net loss | (64,374) |
(72,569) |
(81,035) |
(124,096) |
|||
| Net loss attributable to: | |||||||
| Owners of the parent | (64,374) |
(72,569) |
(81,035) |
(124,096) |
|||
| Net loss per share, basic and diluted | (0.84) |
(0.95) |
(1.05) |
(1.62) |
|||
| ADC Therapeutics SA | |||
| Condensed Consolidated Interim Balance Sheet (Unaudited) | |||
| (in KUSD) | |||
| June 30, 2022 |
December 31, 2021 |
||
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 376,778 |
466,544 |
|
| Accounts receivable, net | 20,863 |
30,218 |
|
| Inventory | 14,650 |
11,122 |
|
| Other current assets | 12,151 |
17,298 |
|
| Total current assets | 424,442 |
525,182 |
|
| Non-current assets | |||
| Property, plant and equipment | 3,596 |
4,066 |
|
| Right-of-use assets | 6,094 |
7,164 |
|
| Intangible assets | 14,575 |
13,582 |
|
| Interest in joint venture | 36,817 |
41,236 |
|
| Deferred tax asset | 34,040 |
26,049 |
|
| Other long-term assets | 899 |
693 |
|
| Total non-current assets | 96,021 |
92,790 |
|
| Total assets | 520,463 |
617,972 |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||
| Current liabilities | |||
| Accounts payable | 13,019 |
12,080 |
|
| Other current liabilities | 52,384 |
50,497 |
|
| Lease liabilities, short-term | 909 |
1,029 |
|
| Current income tax payable | 799 |
3,754 |
|
| Convertible loans, short-term | 6,573 |
6,575 |
|
| Total current liabilities | 73,684 |
73,935 |
|
| Non-current liabilities | |||
| Convertible loans, long-term | 89,844 |
87,153 |
|
| Convertible loans, derivatives | 7,637 |
37,947 |
|
| Deferred royalty obligation, long-term | 204,423 |
218,664 |
|
| Deferred gain of joint venture | 23,539 |
23,539 |
|
| Lease liabilities, long-term | 5,990 |
6,994 |
|
| Defined benefit pension liabilities | - |
3,652 |
|
| Total non-current liabilities | 331,433 |
377,949 |
|
| Total liabilities | 405,117 |
451,884 |
|
| Equity attributable to owners of the parent | |||
| Share capital | 6,445 |
6,445 |
|
| Share premium | 981,818 |
981,827 |
|
| Treasury shares | (119) |
(128) |
|
| Other reserves | 133,480 |
102,646 |
|
| Cumulative translation adjustments | (358) |
183 |
|
| Accumulated losses | (1,005,920) |
(924,885) |
|
| Total equity attributable to owners of the parent | 115,346 |
166,088 |
|
| Total liabilities and equity | 520,463 |
617,972 |
|
| ADC Therapeutics SA | |||||||
| Reconciliation of IFRS Measures to Non-IFRS Measures (Unaudited) | |||||||
| (in KUSD except for share and per share data) | |||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||
| in KUSD (except for share and per share data) | 2022 |
2021 |
2022 |
2021 |
|||
| Net loss | (64,374) |
(72,569) |
(81,035) |
(124,096) |
|||
| Adjustments: | |||||||
| Share-based compensation expense (i) | 13,818 |
18,267 |
27,728 |
32,218 |
|||
| Convertible loans, derivatives, change in fair value income (ii) | (14,455) |
(2,053) |
(30,310) |
(23,222) |
|||
| Convertible loans, first and second tranche, derivatives, transaction costs (iii) | - |
148 |
- |
148 |
|||
| Effective interest expense on convertible loans (iv) | 3,126 |
2,450 |
6,148 |
4,432 |
|||
| Deferred royalty obligation interest expense (v) | 5,545 |
- |
11,687 |
- |
|||
| Deferred royalty obligation cumulative catch-up adjustment income (v) | - |
- |
(18,288) |
- |
|||
| Adjusted net loss | (56,340) |
(53,757) |
(84,070) |
(110,520) |
|||
| Net loss per share, basic and diluted | (0.84) |
(0.95) |
(1.05) |
(1.62) |
|||
| Adjustment to net loss per share, basic and diluted | 0.11 |
0.25 |
(0.04) |
0.18 |
|||
| Adjusted net loss per share, basic and diluted | (0.73) |
(0.70) |
(1.09) |
(1.44) |
|||
| Weighted average shares outstanding, basic and diluted | 76,911,713 |
76,728,714 |
76,866,968 |
76,725,210 |
|||
(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. See note 15, “Share-based compensation” to the unaudited condensed consolidated interim financial statements. These accounting entries have no cash impact. |
|
|
|
|
(ii) |
Change in the fair value of the convertible loan derivatives results from the valuation at the end of each accounting period of the derivatives associated with the convertible loans. See note 14, “Convertible loans” to the unaudited condensed consolidated interim financial statements. 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) |
The transaction costs allocated to the convertible loan first and second tranche derivative represent actual costs. These are not expected to recur on an ongoing basis. |
|
|
|
|
(iv) |
Effective interest expense on convertible loans relates to the increase in the value of our convertible loans in accordance with the effective interest method. See note 14, “Convertible loans” to the unaudited condensed consolidated interim financial statements. |
|
|
||
(v) |
Deferred royalty obligation interest expense and cumulative catch-up adjustment relates to the accretion expense on our deferred royalty obligation pursuant to the royalty purchase agreement with HCR and changes in the expected payments to HCR based on a periodic assessment of our underlying revenue projections. See note 16, “Deferred royalty obligation” to the unaudited condensed consolidated interim financial statements. |
