Business Overview and History

ADC Therapeutics SA (ADCT) is a commercial-stage global leader and pioneer in the field of antibody drug conjugates (ADCs), a rapidly advancing class of targeted cancer therapies. The company's commitment to innovation and its robust pipeline of novel ADC candidates have positioned it as a key player in the oncology landscape.

ADC Therapeutics was founded in 2011 and is headquartered in Lausanne, Switzerland. The company was incorporated under the laws of Switzerland and has since established three wholly-owned subsidiaries in the U.S., UK, and Netherlands. In its early years, ADC Therapeutics focused on developing its proprietary ADC technology platform and building out its specialized end-to-end ADC capabilities, making significant progress in its research and development efforts and advancing multiple ADC product candidates through preclinical and clinical trials.

The company's flagship product, ZYNLONTA (loncastuximab tesirine-lpyl), is a CD19-directed ADC that received accelerated approval from the U.S. Food and Drug Administration (FDA) in 2021 for the treatment of relapsed or refractory diffuse large B-cell lymphoma (r/r DLBCL) after two or more lines of systemic therapy. This milestone marked ZYNLONTA as the first ADC approved for the treatment of DLBCL. ZYNLONTA has since been granted conditional marketing authorization in Europe, solidifying ADC Therapeutics' presence in the global market.

Beyond ZYNLONTA, ADC Therapeutics' pipeline includes several other promising ADC candidates, such as ADCT-602 targeting CD22 in relapsed or refractory B-cell acute lymphoblastic leukemia, and various pre-clinical programs targeting solid tumors. The company's research and development efforts are focused on advancing these programs and exploring combination therapies to expand the potential patient populations that can benefit from its innovative treatments.

Financials and Liquidity

In the third quarter of 2024, ADC Therapeutics reported net product revenues of $18.0 million for ZYNLONTA, a 26.3% increase compared to the same period in the prior year. This growth was driven by both higher sales volume and a net price increase. For the first nine months of 2024, the company's net product revenues for ZYNLONTA totaled $52.9 million, compared to $52.4 million in the same period of 2023, representing a slight increase of 0.9% year-over-year.

The company's operating expenses have been managed prudently, with a 12% year-over-year decrease in non-GAAP operating expenses for the first nine months of 2024. This disciplined approach to capital allocation has allowed ADC Therapeutics to maintain a strong financial position, ending the third quarter of 2024 with $274.3 million in cash and cash equivalents, which the company believes will fund operations into mid-2026 based on current plans.

ADC Therapeutics' financial health is further reflected in its liquidity ratios, with a current ratio of 4.92 and a quick ratio of 4.68, indicating a strong ability to meet short-term obligations. The company's year-over-year revenue growth of 27.4% in the most recent quarter was primarily driven by higher sales volume and a higher selling price, as well as lower gross-to-net (GTN) deductions due to a lower discarded drug rebate accrual. However, net income decreased by 5.9% compared to the prior year quarter, primarily due to higher operating expenses.

It's worth noting that ADCT primarily sells ZYNLONTA in the United States, although the company does generate some royalty revenue from ex-US partnerships. The majority of its sales remain domestic.

Investing in Growth and Diversification

ADC Therapeutics' strategy is focused on expanding the use of ZYNLONTA beyond its current indication and advancing its pipeline of novel ADC candidates. The company is actively pursuing clinical trials to evaluate ZYNLONTA in earlier lines of therapy for DLBCL, as well as in combination with other therapies, such as the bispecific antibody glofitamab, in an effort to enhance efficacy and improve patient outcomes.

The company expects to fully enroll the LOTIS-5 Phase 3 confirmatory study of ZYNLONTA plus rituximab in 2nd line+ DLBCL by the end of 2024, with data expected by the end of 2025. Additionally, ADCT plans to report interim safety and efficacy data from the LOTIS-7 Part 2 dose expansion study of ZYNLONTA plus glofitamab in 2nd line+ DLBCL in December 2024, with additional data expected in the first half of 2025.

In the solid tumor space, ADC Therapeutics has made strategic decisions to focus on its most promising assets. The company has decided to discontinue the ADCT-601 program targeting AXL, as it was unable to demonstrate a favorable benefit-risk profile during the dose optimization/expansion phase. This decision reflects a disciplined approach to portfolio management and a focus on the most promising assets.

ADC Therapeutics is now advancing its pre-clinical pipeline, which includes investigational ADCs targeting Claudin-6, PSMA, NaPi2b, and ASCT2. The company is currently conducting Investigational New Drug (IND) enabling studies for the Claudin-6, PSMA, and NaPi2b programs, while the ASCT2 program is in the drug candidate selection stage and expected to be completed this year.

Addressing Unmet Needs in Oncology

The oncology landscape continues to evolve, with the emergence of new treatment modalities such as cellular therapies, bispecific antibodies, and ADCs. ADC Therapeutics is well-positioned to capitalize on these advancements, as its ZYNLONTA has demonstrated competitive efficacy and a manageable safety profile, positioning it as a potential combination partner for these novel therapies.

Furthermore, the company's investigator-initiated trials evaluating ZYNLONTA in indolent lymphomas, such as follicular lymphoma and marginal zone lymphoma, have shown promising results, highlighting the potential to expand the drug's utility beyond its current DLBCL indication and address significant unmet needs in these patient populations. ADCT plans to present updated data from two investigator-initiated trials of ZYNLONTA in indolent lymphomas at the ASH meeting in December 2024.

Navigating a Competitive Landscape

The oncology market is highly competitive, with numerous players vying for market share. ADC Therapeutics faces competition from other ADC-based therapies, as well as emerging modalities like bispecific antibodies and cellular therapies. However, the company's commitment to innovation, its specialized expertise in ADC development, and the clinical data supporting ZYNLONTA's efficacy and safety profile position it well to navigate this landscape.

The company's strategic partnerships, such as its collaboration with Overland ADCT BioPharma for the development and commercialization of ZYNLONTA and other product candidates in Greater China and Singapore, also strengthen its global reach and ability to compete effectively.

Conclusion

ADC Therapeutics is a pioneering force in the field of antibody drug conjugates, with a diverse pipeline, a commercialized product in ZYNLONTA, and a strong financial position. The company's focus on advancing its lead asset and exploring combination therapies, coupled with its commitment to innovation, positions it for continued growth and the potential to address significant unmet needs in oncology.

The company's recent financial performance, with growing ZYNLONTA revenues and a solid cash position, provides a foundation for executing its strategic plans. As ADC Therapeutics navigates the competitive landscape, its specialized expertise, clinical data-driven approach, and focus on both hematological malignancies and solid tumors suggest a promising future for the company and its shareholders.

While challenges remain, including the need to demonstrate continued traction with ZYNLONTA and advancement of its pipeline, ADC Therapeutics' strong cash position and targeted approach to research and development provide the resources and focus needed to drive long-term value in the evolving oncology market.