ADC Therapeutics(ADCT) - 2024 Q4 - Annual Report

Revenue Performance - Product revenues, net for the year ended December 31, 2024, were $69.3 million, a slight increase of$0.2 million or 0.3% compared to $69.1 million in 2023[395] - License revenues and royalties increased significantly to$1.6 million in 2024 from $0.5 million in 2023, representing a growth of$1.1 million or 212.7%[397] - Total revenue, net for 2024 was $70.8 million, an increase of$1.3 million or 1.8% from $69.6 million in 2023[393] Operating Expenses - Total operating expenses decreased to$201.5 million in 2024 from $235.5 million in 2023, a reduction of$34.1 million or 14.5%[393] - Research and development expenses were $109.6 million for 2024, down$17.5 million or 13.8% from $127.1 million in 2023[403] - Selling and marketing expenses decreased to$44.0 million in 2024, a reduction of $13.4 million or 23.4$57.5 million in 2023[408] - General and administrative expenses were $41.9 million for the year ended December 31, 2024, a decrease of$6.5 million, or 13.5%, compared to $48.4 million in 2023[413] Net Loss and Financial Performance - The net loss for 2024 was$157.8 million, a decrease of $82.2 million or 34.2$240.1 million in 2023[393] - Interest income increased to $12.3 million for the year ended December 31, 2024, an increase of$1.7 million, or 16.4%, from $10.5 million in 2023[415] - Interest expense rose to$50.2 million for the year ended December 31, 2024, an increase of $3.9 million, or 8.4$46.3 million in 2023[416] - Income tax expense significantly decreased to $0.2 million for the year ended December 31, 2024, from$39.1 million in 2023, primarily due to a full valuation allowance on deferred tax assets[421] Cash Flow and Liquidity - Cash and cash equivalents as of December 31, 2024, were $250.9 million, sufficient to fund operations for at least the next twelve months[426] - Net cash used in operating activities increased to$123.8 million for the year ended December 31, 2024, from $118.7 million in 2023, an increase of$5.1 million[435] - Net cash provided by financing activities was $97.1 million for the year ended December 31, 2024, primarily from the completion of an equity offering[437] Product Development and Strategic Initiatives - ZYNLONTA, the flagship product, received accelerated approval from the FDA and is being expanded into earlier lines of DLBCL and indolent lymphomas[391] - The company is pursuing strategic partnerships and collaborations to maximize the value of its solid tumor program[392] - Research and development expenses for ZYNLONTA specifically were$58.3 million in 2024, down from $68.5 million in 2023, a decrease of$10.2 million or 14.8%[403] Royalty Obligations and Accounting Estimates - Cumulative catch-up adjustment income related to the deferred royalty obligation was $11.2 million for the year ended December 31, 2024, up$6.2 million from $5.0 million in 2023[419] - The deferred royalty obligation involves estimating future royalty payments based on revenue projections, with adjustments made if actual payments differ significantly from estimates[450] - The company uses a Monte Carlo simulation model to estimate the total amount of future royalty payments to HCR, which can vary based on actual net sales of ZYNLONTA[449] - The provision for the discarded drug rebate is recorded in either current or long-term liabilities depending on when refunds are expected to be due[446] - The accounting estimates involve significant uncertainty, and actual results may differ from those estimates under different assumptions[441]