ADC Therapeutics(ADCT) - 2024 Q2 - Quarterly Results

Executive Summary ADC Therapeutics reported its Q2 2024 results, highlighting that its key product, ZYNLONTA®, achieved commercial profitability in the first half of the year - ZYNLONTA® achieved commercial profitability in the first half of 2024[2][3] - The company's cash runway has been extended into mid-2026 following a recent underwritten offering[2][6] - Key clinical trial updates are expected by year-end 2024 for LOTIS-7 and in H1 2025 for mature data. Full enrollment for the LOTIS-5 trial is expected before year-end 2024[1] Operational Updates and Pipeline Highlights The company reported ZYNLONTA® net sales of $17.0 million for Q2 2024, with demand affected by ordering variability, while key clinical programs are advancing ZYNLONTA® Commercial Performance ZYNLONTA® generated net product sales of $17.0 million in Q2 2024, representing a 5% decrease from the previous quarter, partly due to ordering variability ZYNLONTA® Net Sales | Metric | Q2 2024 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $17.0M | $17.8M | -5% | - Demand was impacted in part by variability in ordering patterns during the second quarter[3] ZYNLONTA® Clinical Development Progress continues across ZYNLONTA's clinical development programs, with LOTIS-7 and LOTIS-5 trials on track for enrollment completion by year-end 2024 - LOTIS-7 (Phase 1b): Enrollment in the dose expansion part is progressing and expected to complete by year-end, with a safety and efficacy update anticipated by year-end 2024[3] - LOTIS-5 (Phase 3): An independent committee recommended the trial continue as planned. Full enrollment is expected before year-end 2024[4] - Investigator-initiated trial in MZL: Initial data from 15 evaluable patients showed 13 complete responses and 1 partial response[5] Early-Stage Pipeline Development The company's early-stage pipeline is advancing, with ADCT-601 Phase 1b trial enrolling patients and IND-enabling studies progressing for new ADC targets - ADCT-601 (targeting AXL): The Phase 1b trial continues enrollment, with an initial update from the trial expected in H2 2024[5] - Progress continues in IND-enabling studies for ADCs targeting PSMA, NaPi2b, and Claudin-6. The company expects to disclose one target to move toward IND in 2025[6] Second Quarter and First Half 2024 Financial Results For Q2 2024, ADC Therapeutics reported total revenues of $17.4 million and a net loss of $36.5 million, an improvement from Q2 2023, with cash strengthened to $300.1 million Financial Position As of June 30, 2024, the company's cash and cash equivalents stood at $300.1 million, an increase from $278.6 million at the end of 2023, bolstered by a recent offering Cash and Cash Equivalents | Date | Amount (in millions) | | :--- | :--- | | June 30, 2024 | $300.1 | | Dec 31, 2023 | $278.6 | - A May 2024 underwritten offering resulted in net proceeds of approximately $97.4 million, extending the cash runway into mid-2026[6] Statement of Operations Analysis In Q2 2024, net product revenues decreased to $17.0 million, but operating expenses were significantly reduced, leading to an improved net loss of $36.5 million Q2 2024 vs. Q2 2023 Financial Performance (in millions) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Product Revenues, Net | $17.0 | $19.2 | | R&D Expense | $24.3 | $31.3 | | S&M Expense | $10.7 | $14.5 | | G&A Expense | $10.2 | $12.0 | | Net Loss | ($36.5) | ($48.9) | | Net Loss Per Share | ($0.38) | ($0.60) | - The decrease in operating expenses was driven by productivity initiatives, focused investment in prioritized programs, and lower marketing and personnel costs[7][8] Non-GAAP Financial Measures On a non-GAAP basis, the adjusted net loss for Q2 2024 was $24.4 million, a favorable comparison to $32.1 million in Q2 2023, primarily due to lower operating expenses Q2 Adjusted Financials (Non-GAAP) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Adjusted Net Loss | ($24.4M) | ($32.1M) | | Adjusted Net Loss per Share | ($0.25) | ($0.39) | Appendices This section includes supplementary information such as investor call details, company and product background, non-GAAP measure explanations, forward-looking statements, and detailed unaudited financial tables Condensed Consolidated Statements of Operation This unaudited statement details the company's revenues and expenses for the three and six months ended June 30, 2024, and 2023, showing a Q2 2024 net loss of $36.5 million Key Financial Data (Three Months Ended June 30, in thousands) | Description | 2024 | 2023 | | :--- | :--- | :--- | | Total revenue, net | $17,410 | $19,283 | | Total operating expense | ($46,451) | ($58,932) | | Loss from operations | ($29,041) | ($39,649) | | Net loss | ($36,544) | ($48,922) | Condensed Consolidated Balance Sheet This unaudited statement presents the company's financial position as of June 30, 2024, compared to December 31, 2023, showing total assets of $371.8 million Key Balance Sheet Data (in thousands) | Description | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $300,119 | $278,598 | | Total assets | $371,779 | $354,782 | | Total liabilities | $503,449 | $503,031 | | Total shareholders' equity (deficit) | ($131,670) | ($148,249) | Reconciliation of GAAP to Non-GAAP Measures This section provides a detailed reconciliation of GAAP financial figures to non-GAAP adjusted figures, bridging the GAAP net loss of $36.5 million to an adjusted net loss of $24.4 million for Q2 2024 - The reconciliation bridges GAAP net loss to adjusted net loss by excluding non-cash items like share-based compensation and changes in fair value of warrants, as well as certain interest expenses[29][30][31] About ZYNLONTA® ZYNLONTA® is a CD19-directed antibody-drug conjugate (ADC) approved for adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy - ZYNLONTA is a CD19-directed ADC designed to be internalized by CD19-expressing cells, where it releases a PBD payload to cause cell cycle arrest and death[12] - It is approved for r/r large B-cell lymphoma after two or more lines of systemic therapy under accelerated/conditional approval pathways[13] About ADC Therapeutics ADC Therapeutics is a commercial-stage global company pioneering antibody-drug conjugates (ADCs) to treat hematologic malignancies and solid tumors, with its lead product ZYNLONTA® approved for diffuse large B-cell lymphoma - The company is a commercial-stage leader in the field of antibody-drug conjugates (ADCs)[15] - It is based in Lausanne, Switzerland, with operations in London and New Jersey[16] Forward-Looking Statements This section serves as a legal disclaimer, cautioning that the press release contains forward-looking statements subject to significant risks and uncertainties, where actual results could differ materially from expectations - The document contains forward-looking statements that are not guarantees of future performance and are subject to risks and uncertainties[21] - Key risks include the ability to grow ZYNLONTA revenue, timing and results of clinical trials (LOTIS 5, LOTIS 7, ADCT 601), regulatory outcomes, and restrictions from indebtedness[21]