ADC Therapeutics(ADCT) - 2025 Q2 - Quarterly Report

PART I: FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and notes for June 30, 2025 and 2024 Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $264,560 | $250,867 | | Total current assets | $318,755 | $307,390 | | Total assets | $321,561 | $321,980 | | Total current liabilities | $64,600 | $80,469 | | Total liabilities | $520,745 | $524,622 | | Total shareholders' (deficit) equity | $(199,184) | $(202,642) | Condensed Consolidated Statements of Operations This section outlines the company's revenues, expenses, and net loss over specific reporting periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue, net | $18,839 | $17,410 | $41,872 | $35,463 | | Total operating expense | $(62,986) | $(46,451) | $(114,483) | $(98,117) | | Loss from operations | $(44,147) | $(29,041) | $(72,611) | $(62,654) | | Net loss | $(56,646) | $(36,544) | $(95,248) | $(83,150) | | Net loss per share, basic and diluted | $(0.50) | $(0.38) | $(0.86) | $(0.93) | Condensed Consolidated Statements of Comprehensive Loss This section details the net loss and other comprehensive income or loss, culminating in total comprehensive loss | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(56,646) | $(36,544) | $(95,248) | $(83,150) | | Other comprehensive income (loss) | $704 | $(137) | $1,033 | $(245) | | Total comprehensive loss | $(55,942) | $(36,681) | $(94,215) | $(83,395) | Condensed Consolidated Statements of Changes in Shareholders' (Deficit) Equity This section tracks changes in common shares, additional paid-in capital, accumulated deficit, and total shareholders' equity | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Common shares, par value | $9,753 | $8,425 | | Additional paid-in capital | $1,380,224 | $1,283,892 | | Accumulated deficit | $(1,588,566) | $(1,493,318) | | Total shareholders' (deficit) equity | $(199,184) | $(202,642) | - Total shareholders' deficit improved from $(202,642) thousand at December 31, 2024, to $(199,184) thousand at June 30, 2025, primarily due to the 2025 Private Placement which increased additional paid-in capital by $93,667 thousand for the three months ended June 30, 2025, and $96,332 thousand for the six months ended June 30, 2025, partially offset by net losses[22][24] Condensed Consolidated Statements of Cash Flows This section details cash flows from operating, investing, and financing activities, and their impact on cash and cash equivalents | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(80,421) | $(76,940) | | Net cash used in investing activities | $(264) | $(561) | | Net cash provided by financing activities | $94,054 | $99,053 | | Net increase in cash and cash equivalents | $13,369 | $21,552 | | Cash and cash equivalents at end of period | $264,560 | $300,119 | Notes to the Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Description of Business and Organization This note describes the company's core business, primary products, and organizational structure - ADC Therapeutics is a commercial-stage global leader in antibody drug conjugates (ADCs), focusing on ZYNLONTA (loncastuximab tesirine-lpyl) and an early-stage PSMA-targeting ADC[27] - ZYNLONTA has received accelerated approval from the FDA in the U.S. and conditional approvals in Europe, China, and Canada for relapsed or refractory DLBCL[27] - The Company was incorporated in Switzerland in 2011 and has wholly-owned subsidiaries in the U.S. (ADCT America) and UK (ADCT UK)[28] 2. Summary of Significant Accounting Policies This note outlines the key accounting principles and methods used in preparing the financial statements - The unaudited condensed consolidated financial statements are prepared following SEC requirements for interim reporting, condensing certain footnotes and information normally required by U.S. GAAP[30] - On June 11, 2025, the Board approved a strategic restructuring plan (2025 Restructuring) to shut down its UK facility and reduce the global workforce by approximately 30%[34][35] - As a result of the 2025 Restructuring, the Company recognized $5.4 million of impairment losses on its long-lived asset group associated with the UK facility during the three months ended June 30, 2025[37] 3. Fair value measurements This note details the valuation methodologies and inputs used for financial instruments measured at fair value - The fair value of the deferred royalty obligation was approximately $312.0 million as of June 30, 2025, and December 31, 2024, based on Level 3 inputs (estimates of future royalties)[40] - Deerfield warrants expired on May 19, 2025, and had a fair value of $0 as of December 31, 2024, valued using a Black-Scholes model[41][59][60] 4. Inventory This note provides a breakdown of inventory components and related valuation adjustments | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Work in progress | $17,620 | $18,338 | | Finished goods | $143 | $49 | | Total inventory, net | $17,763 | $18,387 | - Inventory write-downs of $1,636 thousand were recognized for the six months ended June 30, 2025, compared to $1,036 thousand for the same period in 2024, charged to cost of product sales[43] 5. Property and equipment This note presents the carrying amounts of property and equipment, including depreciation and impairment details | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Leasehold improvements | $1,498 | $3,873 | | Laboratory equipment | $3,009 | $4,415 | | Office equipment | $781 | $970 | | Hardware and computer software | $1,148 | $1,137 | | Total | $6,436 | $10,395 | | Less: accumulated depreciation | $(6,435) | $(5,320) | | Property and equipment, net | $1 | $5,075 | - In connection with the 2025 Restructuring, the Company recorded impairment of property and equipment of $5.0 million during the three and six months ended June 30, 2025, related to the UK facility[45] 6. Leases This note provides information on lease liabilities, right-of-use assets, and lease maturities - Due to the 2025 Restructuring, the UK facility lease liability and right-of-use asset were remeasured, resulting in a $6.8 million reduction as of June 30, 2025[47] - The Company extended its New Jersey office lease by eighteen months, expiring December 31, 2026[49] Lease Maturities (in thousands) | Lease Maturities (in thousands) | Amount | | :------------------------------ | :----- | | Year ending December 31, 2025 | $889 | | Year ending December 31, 2026 | $1,221 | | Year ending December 31, 2027 | $165 | | Year ending December 31, 2028 | $165 | | Year ending December 31, 2029 | $165 | | Thereafter | $641 | | Total lease payments | $3,246 | | Present value of lease liabilities | $3,050 | 7. Accrued expenses and other current liabilities This note details the components of accrued expenses and other current liabilities | (in thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Accrued R&D costs | $21,677 | $20,523 | | Accrued payroll and benefits | $5,996 | $13,600 | | Accrued restructuring costs | $6,631 | — | | Gross-to-net sales adjustments, short-term | $8,369 | $15,697 | | Operating lease liabilities, short-term | $1,792 | $1,371 | | Other | $10,519 | $11,249 | | Total | $54,984 | $62,440 | 8. Senior secured term loan facility This note describes the terms and financial impact of the company's senior secured term loan facility - The Company drew down $120.0 million principal amount of term loans under the Loan Agreement on August 15, 2022[52] Interest Expense (in thousands) | Interest Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contractual interest expense | $3,624 | $3,973 | $7,218 | $7,873 | | Amortization of debt discount | $650 | $440 | $841 | $943 | | Total | $4,274 | $4,413 | $8,059 | $8,816 | - The effective interest rate (EIR) at June 30, 2025, was 16.15%. The carrying value of the loan was $114.5 million at June 30, 2025[55][56] 9. Deerfield warrants This note provides details on the Deerfield warrants, including their issuance, fair value, and expiration - Warrants to purchase 4,412,840 common shares were issued to Deerfield on August 15, 2022, with exercise prices of $24.70 and $28.07 per share[58] - The Deerfield warrants expired on May 19, 2025, and had a fair value of $0 as of December 31, 2024[59] Valuation Input (as of Dec 31, 2024) | Valuation Input (as of Dec 31, 2024) | Value | | :----------------------------------- | :---- | | Exercise price | $24.70 and $28.07 | | Share price | $1.99 | | Risk-free interest rate | 4.3 % | | Expected volatility | 83.0 % | | Expected term | 0.4 years | | Black-Scholes value | nil and nil | 10. Deferred royalty obligation This note describes the deferred royalty obligation, including the agreement terms and changes in liability balance - The Company entered into a royalty purchase agreement with HCR for up to $325.0 million, receiving $225.0 million initially and an additional $75.0 million in 2023[61] | (in thousands) | Amount | | :--------------- | :----- | | Liability balance at January 1, 2024 | $309,613 | | Liability balance at December 31, 2024 | $326,659 | | Liability balance at June 30, 2025 | $340,411 | - Interest expense on the deferred royalty obligation was $17,168 thousand for the six months ended June 30, 2025, an increase from $16,359 thousand in the prior year[64][86] 11. Pension and post-retirement benefit obligations This note outlines the company's pension and post-retirement benefit plans and associated costs - The Company's pension plan for Swiss employees is a defined benefit plan, fully reinsured with Swiss Life SA[65] Net Periodic Benefit Cost (in thousands) | Net Periodic Benefit Cost (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service cost | $209 | $183 | $397 | $347 | | Interest cost | $28 | $37 | $53 | $75 | | Expected return on plan assets | $(72) | $(59) | $(137) | $(118) | | Net periodic benefit cost | $123 | $121 | $234 | $223 | 12. Commitments and contingencies This note discloses the company's contractual commitments and potential contingent liabilities - The Company has long-term manufacturing commitments for inventory components to meet revenue forecasts[68] - As a result of the 2025 Restructuring, the Company notified its UK landlord of lease termination, but potential costs for returning the leased space to original condition are not yet estimable[69] - The Company is not aware of any legal matters that would have a material impact on its financial condition, liquidity, or results of operations[70] 13. Shareholders' equity This note details changes in the company's equity accounts, including common shares, warrants, and private placements - On June 11, 2025, the Company completed a private placement, selling 13,031,161 common shares and pre-funded warrants to purchase 15,734,267 common shares, generating gross proceeds of $100.0 million and net proceeds of $93.1 million[71][111] - The common shares and pre-funded warrants from the 2025 Private Placement were accounted for as freestanding financial instruments, recognized in equity as additional paid-in capital[73][74] 14. Revenue This note disaggregates revenue by source, including product sales, license fees, and royalties, and identifies major customers | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Product revenues, net | $18,085 | $17,030 | $35,489 | $34,878 | | License revenues | — | — | $5,000 | — | | Royalties | $754 | $380 | $1,383 | $585 | | Total revenue | $18,839 | $17,410 | $41,872 | $35,463 | - Product revenues, net, increased by 6.2% to $18.1 million for the three months ended June 30, 2025, and by 1.8% to $35.5 million for the six months ended June 30, 2025, primarily due to higher price and sales volume[76][115][138] - License revenues and royalties significantly increased, with $5.0 million recognized in March 2025 upon ZYNLONTA's conditional approval by Health Canada[76][80][140] Major Customers (as % of total product revenues) | Major Customers (as % of total product revenues) | 2025 (3 months) | 2024 (3 months) | 2025 (6 months) | 2024 (6 months) | | :----------------------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | McKesson | 40 % | 37 % | 37 % | 40 % | | AmerisourceBergen Corporation | 39 % | 35 % | 40 % | 36 % | | Cardinal Health | 21 % | 28 % | 23 % | 24 % | 15. Restructuring, impairment and other related costs This note details the costs associated with the company's restructuring plan, including severance and asset impairments - The 2025 Restructuring plan, approved on June 11, 2025, focuses resources on ZYNLONTA expansion and PSMA-targeting ADC, discontinuing other preclinical programs[81] - The plan includes shutting down the UK R&D facility and reducing the global workforce by approximately 30% by September 30, 2025[81] Restructuring Costs (in thousands) | Restructuring Costs (in thousands) | Three Months Ended June 30, 2025 | | :--------------------------------- | :------------------------------- | | Severance and benefit expense | $6,677 | | Impairment of long-lived assets and prepaid expenses | $6,414 | | Total restructuring, impairment and other related costs | $13,091 | 16. Other income (expense) This note provides a breakdown of other income and expense items, including interest, warrant valuation changes, and tax credits Interest Expense (in thousands) | Interest Expense (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Deferred royalty obligation interest expense | $8,723 | $8,266 | $17,168 | $16,359 | | Senior secured term loan facility | $4,274 | $4,413 | $8,059 | $8,816 | | Total Interest expense | $12,997 | $12,679 | $25,227 | $25,175 | Other, net (in thousands) | Other, net (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Deerfield warrant obligation, change in fair value income (expense) | $— | $2,230 | $— | $(838) | | Cumulative catch-up adjustment, deferred royalty obligation | $184 | $263 | $196 | $526 | | Exchange differences loss | $(847) | $(59) | $(937) | $(96) | | R&D tax credit gain | $481 | $320 | $762 | $567 | | Other, net | $(182) | $2,754 | $21 | $159 | 17. Share-based compensation This note details the company's share-based compensation plans, including options, RSUs, and related expenses - The Company has various share-based compensation plans (2019 Equity Incentive Plan, Conditional Share Capital Plan, Inducement Plan) for directors, employees, and service providers[88][89][91][93] - Total share-based compensation expense for all awards was $4,232 thousand for the six months ended June 30, 2025, compared to $2,146 thousand for the same period in 2024[26] - As of June 30, 2025, 1,550,150 common shares were available for future issuance under the 2019 Equity Incentive Plan, and 1,582,328 under the Conditional Share Capital Plan[89][91] Share Options Movement | Share Options Movement | Number of awards | Weighted average strike price per share | | :--------------------- | :--------------- | :------------------------------------ | | Outstanding as of December 31, 2024 | 10,697,288 | $8.69 | | Granted | 362,950 | $2.54 | | Forfeited | (320,972) | $3.62 | | Expired | (75,599) | $17.62 | | Exercised | (18,565) | $1.87 | | Outstanding as of June 30, 2025 | 10,645,102 | $8.59 | - Unrecognized compensation cost related to unvested share options was $5.2 million as of June 30, 2025, to be recognized over an estimated weighted-average amortization period of 1.55 years[97] RSU Awards Movement | RSU Awards Movement | Number of awards | Weighted average grant date fair value (in $ per share) | | :------------------ | :--------------- | :---------------------------------------------------- | | December 31, 2024 | 3,106,310 | $1.81 | | Granted | 5,295,765 | $1.71 | | Vested | (511,433) | $5.38 | | Forfeited | (487,974) | $1.42 | | June 30, 2025 | 7,402,668 | $1.52 | 18. Loss per share This note presents the calculation of basic and diluted loss per share, including the impact of potentially dilutive securities | (in thousands, except share and per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(56,646) | $(36,544) | $(95,248) | $(83,150) | | Weighted average number of shares outstanding | 113,743,358 | 95,691,245 | 110,490,935 | 89,121,783 | | Basic and diluted loss per share | $(0.50) | $(0.38) | $(0.86) | $(0.93) | - Potentially dilutive securities, including share options, RSUs, and outstanding warrants, were excluded from diluted EPS calculations as their effect would be anti-dilutive[103][104] 19. Segment reporting This note provides information on the company's operating segments, including revenues, expenses, and profit or loss - The Company operates and is managed as one reportable segment, encompassing all global activities related to the development and commercialization of targeted ADC cancer therapies[105] - The Chief Executive Officer, as the CODM, uses loss from operations and consolidated net loss to assess performance and allocate resources[105] Segment Profit or Loss (in thousands) | Segment Profit or Loss (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues, net | $18,839 | $17,410 | $41,872 | $35,463 | | Total operating expenses | $(62,986) | $(46,451) | $(114,483) | $(98,117) | | Loss from operations | $(44,147) | $(29,041) | $(72,611) | $(62,654) | | Net loss | $(56,646) | $(36,544) | $(95,248) | $(83,150) | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides a detailed discussion and analysis of the Company's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the same periods in 2024. It covers business overview, strategic reprioritization, financial performance drivers, liquidity, capital resources, and cash flow changes Business Overview This section provides an overview of the company's business, strategic priorities, and recent corporate developments - ADC Therapeutics is a commercial-stage global leader in antibody drug conjugates (ADCs), with ZYNLONTA as its flagship product and an early-stage PSMA-targeting ADC[108] - ZYNLONTA is approved in the U.S., Europe, China, and Canada for relapsed or refractory DLBCL, with ongoing trials (LOTIS-5, LOTIS-7) to expand its indications[108] - The Company approved a strategic reprioritization and restructuring plan on June 11, 2025, to focus on ZYNLONTA and the PSMA-targeting ADC, discontinuing other preclinical programs, shutting down its UK facility, and reducing its global workforce by approximately 30%[110] - A private placement completed on June 11, 2025, raised $100.0 million in gross proceeds ($93.1 million net) through the sale of common shares and pre-funded warrants[111] Results of Operations This section analyzes the company's financial performance, including revenue, expenses, and net loss, for the reported periods Three Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :---------- | :---------- | :---------- | :------- | | Product revenues, net | $18,085 | $17,030 | $1,055 | 6.2 % | | License revenues and royalties | $754 | $380 | $374 | 98.4 % | | Total revenue, net | $18,839 | $17,410 | $1,429 | 8.2 % | | Research and development | $(30,090) | $(24,295) | $(5,795) | 23.9 % | | Selling and marketing | $(10,147) | $(10,701) | $554 | (5.2) % | | General and administrative | $(8,822) | $(10,238) | $1,416 | (13.8) % | | Restructuring, impairment and other related costs | $(13,091) | — | $(13,091) | 100.0 % | | Net loss | $(56,646) | $(36,544) | $(20,102) | 55.0 % | Six Months Ended June 30, 2025 vs 2024 | Metric (in thousands) | 2025 | 2024 | Change | % Change | | :-------------------- | :---------- | :---------- | :---------- | :------- | | Product revenues, net | $35,489 | $34,878 | $611 | 1.8 % | | License revenues and royalties | $6,383 | $585 | $5,798 | 991.1 % | | Total revenue, net | $41,872 | $35,463 | $6,409 | 18.1 % | | Research and development | $(59,018) | $(50,030) | $(8,988) | 18.0 % | | Selling and marketing | $(20,700) | $(22,091) | $1,391 | (6.3) % | | General and administrative | $(18,777) | $(22,269) | $3,492 | (15.7) % | | Restructuring, impairment and other related costs | $(13,091) | — | $(13,091) | 100.0 % | | Net loss | $(95,248) | $(83,150) | $(12,098) | 14.5 % | - R&D expenses increased due to ZYNLONTA clinical trials (LOTIS-5, LOTIS-7) and IND-enabling activities for the PSMA-targeting ADC, partially offset by reduced spending on discontinued programs[123][145][146] - Selling and marketing expenses decreased due to cost-cutting initiatives, particularly in marketing and advertising[125][149] - General and administrative expenses decreased due to lower professional fees, insurance costs, and recruitment costs[127][151] - Interest income decreased due to lower yields and average cash balances, while interest expense remained relatively flat for the six-month period[131][132][156][157] - Income tax expense increased significantly due to a tax adjustment in UK operations resulting from the 2025 restructuring[133][158] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash, including its current cash position and future funding plans - As of June 30, 2025, the Company had $264.6 million in cash and cash equivalents, deemed sufficient to fund operations for at least the next twelve months[161] - Future operating needs are planned to be funded through existing cash, ZYNLONTA sales, milestone/royalty payments, and additional equity/debt financings or collaborations[162] - The $100.0 million private placement completed on June 16, 2025, provided net proceeds of $93.1 million, contributing significantly to liquidity[164] - Primary uses of capital include R&D, S&M, compensation, debt payments, and other operating expenses, with continued focus on ZYNLONTA expansion and PSMA-targeting ADC development[165] Cash Flows This section analyzes the sources and uses of cash from operating, investing, and financing activities | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--------------- | :----------------------------- | :----------------------------- | :----- | | Operating activities | $(80,421) | $(76,940) | $(3,481) | | Investing activities | $(264) | $(561) | $297 | | Financing activities | $94,054 | $99,053 | $(4,999) | | Net change in cash and cash equivalents | $13,369 | $21,552 | $(8,183) | - Net cash used in operating activities increased by $3.5 million, primarily due to a $7.2 million payment of the 2023 discarded drug rebate and a $4.0 million increase in bonus/retention payments, partially offset by increased partner collections[167] - Net cash provided by financing activities decreased by $5.0 million, with 2025 driven by the private placement and 2024 by an equity offering[169] Off-Balance Sheet Arrangements This section discloses any off-balance sheet arrangements that could have a material effect on the company's financial condition - The Company did not have any off-balance sheet arrangements during the periods presented and does not currently have any[170] Contractual Obligations and Commitments This section outlines the company's significant contractual obligations and commitments - Due to the 2025 Restructuring, the Company notified its UK landlord of lease termination, but the liability for returning the leased space to its original condition is not yet estimable[171] Critical Accounting Estimates This section discusses accounting estimates that require significant judgment and could materially impact financial results - There have been no material changes to the significant accounting estimates previously disclosed in the Company's Annual Report[172] Recently Issued and Adopted Accounting Pronouncements This section provides information on new accounting standards that have been issued or adopted by the company - Refer to Note 2 of the unaudited condensed consolidated financial statements for information on recently issued accounting pronouncements not yet adopted[173] Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company is not required to provide disclosures about market risk as it qualifies as a smaller reporting company - The Company is exempt from providing quantitative and qualitative disclosures about market risk because it is a smaller reporting company[174] Item 4. Controls and Procedures Management, with CEO and CFO participation, evaluated disclosure controls and procedures, concluding they were effective as of June 30, 2025. There were no material changes to internal control over financial reporting during the period - Disclosure controls and procedures were evaluated and deemed effective as of the end of the reporting period[175][176] - No material changes to internal control over financial reporting occurred during the period covered by the report[177] PART II: OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, and other disclosures Item 1. Legal Proceedings The Company is not currently involved in any legal proceedings or claims that are expected to have a material adverse effect on its consolidated financial condition, liquidity, or results of operations - The Company is not party to any claim or litigation expected to have a material adverse effect on its financial condition, liquidity, or results of operations[179] Item 1A. Risk Factors This section supplements previously disclosed risk factors, highlighting new risks related to potential changes in U.S. trade policy, specifically tariffs, and drug pricing policies, such as the Most Favored Nation (MFN) drug pricing initiative, which could negatively impact product sales revenue and increase operating costs - Changes in U.S. trade policy, including tariffs, could increase the Company's cost of sales and operating expenses, as products are manufactured outside the U.S[181] - New U.S. drug pricing policies, such as the Most Favored Nation (MFN) drug pricing, could substantially reduce the U.S. list price of ZYNLONTA, negatively impacting product sales revenue[182] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Information regarding recent unregistered sales of equity securities has been previously disclosed in a Form 8-K. The Company did not make any purchases of its own equity securities during the reporting period - Information on unregistered sales of equity securities was disclosed in a Form 8-K dated June 12, 2025[183] - There were no purchases of the Company's equity securities by or on behalf of the Company or any affiliated purchaser during the period[185] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[186] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable to the Company[187] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements during the reporting period - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the period[188] Item 6. Exhibits This section lists all exhibits filed with or incorporated by reference into this Quarterly Report, including Articles of Association, securities purchase agreements, certifications, and XBRL taxonomy documents - The report includes a list of exhibits, such as Articles of Association, securities purchase agreements, pre-funded warrants, and various certifications[189][190]