On November 2, 2021 ADC Therapeutics SA (NYSE: ADCT), a commercial-stage biotechnology company improving the lives of those affected by cancer with its next-generation, targeted antibody drug conjugates (ADCs) for patients with hematologic malignancies and solid tumors, reported financial results for the third quarter ended September 30, 2021 and provided business updates (Press release, ADC Therapeutics, NOV 2, 2021, View Source [SID1234594148]).

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"We are pleased with the momentum of the ZYNLONTA launch to date and the positive reception from the physician community. Top priorities for the company remain driving the continued growth of ZYNLONTA and developing the longer-term potential of ZYNLONTA for patients," said Chris Martin, PhD, Chief Executive Officer of ADC Therapeutics. "We are also excited by the progress of our diverse clinical-stage pipeline in both hematology and solid tumors."

Recent Highlights and Developments

ZYNLONTA

ZYNLONTA generated net sales of $13.1 million in the third quarter of 2021, the first full quarter of sales.
Academic centers represented over 50% of total volume with an approximately 50/50 split between academic and community accounts in the third quarter.
The Company continued to initiate new accounts and increase volume from existing and prioritized accounts, including National Comprehensive Cancer Network (NCCN) centers.
Brand aided and unaided awareness, perception and intent to prescribe continued to increase through the quarter.
Broad payer access has been achieved, with no barriers encountered to date. A comprehensive patient support program, Advancing Patient Support, is available to patients.
The Company continued to operate efficiently in the dynamic COVID environment. The sales and medical teams are executing with a hybrid model conducting both virtual and face-to-face interactions according to customer preferences and local conditions.
Clinical-Stage Pipeline

ADCT-901: Dosed the first patient in the Phase 1 study for ADCT-901, targeting KAAG-1, a novel antigen expressed in various cancers, in patients with advanced solid tumors. KAAG-1 is expressed intracellularly in healthy tissues, but over-expression occurs on the membrane of certain advanced solid tumors such as ovarian cancer and breast cancer, including triple negative breast cancer.
ADCT-701: Entered into a collaboration with the National Cancer Institute (NCI) at the National Institutes of Health for the continued development of ADCT-701, targeting DLK-1, in neuroendocrine malignancies. DLK-1 is expressed during embryonic development, but expression is very restricted in healthy adult tissues. Over-expression occurs on the membrane of certain advanced solid tumors found in adrenocortical carcinoma, pheochromocytoma, paraganglioma, neuroblastoma and small cell lung cancer.
Corporate Update

Geographic Expansion: ADC Therapeutics is committed to expanding its geographic footprint to provide ZYNLONTA and other novel treatments to patients who can benefit from them globally.
The Marketing Authorization Application (MAA) for ZYNLONTA was validated by the European Medicines Agency (EMA) for treatment in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) in October.
Orphan Drug Designation was granted in the EU to ZYNLONTA for the treatment of DLBCL.
Overland ADCT BioPharma dosed the first patient in the pivotal Phase 2 clinical trial of ZYNLONTA in patients with relapsed or refractory DLBCL in China, which is intended to support the anticipated registration of ZYNLONTA in China.
Upcoming Expected Milestones

ZYNLONTA

Initiate the dose-finding study of ZYNLONTA in first-line DLBCL with R-CHOP in the fourth quarter of 2021.
Initiate the clinical study to evaluate ZYNLONTA in multiple combinations in B-cell non-Hodgkin lymphoma in the fourth quarter of 2021.
Complete enrollment of safety lead-in of the Phase 3 LOTIS-5 confirmatory study of ZYNLONTA in combination with rituximab in the fourth quarter of 2021.
Continue enrollment in the Phase 2 LOTIS-3 study of ZYNLONTA in combination with ibrutinib in the fourth quarter of 2021.
Cami

Complete 12-month follow up of Phase 2 trial in relapsed or refractory Hodgkin lymphoma in the first quarter of 2022.
Report preliminary results for the Phase 2 trial in Hodgkin lymphoma in the first half of 2022.
Complete dose finding for Phase 1b solid tumor trial in combination with pembrolizumab.
Clinical-Stage Pipeline

Initiate a Phase 1b combination study of ADCT-601 (mipasetamab uzoptirine), in tumors known to express AXL, in the first half of 2022.
Third Quarter 2021 Financial Results

Cash and Cash Equivalents

Cash and cash equivalents were $530.2 million as of September 30, 2021, compared to $371.9 million as of June 30, 2021. During the third quarter of 2021, the Company entered into a financing agreement with HealthCare Royalty Partners (HCR) for up to $325 million, including gross proceeds of $225 million upon closing before deducting transaction costs of $7.0 million.

Product Revenue

Product revenue (net) was $13.1 million for the quarter ended September 30, 2021, compared to zero for the same quarter in 2020. Net revenues are for U.S. sales of ZYNLONTA, which received accelerated approval from the FDA on April 23, 2021.

Research and Development (R&D) Expenses

R&D expenses were $36.8 million for the quarter ended September 30, 2021, compared to $32.2 million for the same quarter in 2020. R&D expenses increased due to investments in programs evaluating the potential of ZYNLONTA in earlier lines of treatment and additional histologies and advancing the portfolio. As a result of these initiatives, employee headcount and share-based compensation expense increased.

Selling and Marketing (S&M) Expenses

During the third quarter of 2021, S&M expenses were $17.0 million as compared to $6.1 million for the same quarter in 2020. The increase in S&M expenses was related to the launch of ZYNLONTA. Prior to December 31, 2020, S&M expenses were reported within General and Administrative (G&A) expenses within the condensed consolidated interim statement of operations. The period ended September 30, 2020, has been recast to conform to the current year presentation.

G&A Expenses

G&A expenses were $16.6 million for the quarter ended September 30, 2021, compared to $14.2 million for the same quarter in 2020. G&A expenses increased due to higher headcount to support the commercial launch and increased share-based compensation expense.

Net Loss and Adjusted Net Loss

Net loss was $71.5 million, or a net loss of $0.93 per basic and diluted share, for the quarter ended September 30, 2021, compared to $20.3 million, or a net loss of $0.29 per basic and diluted share, for the same quarter in 2020. Net loss included share-based compensation expense of $14.8 million for the quarter ended September 30, 2021, compared to $11.0 million for the same quarter in 2020. In addition, net loss for the quarter ended September 30, 2021, includes a $6.9 million non-cash loss related to the changes in fair value of derivatives associated with the convertible loans under the Convertible Credit Facility with Deerfield, compared to a $33.9 million non-cash gain for the same quarter in 2020. The increase in fair value for the quarter ended September 30, 2021, was driven by the increase in the Company’s share price from June 30, 2021. The decrease in fair value for the quarter ended September 30, 2020, was primarily driven by the decrease in the Company’s share price from June 30, 2020.

Adjusted net loss was $45.6 million, or an adjusted net loss of $0.59 per basic and diluted share, for the quarter ended September 30, 2021, compared to $41.3 million, or an adjusted net loss of $0.58 per basic and diluted share, for the same quarter in 2020. The increase in adjusted net loss was primarily driven by investment in the expanding clinical portfolio and the launch of ZYNLONTA.

Conference Call Details

ADC Therapeutics management will host a conference call and live audio webcast to discuss third quarter 2021 financial results and provide a company update today at 8:30 a.m. Eastern Time. To access the live call, please dial 833-303-1198 (domestic) or +1 914-987-7415 (international) and provide conference ID 4035885. A live webcast of the presentation will be available under "Events and Presentations" in the Investors section of the ADC Therapeutics website at 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.