On March 3, 2022 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 fourth quarter and full year ended December 31, 2021 and provided business updates (Press release, ADC Therapeutics, MAR 3, 2022, View Source [SID1234609485]).
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"We are encouraged by the progress of the ZYNLONTA launch and pleased with its differentiated product profile across the third-line patient spectrum, including patients with hard-to-treat disease, such as double hit/triple hit genetics, primary refractory and post CAR-T. In addition, data from our combination studies suggest that ZYNLONTA may be a valuable combination agent in earlier lines of therapy," said Chris Martin, DPhil, Chief Executive Officer of ADC Therapeutics. "Based on the latest data generated from our ZYNLONTA programs, we are focusing our efforts on the combination with rituximab in earlier lines of DLBCL, studies which offer the most rapid potential path to registration in areas of high unmet medical need. As we look ahead in 2022, we remain deeply committed to expanding the reach of ZYNLONTA to more patient types and geographies, advancing Cami towards a potential future BLA in Hodgkin lymphoma and advancing our solid tumor pipeline comprised of three clinical programs and two additional preclinical programs with near-term IND plans."
Recent Highlights and Developments
ZYNLONTA (loncastuximab tesirine-lpyl)
ZYNLONTA generated net sales of $17.0 million in the fourth quarter of 2021 and $33.9 million in 2021 following the May launch.
The Phase 3 confirmatory trial of ZYNLONTA in combination with rituximab in second-line transplant-ineligible DLBCL patients (LOTIS-5) has cleared the safety lead-in and is now enrolling the randomized portion of the study. The combination of ZYNLONTA and rituximab is well tolerated, there are no new safety events, and the initial data suggest the agents are additive. The Company looks forward to sharing these data at a future meeting and believes this trial will support a supplemental Biologics License Application (BLA) in second-line transplant-ineligible patients.
The Company will focus on the second-line opportunity with the combination of ZYNLONTA and rituximab as the fastest potential route to a label in second-line therapy for DLBCL and will discontinue the Phase 2 LOTIS-3 trial of ZYNLONTA in combination with ibrutinib in third-line DLBCL and MCL.
In first-line DLBCL, the Company plans to initiate enrollment in the second half of 2022 for the LOTIS-9 study of ZYNLONTA in combination with rituximab in first-line unfit or frail DLBCL patients who are not eligible for R-CHOP. This is an important and meaningful subset of first-line patients. These patients have a significant unmet need, and the Company believes the ZYNLONTA profile combined with rituximab provides a potential advantage.
The Company intends to initiate the LOTIS-7 trial in the first half of 2022 to study ZYNLONTA in multiple additional combinations. Based on the plans to advance LOTIS-9 in unfit or frail first-line patients and LOTIS-7 for novel combinations, the Company will not pursue the LOTIS-8 dose-finding trial of ZYNLONTA in combination with R-CHOP in first-line DLBCL.
The comparator agent in the Phase 2 LOTIS-6 study, idelalisib, was recently withdrawn from the follicular lymphoma market. As such, the Company has voluntarily paused the study and will consult with its clinical advisors and the U.S. Food and Drug Administration (FDA) on the optimal path forward.
Cami (camidanlumab tesirine)
The 12-month patient follow-up in the pivotal Phase 2 trial of Cami in Hodgkin lymphoma has completed. The Company has submitted the data in an abstract for an upcoming oncology conference and plans to meet with the FDA for a pre-BLA filing meeting.
The Phase 1b solid tumor trial of Cami in combination with pembrolizumab continues to dose escalate and in parallel has initiated a dose expansion cohort.
ADCT-601 (Targeting AXL)
The Company plans to initiate the Phase 1b study of ADCT-601 in solid tumors in the first half of 2022. In January 2022, results of a preclinical study that aimed to validate the mode of action and evaluate the efficacy of ADCT-601 in vitro and in vivo were published in Molecular Cancer Therapeutics. The study showed that ADCT-601, targeting AXL, had potent and durable antitumor activity.
ADCT-212 (Targeting PSMA)
In February 2022, the Company disclosed a new preclinical program, ADCT-212, a second-generation ADC targeting prostate specific membrane antigen (PSMA), a validated target over-expressed in the majority of metastatic castration-resistant prostate cancer. The Company is completing preclinical studies to support an Investigational New Drug (IND) filing for ADCT-212.
Other Solid Tumor Programs
In February 2022, the Company held a solid tumor pipeline webcast highlighting its ADC platform and five solid tumor programs in clinical and preclinical development.
Corporate Update
Geographic Expansion: ADC Therapeutics continues to expand geographic access to ZYNLONTA:
In October 2021, the Company received validation of its Marketing Authorization Application (MAA) from the European Medicines Agency (EMA).
In January 2022, the Company entered into an exclusive license agreement with Mitsubishi Tanabe Pharma Corporation to develop and commercialize ZYNLONTA in Japan. The Company received an upfront payment of $30 million and is eligible to receive up to an additional $205 million in milestones if certain development and commercial events are achieved. The Company will also receive royalties ranging in percentage from the high teens to the low twenties based on net sales of the product in Japan.
Upcoming Expected Milestones
Hematology Franchise
ZYNLONTA
Continue to enroll the randomized portion of the LOTIS-5 confirmatory trial in combination with rituximab
Initiate the LOTIS-9 trial of ZYNLONTA + rituximab in 1L unfit/frail DLBCL patients in 2H 2022
Initiate the LOTIS-7 trial of ZYNLONTA in multiple combinations in NHL in 1H 2022
Overland ADCT BioPharma continues enrollment in the pivotal Phase 2 trial in China of ZYNLONTA in r/r DLBCL
Cami
Report topline results for the Phase 2 trial in HL in 1H 2022
Meet with FDA for pre-BLA meeting in 2H 2022
ADCT-602 (targeting CD22)
Continue to enroll the Phase 1 trial in acute lymphoblastic leukemia (ALL)
Solid Tumor Franchise
Cami (targeting CD25)
Continue to advance the Phase 1b solid tumor trial of Cami in combination with pembrolizumab
ADCT-901 (targeting KAAG1)
Continue to enroll the Phase 1 study in multiple solid tumors
ADCT-601 (targeting AXL)
Initiate the Phase 1b combination study in multiple solid tumors in 1H 2022
ADCT-701 (targeting DLK1)
Continue to work with the NCI for completion of preclinical studies to support an IND filing
ADCT-212 (targeting PSMA)
Continue completion of preclinical studies to support an IND filing
Fourth Quarter and Full Year 2021 Financial Results
Product Revenue
Product revenue (net) was $17.0 million for the quarter and $33.9 million for the full year ended December 31, 2021, compared to zero for the same quarter and full year in 2020. Net revenues are for U.S. sales of ZYNLONTA, which received accelerated approval from the FDA on April 23, 2021.
Cash and Cash Equivalents
Cash and cash equivalents were $466.5 million as of December 31, 2021, compared to $439.2 million as of December 31, 2020.
Research and Development (R&D) Expenses
R&D expenses were $42.5 million for the quarter and $158.0 million for the full year ended December 31, 2021, compared to $48.6 million for the same quarter in 2020 and $142.0 million for the full year in 2020. R&D expense decreased for the quarter ended December 31, 2021, as compared to the same quarter in 2020 as a result of lower CMC activity following the ZYNLONTA BLA submission and subsequent approval. R&D expenses increased for the year ended December 31, 2021, as compared to the same period in 2020 due to investments in programs evaluating the potential of ZYNLONTA in earlier lines of treatment and advancing the portfolio. As a result of these initiatives, employee headcount and share-based compensation expense increased.
Selling and Marketing (S&M) Expenses
S&M expenses were $18.6 million for the fourth quarter and $64.8 million for the full year ended December 31, 2021, as compared to $9.4 million for the same quarter in 2020 and $22.1 million for the full year in 2020. The increase in S&M expenses related to the launch of ZYNLONTA, including higher headcount and increased share-based compensation expense.
G&A Expenses
G&A expenses were $17.9 million for the quarter and $71.5 million for the year ended December 31, 2021, compared to $20.1 million for the same quarter in 2020 and $55.1 million for the full year in 2020. G&A expenses decreased for the quarter ended December 31, 2021, as compared to the same quarter in 2020 primarily due to a decrease in share-based compensation expense partially offset by higher costs of being a public company. G&A expenses for the year ended December 31, 2021, as compared to the same period in 2020 increased due to higher headcount to support the commercial launch, increased share‐based compensation expense and higher costs of being a public company.
Income Tax Benefit (Expense)
The Company recorded an income tax benefit of $22.0 million for the quarter and $21.5 million for the year ended December 31, 2021, compared to an income tax expense of $0.1 million for the same quarter in 2020 and $0.3 million for the full year in 2020. The income tax benefit in 2021 is the result of recording a deferred tax asset associated with R&D tax credits and temporary differences related to our U.S. subsidiary, which was recognized as a result of management’s revised projections of future taxable income based on the approval of ZYNLONTA and the commencement of commercial sales in the U.S.
Net Loss and Adjusted Net Loss
Net loss was $34.4 million, or a net loss of $0.45 per basic and diluted share, for the quarter ended December 31, 2021, and $230.0 million, or a net loss of $3.00 per basic and diluted share, for the full year 2021. This compares to a net loss of $55.9 million, or a net loss of $0.73 per basic and diluted share, for the same quarter in 2020 and a net loss of $246.3 million, or a net loss of $3.77 per basic and diluted share, for the full year 2020.
In addition to the items noted above, net loss for the quarter and year ended December 31, 2021, include a $18.6 million and $34.9 million non-cash gain, respectively, related to the changes in fair value of derivatives associated with the convertible loans under the Convertible Credit Facility with Deerfield, compared to an immaterial amount and a $45.4 million non-cash loss, respectively, for the same quarter and full year in 2020. The decrease in fair value for the year ended December 31, 2021, was driven by the decrease in the Company’s share price year-to-date, and the increase in fair value for the year ended December 31, 2020, was primarily driven by the increase in the Company’s share price from its initial public offering in May 2020. The quarter and year ended December 31, 2020, include a $24.5 million non-cash gain related to the Company’s contribution of intellectual property for its equity interest in the Overland ADCT BioPharma joint venture.
Adjusted net loss was $30.0 million, or an adjusted net loss of $0.39 per basic and diluted share, for the quarter ended December 31, 2021, and $186.1 million, or an adjusted net loss of $2.42 per basic and diluted share, for the full year 2021. This compares to $63.0 million, or an adjusted net loss of $0.82 per basic and diluted share, for the same quarter in 2020 and $176.1 million or an adjusted net loss of $2.69 per basic and diluted share, for the full year 2020. The decrease in adjusted net loss for the quarter ended December 31, 2021, as compared to the same period in 2020 was primarily due to the recognition of the income tax benefit described above. The increase in adjusted net loss for the year ended December 31, 2021, as compared to the same period in 2020 was primarily driven by the investment in the expanding clinical portfolio and the launch of ZYNLONTA, partially offset by the income tax benefit described above.
Conference Call Details
ADC Therapeutics management will host a conference call and live audio webcast to discuss fourth quarter and full year 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 8189237. 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.