On February 28, 2023 ADC Therapeutics SA (NYSE: ADCT) reported financial results for the fourth quarter and full year ended December 31, 2022, and provided business updates (Press release, ADC Therapeutics, FEB 28, 2023, View Source [SID1234627799]).
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Recent Highlights and Developments
ZYNLONTA (loncastuximab tesirine-lpyl)
• Revenue from the net sales of ZYNLONTA in the fourth quarter of 2022 increased to $19.8 million, a 16.5% increase over the same quarter in 2021, and $74.9 million for the full year 2022, partially offset by higher gross-to-net sales deductions. The sequential third quarter to fourth quarter slight decline of 7.0% in net sales was due to higher gross-to-net and individual ordering account fluctuations.
• The European Commission (EC) and the United Kingdom’s Medicines and Healthcare products Regulatory Agency (MHRA) granted conditional marketing authorization for the use of ZYNLONTA (loncastuximab tesirine) for the treatment of relapsed or refractory diffuse large B-cell lymphoma (DLBCL).
• The Company entered into a collaboration and clinical supply agreement with Roche to evaluate ZYNLONTA in combination with glofitamab and mosunetuzumab in addition to polatuzumab in the Phase 1 LOTIS-7 trial.
Cami (camidanlumab tesirine)
• Based on the positive pivotal Phase 2 data, the Company is actively seeking a partner to progress this program.
Pipeline
• ADCT-901 (targeting KAAG1): Dose escalation in the Phase 1 single-agent trial is progressing. The Company is amending the protocol to explore different dosing schedules to optimize the potential clinical outcomes for patients and in preparation for regulatory interactions.
• ADCT-601 (targeting AXL): Dose escalation in the Phase 1b trial is progressing and the IHC assay is under final validation. The study is comprised of a monotherapy arm including patients with sarcoma, non-small cell lung cancer and those with AXL gene amplification and a combination arm with gemcitabine in patients with sarcoma.
• ADCT-602 (targeting CD22): Initial data showing encouraging clinical activity from the Phase 1 study of ADCT-602 for patients with relapsed or refractory acute lymphoblastic leukemia were released in an oral presentation at the 64th American Society of Hematology (ASH) (Free ASH Whitepaper) Annual Meeting by The University of Texas MD Anderson Cancer Center.
Corporate Update
• Mohamed Zaki, MD, PhD, was appointed the Company’s new Chief Medical Officer (CMO), effective January 3, 2023. Dr. Zaki is a pharmaceutical industry veteran with over 20 years of experience in oncology and hematology drug development. Most recently, he served as Vice President & Global Head of Oncology Development at AbbVie. Dr. Zaki worked on ibrutinib, venetoclax, lenalidomide and pomalidomide, among many other notable therapies.
• Jose "Pepe" Carmona was appointed the Company’s new Chief Financial Officer (CFO), effective December 19, 2022. Mr. Carmona is a seasoned CFO with over 20 years of financial leadership optimizing capital formation, developing and implementing capital allocation strategies, managing multibillion-dollar international commercial businesses and executing partnerships in the pharmaceutical and biotech industry, both in the U.S. and internationally.
Upcoming Expected Milestones
ZYNLONTA
• European phased launch by partner Sobi in 2Q 2023
• Complete enrollment of the LOTIS-5 study in 2024
• Preliminary safety and efficacy data from the LOTIS-9 study in 2024
• Preliminary safety and efficacy data from the LOTIS-7 study in 2024
Pipeline
ADCT-901 (targeting KAAG1)
• Preliminary data from Phase 1 dose escalation study in 1H 2024
ADCT-601 (targeting AXL)
• Preliminary data from Phase 1 dose escalation/expansion study in 1H 2024
ADCT-212 (targeting PSMA)
• Initiate Phase 1 study in 1H 2024
ADCT-602 (targeting CD22)
• Complete Phase 1 dose expansion study in 1H 2024
ADCT-701 (targeting DLK-1)
• Initiate Phase 1 study in 2H 2023
Fourth Quarter and Full Year Financial Results
Cash and Cash Equivalents
Cash and cash equivalents were $326.4 million as of December 31, 2022, compared to $380.9 million as of September 30, 2022. This does not include the $50.0 million milestone received in February 2023 from Sobi, triggered by European regulatory approval of ZYNLONTA in third-line DLBCL. Based on the Company’s business plan and expected $75.0 million milestone from HealthCare Royalty Partners, triggered by the first EU commercial sale, the Company expects its cash runway now extends into the middle of 2025.
Product Revenue
Net product revenue was $19.8 million for the fourth quarter and $74.9 million for the full year ended 2022, compared to $17.0 million for the same quarter and $33.9 million for the full year ended 2021. Net product revenues are for U.S. sales of ZYNLONTA which commenced in May 2021. The 120.9% year-over-year increase was principally due to a full year of sales activity in 2022 as compared to a partial year in 2021. The increase in sales volume was partially offset with higher gross-to-net deductions.
License Revenue
License revenue was $50.0 million for the fourth quarter of 2022. The Company recognized $50.0 million from Sobi for the European regulatory approval of ZYNLONTA in third-line DLBCL. License revenue was $135.0 million for the full year 2022 and included the $50.0 million European regulatory approval milestone from Sobi, as well as $85.0 million in upfront payments from our partners, Sobi and Mitsubishi Tanabe Pharma Corporation.
Cost of Product Sales
Cost of product sales was $0.5 million for the fourth quarter and $4.6 million for the full year 2022, compared to $0.8 million for the same quarter and $1.4 million for the year full 2021. The increase of $3.2 million for the year was primarily associated with $2.5 million of impairment charges for product intermediates and antibodies that did not meet the Company’s specifications. The specification issues did not, and are not expected to, impact the Company’s ability to supply commercial product. In addition, cost of product sales increased due to a full year of sales activity in 2022 as compared to 2021 due to the commencement of ZYNLONTA sales in May 2021.
Research and Development (R&D) Expenses
R&D expenses were $48.7 million for the fourth quarter and $187.9 million for the full year 2022, compared to $42.5 million for the same quarter and $158.0 million for the full year 2021. R&D expenses increased as a result of continued investments in the pipeline.
Selling and Marketing (S&M) Expenses
S&M expenses were $16.2 million for the fourth quarter and $69.1 million for the full year 2022, as compared to $18.6 million for the same quarter and $64.8 million for the full year 2021. The decrease in S&M expenses for the quarter was primarily due to lower share-based compensation expense. The increase in S&M expenses during the year is primarily due to increased professional expenses relating to the commercial launch of ZYNLONTA during the year partially offset by lower share-based compensation expense.
General and Administrative (G&A) Expenses
G&A expenses were $15.1 million for the fourth quarter and $72.0 million for the full year 2022, compared to $17.9 million for the same quarter and $71.5 million for the full year. G&A expenses decreased during the fourth quarter primarily due to lower share-based compensation expense. G&A expenses for the full year increased primarily due to higher professional fees and costs associated with the CEO transition, partially offset by lower share-based compensation expense.
Net Loss and Adjusted Net Loss
Net loss was $24.2 million, or a net loss of $0.30 per basic and diluted share for the fourth quarter and $155.8 million, or a net loss of $1.99 per basic and diluted share for the year ended December 31, 2022. This compares to a net loss of $34.4 million, or a net loss of $0.45 per basic and diluted share, for the same quarter and $230.0 million, or a net loss of $3.00 per basic and diluted share, for the year ended December 31, 2021.
Adjusted net loss, which is a non-IFRS financial measure, was $7.9 million, or an adjusted net loss of $0.10 per basic and diluted share for the fourth quarter and $81.7 million, or an adjusted net loss of $1.05 per basic and diluted share for the full year ended December 31, 2022. This compares to an adjusted net loss of $30.0 million, or an adjusted net loss of $0.39 per basic and diluted share, for the same quarter and $186.1 million, or an adjusted net loss of $2.42 per basic and diluted share, for the year ended December 31, 2021.
The decrease in net loss and adjusted net loss for the quarter and year ended December 31, 2022, as compared to the same period in 2021, was primarily due to higher product and license revenue, partially offset by the increase in operating expenses. The decrease in net loss for the quarter and year-ended December 31, 2022 was also attributable to lower share-based compensation expense and
income arising from changes in the fair value of our convertible loan derivatives and warrant obligations, offset by the extinguishment of our convertible loans and derivatives.
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.