On August 3, 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 second quarter ended June 30, 2021 and provided business updates (Press release, ADC Therapeutics, AUG 3, 2021, View Source [SID1234585635]).

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"We were thrilled to receive accelerated FDA approval for the first indication for ZYNLONTA and are encouraged by the momentum and positive feedback in the initial weeks following approval. We remain highly focused on the successful execution of the launch and positive about the longer-term potential of the product," said Chris Martin, Chief Executive Officer of ADC Therapeutics. "During the second quarter, we were also pleased to present positive data on ZYNLONTA and our exciting pipeline of advancing programs at key medical meetings. Looking to the rest of the year, we have several notable milestones on the horizon and look forward to keeping you updated on our progress."

Recent Highlights and Developments

ZYNLONTA (loncastuximab tesirine-lpyl)

Launch update:
ZYNLONTA generated net sales of $3.8 million for the two-month period following accelerated U.S. Food and Drug Administration (FDA) approval on April 23, 2021, reflecting patient demand with no material inventory build. Launch performance was driven by the differentiated profile of ZYNLONTA in addressing an area of high unmet medical need.
The Company has engaged prioritized accounts, with patient starts at a significant percentage of key accounts. A substantial number of the National Comprehensive Cancer Network (NCCN) centers have ordered and reordered ZYNLONTA. There has been positive reception across the treatment site spectrum from academic- to community-based centers reflecting the broad applicability of ZYNLONTA in the 3L+ setting supported by the LOTIS-2 pivotal data.
ZYNLONTA was added to the NCCN Guidelines with a Category 2A recommendation just two weeks after receiving accelerated FDA approval. The NCCN guidelines listing is consistent with the broad FDA-approved indication. As a result, payer access and medical policy publication have accelerated.
The Company is pleased with the positive launch momentum in a continuing COVID environment. The sales and medical teams are executing with a hybrid model, and there has been an increase in face-to-face visits.
Online publication of LOTIS-2 results in The Lancet Oncology: Results of LOTIS-2, a Phase 2 clinical trial evaluating the safety and efficacy of single-agent ZYNLONTA in adult patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL) following two or more systemic treatments, were published in The Lancet Oncology. The trial included patients with high-risk characteristics for poor prognosis, such as double-/triple-hit, transformed, and primary refractory DLBCL.
Phase 2 LOTIS-2 trial update at ASCO (Free ASCO Whitepaper) and ICML: Updated clinical data from LOTIS-2, the pivotal Phase 2 trial of ZYNLONTA in patients with relapsed or refractory DLBCL, were presented at the American Society of Clinical Oncology (ASCO) (Free ASCO Whitepaper) Annual Meeting and the International Conference on Malignant Lymphoma (ICML), both in June 2021. As of the March 1, 2021 cutoff date, the overall response rate (ORR) was 48.3% and the complete response rate (CRR) was 24.8%. At this data cut, there was a median duration of response of 13.4 months for the responders, with durable responses in high-risk subgroups. No new safety concerns were identified during the study.
Other ZYNLONTA trials:
The Phase 3 LOTIS-5 clinical trial is evaluating ZYNLONTA in combination with rituximab in second-line patients with relapsed or refractory DLBCL who are not eligible for autologous stem cell transplant.
The Phase 2 LOTIS-3 clinical trial of ZYNLONTA in combination with ibrutinib for relapsed or refractory DLBCL patients continues to enroll patients. Updated Phase 1 results presented at ICML demonstrated ORR of 62.2%, CRR of 35.1% and a manageable toxicity profile. Based on interim data from the Phase 2 trial, the Company plans to amend the protocol to evaluate the administration of ZYNLONTA with every cycle to potentially further enhance efficacy and durability. Based on this additional data, the Company could potentially pursue a Phase 3 study in second-line DLBCL, expanding the addressable market and the number of patients who could benefit from ZYNLONTA.
The pivotal Phase 2 LOTIS-6 clinical trial in patients with relapsed or refractory follicular lymphoma (FL) is open for enrollment.
The Company plans to initiate a clinical trial to evaluate ZYNLONTA in combination with select therapies in B-cell non-Hodgkin lymphoma (NHL).
The Company plans to initiate a dose-finding study to evaluate ZYNLONTA in combination with R-CHOP in frontline DLBCL.
Camidanlumab Tesirine (Cami)

Pivotal Phase 2 trial in Hodgkin lymphoma (HL): Encouraging interim results from the pivotal Phase 2 study in patients with relapsed or refractory HL were presented at ICML. In a heavily pre-treated patient population with a median of six prior lines of systemic therapy, these results included an ORR of 66.3% and CRR of 27.7%. Median duration of response has not been reached, and no new safety signals were identified.
Phase 1b trial in solid tumors: The Phase 1b clinical trial, enrolling patients with selected advanced solid tumors, is an open-label, dose-escalation and dose-expansion trial evaluating the safety, tolerability, pharmacokinetics and antitumor activity of Cami in combination with pembrolizumab, a checkpoint inhibitor.
ADCT-901

The FDA has cleared the Investigational New Drug (IND) application for ADCT-901, targeting KAAG-1. The Company expects to initiate the Phase 1 study in the second half of 2021.
Corporate Update

Geographic Expansion: ADC Therapeutics is committed to expanding its geographic footprint in order to provide ZYNLONTA and other novel treatments to patients who can benefit from them.
The Company expects to submit a regulatory filing in the second half of 2021 to the European Medicines Agency (EMA) for ZYNLONTA for the treatment of patients with relapsed or refractory DLBCL.
The Overland ADCT BioPharma joint venture in China is making good progress toward initiating a pivotal bridging study and seasoned executive Eric Koo was appointed CEO during the second quarter.
Upcoming Expected Milestones

ZYNLONTA

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

Initiate Phase 1 study of ADCT-901, targeting KAAG1, in the second half of 2021.
Initiate a Phase 1b combination study of ADCT-601 (mipasetamab uzoptirine), targeting AXL, in multiple solid tumors in the first half of 2022.
Second Quarter 2021 Financial Results

Cash and Cash Equivalents

Cash and cash equivalents were $371.9 million as of June 30, 2021, compared to $439.2 million as of December 31, 2020. During the second quarter of 2021, the Company drew down $50 million under its Convertible Credit Facility with Deerfield, which was contingent upon ZYNLONTA approval.

Research and Development (R&D) Expenses

R&D expenses were $39.5 million for the quarter ended June 30, 2021, compared to $26.0 million for the same quarter in 2020. R&D expenses increased due to investments in programs supporting the ZYNLONTA commercial launch and evaluating the potential of ZYNLONTA in earlier lines of treatment and additional histologies, and due to 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 second quarter of 2021, S&M expenses were $15.2 million, compared to $4.0 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 June 30, 2020 has been recast to conform to the current year presentation.

G&A Expenses

G&A expenses were $19.4 million for the quarter ended June 30, 2021, compared to $15.0 million for the same quarter in 2020. G&A expenses increased due to higher headcount to support the commercial launch, increased share-based compensation expense and higher costs of being a public company.

Net Loss and Adjusted Net Loss

Net loss was $72.6 million, or a net loss of $0.95 per basic and diluted share, for the quarter ended June 30, 2021, compared to $126.6 million, or a net loss of $2.01 per basic and diluted share, for the same quarter in 2020. Net loss included share-based compensation expense of $18.3 million for the quarter ended June 30, 2021, compared to $12.7 million for the same quarter in 2020. In addition, net loss for the quarter ended June 30, 2021 includes a $2.1 million non-cash gain related to the changes in fair value of derivatives associated with the convertible loans under the Convertible Credit Facility with Deerfield, compared to a $79.3M charge for the same quarter in 2020. The decrease in fair value for the quarter ended June 30, 2021 was driven by the decrease in the Company’s share price from March 31, 2021. The increase in fair value for the quarter ended June 30, 2020 was driven by the increase in the Company’s share price from the April 2020 inception of the derivative.

Adjusted net loss was $53.7 million, or an adjusted net loss of $0.70 per basic and diluted share, for the quarter ended June 30, 2021, compared to $32.1 million, or an adjusted net loss of $0.51 per basic and diluted share, for the same quarter in 2020. The increase in adjusted net loss was primarily driven by the expansion of the organization, investment in the expanding clinical portfolio and the preparation for the launch of ZYNLONTA.

Conference Call Details

ADC Therapeutics management will host a conference call and live audio webcast to discuss second 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 confirmation number 6962756. 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.