On August 08, 2023 ADC Therapeutics reported financial results for the second quarter 2023 and provided business updates (Press release, ADC Therapeutics, AUG 8, 2023, View Source [SID1234634577]).

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"We continue to focus on unlocking potential value from multiple ongoing initiatives over the next 12 months," said Ameet Mallik, Chief Executive Officer of ADC Therapeutics. "During the second quarter, we executed on our corporate and capital allocation strategy that streamlined our processes and prioritized our nearer-term clinical catalysts. We implemented the new commercial go-to-market model, enhanced investment in key pipeline programs, delivered organizational efficiencies and strengthened our capital resources. Our ongoing clinical trials of ZYNLONTA in earlier lines and combinations, as well as our earlier-stage pipeline programs, are expected to deliver key milestones in 2024. We look forward to keeping you updated on our progress."

Recent Highlights and Developments

ZYNLONTA (loncastuximab tesirine-lpyl)

ZYNLONTA generated net sales of $19.2 million in the second quarter of 2023, representing an 11% increase over the second quarter of 2022. The growth was partially offset by higher gross-to-net sales deductions due to the new Medicare Part B discarded drug policy effective January 1, 2023 and Group Purchasing Organization (GPO) contracting. Compared to the prior quarter, net sales increased 1.3% and volume increased 3.4%.
The Company’s partner Sobi completed the first European commercial sale of ZYNLONTA with the launch in Germany in the second quarter of 2023. The first commercial sale in the European Union triggered a $75 million milestone payment to the Company from HealthCare Royalty Partners under the royalty purchase agreement.
The Biologics License Application (BLA) for ZYNLONTA submitted by Overland ADCT BioPharma was accepted for filing by the China National Medical Products Administration (NMPA) seeking an indication for relapsed or refractory diffuse large B-cell lymphoma (DLBCL) after two or more lines of systemic therapy. The BLA has been granted priority review by the NMPA.
During the second quarter, the Company’s partner Mitsubishi Tanabe Pharma Corporation (MTPC) initiated the Phase 1/2 bridging study for ZYNLONTA in Japan.
The Company announced its plan to discontinue the Phase 2 LOTIS-9 trial studying ZYNLONTA in combination with rituximab in unfit or frail patients with previously untreated diffuse large B-cell lymphoma (DLBCL). The U.S. Food and Drug Administration (FDA) placed a partial clinical hold on the trial for new patient enrollment but will allow patients already on therapy who are deriving clinical benefit to remain on therapy after being reconsented. Following completion of treatment of any reconsenting patients, the Company will conduct the necessary steps to terminate the trial.
The LOTIS-5 Independent Data Monitoring Committee (IDMC) reviewed unblinded data at a regularly scheduled meeting in late July and noted that the study should proceed as planned. They also recognized that the LOTIS-9 and LOTIS-5 trials target very different patient populations.
Pipeline

ADCT-601 (targeting AXL): Dose escalation is progressing in the Phase 1b trial, and the maximum tolerated dose has not yet been reached. The trial has been amended to focus on patients with non-small cell lung cancer (NSCLC) and patients with sarcoma. The immunohistochemistry (IHC) assay is under final validation.
ADCT-901 (targeting KAAG1): The Phase 1 study protocol amendment to explore different dosing schedules has been finalized and submitted to the FDA and will be submitted shortly to the regulatory authorities in Europe. Once approved by the Institutional Review Board (IRB), the Company plans to advance to the next dosing level. The IHC assay is under final validation.
ADCT-602 (targeting CD22): Dose expansion in the Phase 1 trial in collaboration with MD Anderson Cancer Center is progressing and additional clinical trial sites have been selected.
Guidance
The Company maintains the following guidance based on its current business plan:

ZYNLONTA FY 2023 net product sales expected to grow by a double-digit percentage year-over-year. This includes a gross-to-net increase as compared to 2022 of:
Approximately 2 to 3 percentage points related to Group Purchasing Organization (GPO) contracting
Mid to high single-digit percentage points resulting from the Infrastructure Investment and Jobs Act’s requirement for manufacturers of certain single-source drugs separately paid for under Medicare Part B and marketed in single-dose containers to provide annual refunds for discarded drug, effective January 1, 2023
Continued decrease in total operating expenses expected in 2023 and 2024 as compared to 2022 as a result of the implementation of the new corporate strategy
Expected cash runway to the middle of 2025
Upcoming Expected Milestones

ZYNLONTA

Grow ZYNLONTA net sales by a double-digit percentage year-over-year and achieve commercial brand profitability in 2023
Updated data from safety lead-in portion of Phase 3 LOTIS-5 study in 2H 2023
Complete enrollment of the LOTIS-5 study in 2024
Initial safety and efficacy data from the LOTIS-7 study in 2024
Pipeline

ADCT-901 (targeting KAAG1)

Initial data from Phase 1 study in 1H 2024
ADCT-601 (targeting AXL)

Initial data from Phase 1 study in 1H 2024
ADCT-602 (targeting CD22)

Additional data from Phase 1 study in 1H 2024
Second Quarter 2023 Financial Results

Cash and Cash Equivalents

Cash and cash equivalents were $347.5 million as of June 30, 2023, compared to $326.4 million as of December 31, 2022. In June 2023, the Company received a $75.0 million milestone payment from Healthcare Royalty Partners, triggered by the first EU commercial sale. The Company expects its cash runway to extend into the middle of 2025.

Product Revenues

Net product revenues were $19.2 million for the quarter ended June 30, 2023, compared to $17.3 million for the same quarter in 2022. Net product revenues are for U.S. sales of ZYNLONTA. The increase of $1.9 million for the quarter was primarily due to higher sales volume, partially offset by higher gross-to-net deductions.

Research and Development (R&D) Expenses

R&D expenses were $31.9 million for the quarter ended June 30, 2023, compared to $48.5 million for the same quarter in 2022. R&D expenses decreased due to less investment in Cami (camidanlumab tesirine) due to the completion of the Phase 2 study in 2022 and the Company’s decision to seek a partner to progress the program, as well as less investment in other development programs. R&D expenses in the second quarter of 2023 also decreased due to lower share-based compensation expense as a result of fluctuations in the share price, voluntary terminations and the reduction in workforce implemented in May 2023 creating organizational efficiencies. These efficiencies allowed the Company to enhance investments in prioritized portfolio programs.

Selling and Marketing (S&M) Expenses

S&M expenses were $14.5 million for the quarter ended June 30, 2023, compared to $17.7 million for the same quarter in 2022. The decrease in S&M expenses for the quarter was primarily due to lower share-based compensation expense resulting from fluctuations in the share price and award forfeitures in connection with voluntary terminations and the commercial realignment implemented in the second quarter.

General & Administrative Expenses

G&A expenses were $11.4 million for the quarter ended June 30, 2023, compared to $18.2 million for the same quarter in 2022. G&A expenses decreased during the second quarter of 2023 primarily due to lower share-based compensation expense due to fluctuations in the share price, transition of a board member, voluntary terminations and the workforce reduction implemented in May 2023.

Net Loss and Adjusted Net Loss

Net loss was $47.1 million, or a net loss of $0.58 per basic and diluted share, for the quarter ended June 30, 2023. This compares to a net loss of $64.4 million, or a net loss of $0.84 per basic and diluted share, for the same quarter in 2022.

Adjusted net loss was $30.3 million, or an adjusted net loss of $0.37 per basic and diluted share, for the quarter ended June 30, 2023. This compares to an adjusted net loss of $56.3 million, or an adjusted net loss of $0.73 per basic and diluted share, for the same quarter in 2022.

The decrease in net loss and adjusted net loss for the quarter ended June 30, 2023, as compared to the same quarter in 2022, was attributable to lower R&D expenses and higher product revenues during the second quarter of 2023. The decrease in net loss was also attributable to lower share-based compensation expense, partially offset by other financial expense arising from a cumulative catch-up adjustment associated with the valuation of the deferred royalty obligation with Healthcare Royalty Partners recognized in the second quarter of 2023 and from changes in the fair value of our convertible loan derivatives, which was recognized in the second quarter of 2022.

Conference Call Details

ADC Therapeutics management will host a conference call and live audio webcast to discuss second quarter 2023 financial results and provide a company update today at 8:30 a.m. Eastern Time. To access the conference call, please register here. Registrants will receive the dial-in number and unique PIN. It is recommended that you join 10 minutes before the event, though you may pre-register at any time. A live webcast of the call will be available under "Events & 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) and the European Medicines Agency (EMA) have 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 and in the European Union under conditional 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.