ADC Therapeutics - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 was solid with total revenue of $23.03M (+27.6% YoY), driven by $5.0M license milestone from Health Canada approval; net product revenue was $17.40M (flat YoY) and EPS improved to -$0.36 from -$0.56 YoY.
• Results beat S&P Global consensus: revenue $23.03M vs $17.71M estimate; EPS -$0.36 vs -$0.40 estimate; strength came from license revenue and disciplined OpEx; product sales were broadly stable QoQ and YoY.
• Guidance/narrative maintained: cash runway to 2H 2026; LOTIS-5 PFS events targeted by end-2025; management clarified data readout could be late-2025 or early-2026 due to PFS-driven timing.
• Clinical catalysts likely to drive stock: LOTIS-7 combination data at EHA/ICML (ORR 95.5%, CR 90.9%) and continued momentum toward potential compendia listing; regulatory meetings planned 2H 2025.

What Went Well and What Went Wrong

• What Went Well

  • Strong clinical efficacy signals: LOTIS-7 ZYNLONTA + glofitamab ORR 95.5% and CR 90.9% (22 evaluable); safety manageable and consistent with known profiles; management believes potential “best-in-class combination”.
  • Revenue beat on license milestone; adjusted net loss improved to -$24.0M vs -$31.1M YoY; adjusted OpEx down 5% YoY (non-GAAP), reflecting disciplined spend.
  • Cash runway reaffirmed into 2H 2026; upcoming EHA/ICML presentations and LOTIS-5 progress toward PFS events are key de-risking catalysts.

• What Went Wrong

  • Core product revenue flat: ZYNLONTA net product revenue $17.4M vs $17.8M YoY; growth remains constrained pending earlier-line/combination adoption.
  • Operating loss remains large: loss from operations -$28.5M (EBIT margin -123.6%); heavy interest expense (-$12.23M) and deferred royalty obligation interest (-$8.45M) weigh on bottom line.
  • Program discontinuation: ADCT-602 (CD22) in r/r B-ALL discontinued; limited cost impact but underscores pipeline prioritization and need for partnering in preclinical assets.

Transcript

Operator (participant)

Morning, ladies and gentlemen, and welcome to ADC Therapeutics' first quarter 2025 earnings call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If anyone has any difficulties hearing the conference, please press star zero for operator assistance at any time. I would now like to turn the conference call over to Marcy Graham, Investor Relations and Corporate Affairs Officer. Please go ahead.

Marcy Graham (Investor Relations and Corporate Affairs Officer)

Thank you, Operator. Today, we issued a press release announcing our first quarter 2025 financial results and business update. This release and the slides we will use in today's presentation are available on the Investor section of the ADC Therapeutics website. I'm joined on today's call by our Chief Executive Officer, Ameet Mallik, who will discuss our operational performance and recent business highlights. Our Chief Medical Officer, Mohamed Zaki, who will discuss our clinical programs and updates, followed by our Chief Financial Officer, Pepe Carmona, who will review our first quarter 2025 financial results. We will then open the call for questions. Before we begin, I would like to remind listeners that some of the statements made during this conference call will contain forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

These forward-looking statements are subject to certain known and unknown risks and uncertainties, and actual results, performance, and achievement could differ materially. They are identified and described in the accompanying slide presentation and in the company's filings with the SEC, including Form 10-K, 10-Q, and 8-K. ADC Therapeutics is providing this information as of today's date and does not undertake any obligation to update any forward-looking statements contained in this conference call as a result of new information, future events, or circumstances, except as required by law. The company cautions investors not to place undue reliance on these forward-looking statements. Today's presentation also includes non-GAAP financial reporting. These non-GAAP measures should be considered in addition to, and not in isolation or as a substitute for, the information prepared in accordance with GAAP.

You should refer to the company's first quarter earnings release for information and reconciliation of historical non-GAAP measures to the comparable GAAP financial measures. I will now turn the call over to our CEO, Ameet Mallik. Ameet.

Ameet Mallik (CEO)

Thanks, Marcy, and hello, everyone. Thank you for joining us on today's call. The first quarter of 2025 represented a solid period of continued performance for our company. Throughout the quarter, we continued to focus on execution and delivering on our commercial strategy, maintaining our place as a treatment option for third-line plus DLBCL patients. Total first quarter revenues were $23 million, which included net product revenues of $17.4 million. This is in line with the first quarter sales in 2024 and compares favorably to $16.4 million in the fourth quarter of 2024. We had an additional $5.6 million in milestone and royalty payments included in total revenue for the quarter. Additionally, as just announced this morning, we are pleased to have data from LOTIS-7 accepted for presentation at EHA, the European Hematology Association Congress, and at ICML, the International Conference on Malignant Lymphoma, both in June.

We are encouraged by the promising LOTIS-7 EHA abstract data, demonstrating the potential for ZYNLONTA plus glofitamab to be a best-in-class combination in a highly competitive market. For reference, we have seen complete response rates in other bispecific combination trials in the range of 47%-62%. Abstract data as of January 2025 shows ZYNLONTA plus glofitamab demonstrated an overall response rate of 95.5% and a complete response rate of 90.9% in the 22 efficacy evaluable patients, with further updated data to be presented at the meeting next month. We have recent enrollment of 40 patients in our LOTIS-7 dose expansion arm and expect to share an additional update on LOTIS-7 in the second half of 2025.

We are encouraged by the results we've reported so far and are assessing options for expanding enrollment to 100 patients at the recommended dose level, which will support regulatory discussions and is in line with recent examples of bispecific combination therapies added to compendia. Once sufficient data with longer follow-up is available, we plan to discuss the path forward for ZYNLONTA and glofitamab with regulatory authorities and to pursue a compendia strategy. LOTIS-5 remains on track to reach the prespecified number of progression-free survival events by the end of 2025. After the prespecified number of PFS events is reached and data are available, we expect to provide top-line data on this phase III confirmatory trial evaluating ZYNLONTA in combination with rituximab in patients with second-line plus DLBCL.

Lastly, updated data from the phase II IIT in marginal zone lymphoma, being led by the Sylvester Comprehensive Cancer Center at University of Miami, will also be presented at ICML. Moving beyond ZYNLONTA, the trial sponsored by the University of Texas MD Anderson Cancer Center, evaluating ADCT-602, which targets CD22 in patients with relapsed or refractory B-cell acute lymphoblastic leukemia, is being discontinued based on available clinical data. I would like to thank the physicians and patients who participated in this trial. We were pleased to have data from preclinical studies of our exatecan-based ADCs targeting Claudin-6, PSMA, and ASCT2 featured at the American Association for Cancer Research annual meeting last month. Here, the most advanced targets are PSMA and Claudin-6, and we continue to seek potential research collaborations to further advance our programs.

I'm excited about the multiple upcoming catalysts ahead within our cash runway, which is expected to fund operations into the second half of 2026. As a single-agent therapy in third-line plus DLBCL, ZYNLONTA has a profile of rapid, deep, and durable efficacy, as well as manageable safety with simple and convenient administration. Beyond our current indication, we believe in the potential to reach significantly more patients while growing the commercial opportunity by expanding use into earlier lines of therapy in DLBCL and into indolent lymphomas. The data we've seen across these settings so far has been consistently encouraging, with the potential to be highly differentiating. We know physicians make treatment choices based on efficacy, safety, and accessibility in the context of individual patient needs. We believe efficacy is the primary driver of decision-making for treatments that are accessible and suitable for a given DLBCL patient.

ZYNLONTA plus rituximab in LOTIS-5 and ZYNLONTA plus glofitamab in LOTIS-7 offer distinct approaches to addressing unmet needs in patients with DLBCL. In LOTIS-5, we believe the combination of ZYNLONTA plus rituximab may offer a competitive second-line plus efficacy with a favorable safety and convenient dosing schedule for patients who cannot access, are not suitable for, or progress on a CAR-T or bispecific-based therapy. With LOTIS-7, based upon the recent data we shared, we believe ZYNLONTA plus glofitamab has the potential to be the preferred bispecific combination in second-line plus DLBCL with highly competitive efficacy and a manageable safety profile. With sufficient data from these trials, we plan to pursue regulatory and compendia strategies.

Now, I will turn the call over to our Chief Medical Officer, Mohamed Zaki, to provide an overview of the LOTIS-7 abstract data accepted for presentation at EHA and ICML next month. Mohamed?

Mohamed Zaki (Chief Medical Officer)

Thank you, Ameet. We are excited today to report updated results from the LOTIS-7 study evaluating a six-duration combination of ZYNLONTA and glofitamab in patients with relapsed or refractory DLBCL. The primary endpoint is safety and tolerability, with the secondary endpoint of efficacy, decay, and immunogenicity. As we discussed, dose escalation was completed last year with early signs of anti-tumor activity, and no DLTs were observed. We are well into dose expansion, having enrolled 40 patients with this combination at either the 120 or 150 microgram per kg dose levels of ZYNLONTA combined with the approved dose of glofitamab. As we turn to the data, we are surely encouraged by the results thus far for this study.

As summarized here, the baseline characteristics of the patients enrolled, including being refractory to prior therapy as well as number and types of prior therapy, are similar to those we have seen in other bispecific combination trials. Turning to safety, no new safety signals were observed, and the combination was well tolerated. Toxicities observed during the study were manageable and were consistent with the known safety profile of each of the two agents. Only low-grade adverse events of CRS and ICANS were observed. Turning to the efficacy results, a 95.5% overall response rate was seen in the 22 patients who were evaluable for efficacy, with 20 patients or 90.9% achieving a complete response based on Nagano criteria. All but one of those patients remained in complete response as of the data cutoff.

We believe the LOTIS-7 results so far are exceptional compared to current and emerging therapies in the second-line plus DLBCL. The impressive efficacy and manageable safety profile seen to date in this trial with the combination of ZYNLONTA and glofitamab, two potent anti-cancer agents with unique mechanism of action, is encouraging. The data reinforces our belief in the potential for the regimen to change the treatment paradigm for patients with aggressive lymphoma. Though we are limited in what we can speak to until the EHA embargo lifts, we look forward to providing a more comprehensive look at results from our LOTIS-7 trial in June when updated data are shared during a post-op presentation at EHA and a subsequent oral presentation at ICML. We expect to host a corporate webcast to further discuss the data shared at that time.

Now, I will turn the call over to Pepe Carmona, our CFO, who will discuss financial results for the first quarter. Pepe?

Pepe Carmona (CFO)

Thank you, Mohamed. On the financial front, ZYNLONTA net product revenues in the first quarter of 2025 were $17.4 million as compared to $17.8 million in the same quarter of 2024. Total revenues for the first quarter was $23 million, which includes the recognition of $5 million in licensing revenue related to a milestone due upon ZYNLONTA's approval by Health Canada. The payment of the milestone was received in the second quarter and not yet reflected in our cash and cash equivalents balance at March 31st, 2025. Total operating expenses for the quarter were $49.1 million on a non-GAAP basis, representing a 5% net decrease over the prior year, driven primarily by a reduction in SG&A.

On a GAAP basis, we reported a net loss of $38.6 million for the first quarter of 2025, or $0.36 per basic and diluted share, as compared to a net loss of $46.6 million, or $0.56 per basic and diluted share for the same period in 2024. The decrease in net loss for the quarter is primarily attributable to higher license revenues and royalties, as well as lower expenses. You can find the reconciliation of GAAP to non-GAAP measures in the compounding financial tables of the press release issued earlier today and in the appendix of this presentation. As of March 31st, 2025, cash and cash equivalents were $194.7 million compared to $250.9 million at December 31st, 2024.

This change was primarily driven by our net loss from operations for the quarter and was impacted by the timing of cash receipts and payments, including payment of the annual discarded drugs rebate, annual bonuses, and phasing of milestones and other partner reimbursements received in the second quarter of 2025. As we have highlighted today, we made significant progress in the first quarter. In 2025, we have several potentially de-risking ZYNLONTA data catalysts, which we believe will unlock significant growth opportunities. In this quarter alone, we have key value-driving milestones at upcoming medical meetings. This includes providing an update on LOTIS-7 at the upcoming EHA conference with an anchor oral presentation at ICML. We expect to host a corporate webcast to further discuss the data shared at that time. We also expect to have updated data from the MZL phase II investigator-initiated trial to be shared by Dr.

Lossos from University of Miami at ICML. As we move forward, we also expect to present data on the 40 patients enrolled for our LOTIS-7 trial in the second half of this year. Beyond this, we'll provide top-line results from LOTIS-5 once the prespecified number of PFS events is reached and data are available. We continue to progress our preclinical assets as shared at AACR and are engaged in discussions with potential partners. With an expected cash runway into the second half of 2026, I'm confident that ADC Therapeutics is well-positioned to deliver on our catalyst and drive value creation for all our stakeholders. I will now turn the call back over to Ameet.

Ameet Mallik (CEO)

Thank you, Pepe. I am pleased with how we are executing against our strategy and continue to be encouraged by the consistently promising ZYNLONTA data we are generating across our ongoing trials. We believe our revenue growth opportunity comes with expanded use of ZYNLONTA through regulatory approvals as well as inclusion in guidelines, and we are confident in the multiple pathways we have to achieve our peak revenue goal. We can now open the line for questions. Operator?

Operator (participant)

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift a handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Kelly Shi from Jefferies. Your line is now open.

Hi, good morning. Thanks for taking my questions. This is for Kelly. Could you please provide some color on the follow-up time for the patients from the update today and also for the 18 patients who achieved a complete response last year? Any color on CR conversion times and durability will be great. Thank you.

Ameet Mallik (CEO)

Okay. Thanks for the question. You were asking about the follow-up time of the data that we showed in December as well as what the follow-up time is now with this latest update and any color on the conversion. I'll turn that over to Mohamed to answer those questions.

Thank you.

Mohamed Zaki (Chief Medical Officer)

Yeah. The patients that we're following up right now is according to the Nagano criteria, when we actually had the assessments for patients based on 6 and 12 weeks and on and on. We keep looking into more assessments to be able to talk more into the durability of responses as we go forward. However, the high number of CR that we're seeing right now is very encouraging. It's actually considered a very strong biomarker for durability. It is really too early to speak about durability or the degree of follow-up at this stage.

Ameet Mallik (CEO)

Yeah. If you recall, in the swimmers plot that we showed in December, the longest patient was nearly a year, so close to a year. Obviously, this analysis is a couple of months later. You can just sort of interpolate that. More data on the follow-up and swimmers plot will be coming at the presentation at EHA.

Thank you. Appreciate it. A follow-up, if I may. On the compendia strategy, you mentioned that you plan to engage with regulatory authorities. Is it when you have data from 40 patients that are already enrolled, or would you wait for 100 patients?

Yeah. We believe if you look at all the recent bispecific combination examples, many were added to guidelines earlier this year as a preferred regimen. We believe we're going to need a publication including the approximately 100 patients with about a year of follow-up just based on all the other recent examples. We're currently assessing how to best move that forward.

Very helpful. Thank you.

Thank you.

Operator (participant)

Thank you. Your next question is from Eric Schmidt from Cantor. Your line is now open.

Eric Schmidt (Biotechnology Analyst)

Thanks for taking my questions and congrats on a really nice update in terms of how these results are trending. Maybe just first, how many more patients should we expect to see at the conference itself, EHA?

Ameet Mallik (CEO)

Yeah. We haven't disclosed how many more, but obviously, we've already indicated in this release that we have enrolled the 40 patients that we had discussed that we want to enroll already. There'll obviously be more patients than the 22. We can't disclose the exact number because anything beyond what's in the abstract is embargoed. We don't want to risk that.

Eric Schmidt (Biotechnology Analyst)

I think in the past, you've said maybe 10-15 additional patients by the time of the EHA update relative to the December update last year. Is that still kind of ballpark-y?

Ameet Mallik (CEO)

Yeah. I'd say it's ballpark-y versus the December update. Yeah.

Eric Schmidt (Biotechnology Analyst)

Okay. How are you thinking about the overall profile of the combination today? I mean, again, relative to the last update, you've got potentially one of the highest-ever response rates and complete response rates we've seen, including in CAR-T. Is it time to start thinking about this maybe as a more efficacious but equally safe combination? Is anything out there, or do you still think that safety might turn out to be trending somewhat better than other combinations as well?

Ameet Mallik (CEO)

Yeah. So it's a great question. I mean, obviously, from an efficacy standpoint, we think the data is very, very encouraging right now. If you look at all the other bispecific combination trial data that's been out there, everything from phase I data to phase III data, the CR rates have been anywhere from 47%-62%, the best ever reported. And as you're aware, CAR-Ts are in the kind of mid-60s to low 70s range in terms of CR rate. So anything over 70% we think would be extremely differentiating from an efficacy standpoint. I think from a safety standpoint, as you could see in this data, we continue to see only low-grade CRS and ICANS, a manageable safety profile overall, low discontinuation we've disclosed in the past with this regimen. I think more importantly than even those things is it's also with a novel mechanism.

If you look at a lot of the other bispecific combinations, they're either combining with chemo, which has some irreversible toxicities of neuropathy, or combining with polatuzumab, which has really become a mainstay frontline. Some physicians are reluctant to retreat with polatuzumab in subsequent lines. The fact that we're a unique agent combining with a highly potent bispecific like glofitamab, I think makes us a great combination partner.

Eric Schmidt (Biotechnology Analyst)

Great. Thank you very much.

Ameet Mallik (CEO)

Thank you.

Operator (participant)

Thank you. Your next question is from Michael Schmidt from Guggenheim Securities. Your line is now open.

Hey, good morning, guys. This is Rosianne from Michael. Congrats on the data. Thanks for taking our questions. In regards to LOTIS-5, I guess with the guidance of reaching PFS events by the end of 2025, do you still expect that top-line data to be a 2025 event, or is that going to be pushed to an early 2026 data readout? I guess along the lines of that, how much data can we expect from that top line? I guess in terms of the data itself, what does the combination need to show in order to be competitive? I know the trial is randomized against R-GemOx, but I was curious on how you're thinking about potential benchmarking against CAR-T regimens or STARGLO.

Ameet Mallik (CEO)

Yeah. In terms of the timing, we've always indicated this is a PFS-driven event trial. We have to hit the prespecified number of PFS events before we can then cleanse the data, assess it, and then show the top-line results. We still expect those events to happen this year, but the data readout could happen end of this year or early next year, as we've been indicating up to this point. We just wanted to make it clear that because it's PFS-driven, we can't control it. It does take, as you know, probably two to three months to cleanse the data, do all the quality control. That could happen end of this year or early next year. That's still similar timing to what we disclosed in the past. Do you want to talk, Mohamed, about her other question?

Mohamed Zaki (Chief Medical Officer)

How differentiated? What do you need to achieve in order to be differentiated? Typically, we have shown already in the safety run of 20 patients, a 50% complete response and 80% overall response rate, and a PFS of 8.3 months. The trial design actually would be suggested that the trial will be successful if we are actually two months stronger, 4 months-6 months. The control arm is at four, every six months. That is the hypothesis of the trial, how it is designed, that is how it is powered. We are very encouraged by the early data from the safety run-in. We will be sharing the top-line results, the outcome of the PFS of the study, and later on in a conference or publication, we will be sharing more details on the outcome of the study.

Great. Thank you so much.

Operator (participant)

Thank you. Your next question is from [Sivan Logonathan] from Stifel. Your line is now open.

Hi. Good morning, Ameet, Mohamed, and Pepe. Thank you for the update. I'm glad to see the continued improvement with the LOTIS-7 data as it matures. My first question is on the progress with the LOTIS-5 and LOTIS-7 and when we can expect maybe conversations with regulators to occur. Are the communications with regulators necessary since we're kind of going after this compendia listing strategy? If you did have a meeting with FDA regulators, what could be gained from it for listing and going forward listing on guidelines?

Ameet Mallik (CEO)

Yeah. I'll start on that and turn it to Mohamed. Meeting with regulatory agents isn't required to continue to expand at a dose that we decide to select on. Obviously, for any regulatory path forward, it is critical. We're assessing different regulatory pathways forward. I know Mohamed and the team plan to meet with regulatory agencies in the second half of this year. Maybe you can comment further on that.

Mohamed Zaki (Chief Medical Officer)

Yeah. We're planning to meet with the regulators in the second half of this year to address or discuss the dose in addition also to a potential path forward for regulatory path. Compendia is a different parallel pathway, as Ameet mentioned. That's two different paths. They actually are going to be going in parallel when we have the right amount of patients, the right amount of follow-up.

Great. I appreciate that. If I can squeeze in a second question real fast regarding the data pipeline developments. I noticed the 602 program was discontinued. Does that free up capital to bring one of the exatecan-based ADCs to the IND filing and even maybe initiating a phase I with the one that emerges? Is there still a goal to potentially out-license or partner out one of those preclinical assets that emerges from those developments maybe later this year or early next year?

Ameet Mallik (CEO)

Yeah. I'm going to turn this to Pepe to address both the cost piece of 602 as well as where we stand with BD efforts on our research programs.

Pepe Carmona (CFO)

Yeah. Thanks for the questions, [Svan]. The 602 program was a program partnered with MD Anderson. Basically, the cost implications of that study, of eliminating that study, is very low. It's not part of, it's not a large portion of our capital allocation. The investment that we have right now is mostly associated with ZYNLONTA and then bringing the research platform to a certain point in which we believe those targets are ponderable. The progress on the research BD efforts is ongoing. We have done an exhaustive review with different strategic and financial partners, and we'll be providing updates in the near term.

Thank you. I appreciate all the answers and the details. Congrats again on the progress.

Ameet Mallik (CEO)

Thank you.

Operator (participant)

Thank you. Your next question is from Gregory Renza from RBC Capital Markets. Your line is now open.

Good morning, team. It's Anishan for Greg. Congrats on the progress this quarter, and thanks for taking our questions. Just a couple from us. First, with LOTIS-7 being in the spotlight, we just wanted to get a sense on how the data to be presented at EHA and ICML would set the stage for data to come later on for the 40 patients in the dose expansion arm. Secondly, with LOTIS-5, what should we be expecting on the parameters to be presented? Even as a safety run-in, are there any key efficacy benchmarks you could point us to? Thanks so much.

Ameet Mallik (CEO)

Okay. So you're really asking about what's coming at EHA and ICML for both the LOTIS-7 presentation as well as the LOTIS-5 presentation. So I'll turn that to Mohamed, who can give a little more detail on that.

Mohamed Zaki (Chief Medical Officer)

Yeah. We will be actually presenting more patients and longer follow-up, but we cannot share any more details on the transition due to embargo reasons. We can only speak about what's in the abstract at this time. That's for LOTIS-7. With regards to LOTIS-5, we'll be sharing a little bit more on the durability of complete responses that has been reaching more than two years now without reaching the median of PFS yet or duration of response. That is technically what is planned to be shared as the abstracts suggest. Pretty much the information, we cannot share any more because of the invite.

Ameet Mallik (CEO)

Yeah. Obviously, as you saw in the press release for LOTIS-7, it's a poster presentation at EHA. It's an oral presentation at ICML. It'll be a full data presentation. You can expect all the typical things you'd want to see in a full data presentation.

Great. Thank you.

Operator (participant)

Thank you. There are no further questions at this time. I will now hand the call back over to Ameet Mallik, CEO, for the closing remarks.

Ameet Mallik (CEO)

I want to thank you all for joining our call today and for your continued support. We look forward to keeping you updated on our progress. Operator, you can now please end the call. Thank you.

Operator (participant)

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may all disconnect your lines.