ADC Therapeutics SA Q2 2025 earnings call

Thank you, Operator. Today, we issued a press release announcing our Second Quarter 2025 Financial Results and Business Updates. 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, Jose Carmona, who will review our second quarter 2025 financial results. We will then open the call to 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 achievements 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 second quarter earnings release for information and reconciliation of historical non-GAAP measures with the comparable GAAP financial measures. I will now turn the call over to our CEO, Ameet Mallik. Ameet?

Thanks, Nicole, and hello, everyone. Thank you for joining us on today's call. The second quarter of 2025 represented a period of continued solid performance for our company, as well as the presentation of promising key data. 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. Net product revenues were $18.1 million and $35.5 million in the second quarter and first half, respectively, both of which were slightly higher as compared to the same periods in the prior year. During the second quarter, we were pleased to have LOTIS-7 data presented at EHA, the European Hematology Association Congress, and at ICML, the International Conference on Malignant Lymphoma.

We are encouraged by the promising data, which we believe demonstrates the potential for ZYNLONTA plus glofitamab to be a best-in-class combination in a highly competitive market. Data as of the April 2025 cutoff date shows ZYNLONTA in combination with glofitamab was generally well tolerated with a manageable safety profile. In addition, we believe the combination demonstrated clinically meaningful benefit with an overall response rate of 93.3% and a complete response rate of 86.7% across 30 efficacy-evaluable LBCL patients. Of note, 25 of the 26 patients achieving CR remained in CR as of the data cutoff. For reference, we have seen complete response rates in other bispecific combination trials in the range of 47%-62%. We are currently expanding enrollment to 100 patients at the selected 150 mcg/kg dose, which will support regulatory discussions and is in line with recent examples of bispecific combination therapies added to compendia.

We expect to share an additional update on LOTIS-7 in the second half of 2025. 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 pre-specified number of progression-free survival events by the end of 2025. After the pre-specified 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 presented at ICML from the phase II IIT in marginal zone lymphoma, being led by the Sylvester Comprehensive Cancer Center at University of Miami, showed an overall response rate of 85% and a complete response rate of 69%, with safety consistent with the known profile of ZYNLONTA.

Moving beyond ZYNLONTA, we are on track to complete IND-enabling activities for our exotic and based prostate-specific membrane antigen, or PSMA-targeting ADC, by the end of the year. From a corporate perspective, as part of our strategic plan to focus resources on ZYNLONTA commercialization and expansion opportunities and on our preclinical PSMA-targeting ADC, we discontinued early development efforts for all other preclinical programs in solid tumors. As research and development efforts and related programs are closed out, we plan to shut down our U.K. facility, reducing our global workforce across functions by approximately 30%. These changes are expected to help position our company for long-term growth with significantly reduced operating expenses. At the same time, we completed a $100 million private placement. Taken together, our expected cash runway now extends into 2028. I'm excited about the multiple upcoming catalysts ahead within this extended cash runway.

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. Within our current indication, our commercial strategy is focused on relapsed and refractory DLBCL patients who need a treatment with a fast, durable response and a manageable safety profile which can be administered in the outpatient setting. We believe LOTIS-5 has the potential to take ZYNLONTA to $200 million-$300 million in peak sales as we expand into the second-line setting.

This is driven by doubling the patient population, extending the duration of therapy, and improving the clinical profile versus our current indication as a monotherapy. With LOTIS-7, we estimate we can expand the total opportunity for ZYNLONTA in DLBCL to $500 million-$800 million in peak revenue with regulatory approval and Compendia listing. If the data persists, we believe ZYNLONTA plus glofitamab has the potential to transform the future lymphoma treatment paradigm by becoming the preferred bispecific combination in the Second Line Plus DLBCL setting. Additionally, in indolent lymphomas, there is a clear unmet need in both the relapsed or refractory marginal zone lymphoma and relapsed or refractory follicular lymphoma settings. We are encouraged by the initial data seen in the phase II IITs, suggesting the ZYNLONTA regimen could provide significant benefit for these patients.

We believe the indolent lymphomas opportunity could provide additional peak revenue of $100 million-$200 million with regulatory approval and Compendia listing, primarily driven by MZL. Taken together, we believe ZYNLONTA has the potential to reach peak revenues of $600 million-$1 billion in the U.S. Looking at the overall DLBCL treatment landscape, whether in the second or third-line setting, there are two main segments. The first are complex therapies which require unique infrastructure and expertise to handle logistical requirements and patient management. This includes therapies like CAR-T, transplant, and bispecifics. The second are more broadly accessible therapies, which all physicians can administer in the outpatient setting, including therapies like ADCs, monoclonal antibodies, and chemotherapy. Bispecifics have already been approved in the Third Line Plus setting as monotherapy, and we estimate there's currently a 60/40 split between the complex and broadly accessible segments, respectively.

In the second line, where bispecifics have not yet been approved but were recently added to NCCN guidelines for use in combination, the estimated split is closer to 25/75. We believe the emerging clinical profile of ZYNLONTA plus glofitamab in the LOTIS-7 trial positions us well among complex therapies, and at the same time, the clinical profile of ZYNLONTA plus rituximab in the LOTIS-5 trial has the potential to differentiate us among broadly accessible therapies. While ZYNLONTA is currently approved as a single agent in Third Line Plus DLBCL, we believe ZYNLONTA has the potential to be the backbone therapy for combinations, raising the bar for efficacy in Second Line Plus DLBCL. ZYNLONTA is a systemic chemo-free option which can be combined with the highly effective bispecific glofitamab and the most widely used agent, rituximab.

We believe ZYNLONTA plus glofitamab in LOTIS-7 and ZYNLONTA plus rituximab in LOTIS-5 are complementary approaches to addressing unmet needs in the two key treatment segments. Now, I will turn the call over to our Chief Medical Officer, Mohamed Zaki, who will share more on our ongoing trials. Mohamed?

Thank you, Ameet. Initial data from the safety lead-in portion of LOTIS-5, our Phase III confirmatory study of ZYNLONTA in combination with rituximab in patients with Second Line Plus diffuse large B-cell lymphoma (DLBCL), showed an overall response rate of 80% and a complete response rate of 50% with no new safety signals, demonstrating that this combination has the potential to provide competitive Second Line Plus efficacy with a favorable safety profile allowing broad accessibility. Enrollment is now complete, and we expect to reach the pre-specified numbers of events by the end of 2025 and will provide data once available. A supplemental BLA submission to regulatory authorities is anticipated in the first half of 2026, with potential confirmatory approval in Second Line Plus DLBCL in the first half of 2027.

With LOTIS-7, we are exploring the combination of ZYNLONTA and Anti-CD19 ADC with glofitamab, an anti-CD20 Series III T-cell engaging bispecific antibody. These two highly potent single-agent drugs offer important and complementary mechanisms of action in DLBCL, which target two different B-cell antigens while delivering a potent payload and activating T-cells. Given this, we expect to see additive or synergistic efficacy. In addition, there are no known overlapping non-hematologic toxicities between the two agents. By dosing ZYNLONTA prior to glofitamab, it is our hypothesis that this dosing schedule has the potential to debulk the tumor and to lower CRS rates and grades. The design of the trial includes two parts. Part one, dose escalation, was conducted across non-Hodgkin lymphoma patients at three dose levels of ZYNLONTA with glofitamab or mosunetuzumab in the Third Line Plus.

Part two, dose expansion, was conducted in the Second Line Plus large B-cell lymphoma with ZYNLONTA at two dose levels, 120 micrograms per kg, and the currently approved monotherapy dose of 150 micrograms per kg combined with the approved monotherapy dose of glofitamab. Based on this initial dose optimization, we selected the 150 microgram per kg dose for expansion to 100 patients at this dose level. ZYNLONTA is being given prior to glofitamab to potentially debulk the tumor in the first cycle, and then both agents are given together in subsequent cycles. The primary endpoint is safety and tolerability, and the secondary endpoint of efficacy, PK, and immunogenicity. Baseline characteristics in this study, including being refractory to prior therapy as well as number and types of prior therapies, are representative of the second line DLBCL patient population and similar to other studies in this space.

Among the 41 patients evaluated for safety, there are certain characteristics that are important to highlight. The median age in this study is 71, with a range of 26-85 years of age. The study enrolled patients with large B-cell lymphoma, including de novo DLBCL, transforming follicular lymphoma, high-grade B-cell lymphoma, and grade 3B follicular lymphoma, all considered to be DLBCL. Median prior lines of therapy was two, with a range from one to five. The study includes a number of difficult-to-treat large B-cell lymphoma patients. Nearly 20% of patients presented at double or triple hit. 19.5% of patients received prior CAR-T, which is in line with other trials done with bispecific combinations.

Patients refractory to prior therapy were well represented in the study, with 51% of patients refractory to primary therapy and 49% refractory to last prior therapy, both of which were slightly higher in the 150 microgram per kg compared to 120 microgram per kg dose. Safety was analyzed in the 41 large B-cell lymphoma patients who received at least one dose of ZYNLONTA plus glofitamab. Most notably, as mentioned during the presentation of this data at S, when looking at grade CM4 treatment emergent adverse events occurring in more than 5% of patients, neutropenia was the most common at 24.4%, which is similar to the rate of neutropenia reported in the prescribing information of each drug separately. No additive effects were observed. Beyond that, the type of treatment emergent adverse events observed are consistent with the known safety profile of each drug separately.

The rate of serious treatment emergent adverse events was similar across both doses. Only three of the 20 patients experiencing serious treatment emergent adverse events discontinued treatment. As of the data cutoff, the combination has shown a manageable safety profile and no new safety signal was observed. A total of six patients discontinued due to adverse events, three of which were serious treatment emergent adverse events. For ZYNLONTA, we saw one case each of pericardial effusion, generalized edema, and pleural effusion. For glofitamab, we saw one case of ICM, polyneuropathy, and febrile neutropenia. This is consistent with the known profile of each drug separately. As of the data cutoff date, we can see that overall rates and grades of CRS are higher at the 120 microgram per kg dose compared to the 150 microgram per kg dose.

The 120 microgram per kg dose had 55% any grade CRS, primarily grade 1 to 2, with one case of grade 3. The 150 microgram per kg dose had 23.8% any grade CRS, all of which was grade 1. Grade 1 and 2 CRS were managed using standard of care therapies without ICU admittance or pressor support. The grade 3 CRS was managed with standard of care therapies and included ICU admittance. ICMs were seen in two patients treated at the 120 microgram per kg, and one ICM was observed at 150 microgram per kg dose. These ICMs were low grade and primarily managed with corticosteroids. All patients had a complete resolution of symptoms, with one patient electing to discontinue treatment and two patients resuming treatment and ultimately achieving a complete response.

Of the 41 treated patients at the time of the April data cutoff, 30 patients have reached the initial disease assessment and were efficacy evaluated. In this study, we have seen 93.3% overall response rate and an 86.7% complete response rate. Median duration of response was not reached at the time of data cutoff. The results observed across those levels were consistent in the terms of ORR, CR, and PR. Looking now at the swimmer's plot, the green bars show all patients in complete response, and the length of these bars shows the durability of each response. The gray bars represent who have not yet made it to the first disease assessment, so are not yet available for response. Most responses were observed at initial assessment, which occurred at day 42.

25 out of 26 patients who achieved a complete response have maintained that response as of the data cutoff, and 12 patients converted from stable disease or partial response to complete response over time. At the data cutoff, the longest response in the study is more than a year. Complete responses were observed regardless of prior therapy. Of the six patients previously treated with CAR-T and undergoing response assessment, five achieved a CR. The impressive efficacy and manageable safety profile seen with the combination of ZYNLONTA and glofitamab is encouraging. The data reinforces our belief in the potential for this regimen to change the treatment paradigm for patients with aggressive lymphoma. Now, I will turn the call over to Pepe Carmona, our CFO, who will discuss financial results from the second quarter. Pepe?

Thank you, Mohamed. On the financial front, ZYNLONTA net product revenues in the second quarter of 2025 were $18.1 million as compared to $17 million in the same quarter of 2024. The first half net product revenue was $35.5 million compared to $34.9 million during the first half of 2024. In connection with the strategic reprioritization and restructuring plan announced in June 2025, the company incurred $13.1 million in restructuring and impairment costs in the second quarter of 2025, which consisted of $6.7 million in employee severance and related benefit costs and $6.4 million in non-cash impairment assets in connection with the close down of the U.K. facility. Total operating expenses for the quarter were $47.8 million on a non-GAAP basis, representing an 8% increase over the prior year, primarily driven by higher R&D costs, mostly related to LOTIS-5 and LOTIS-7, as well as PSMA IND-enabling activities.

The expenses on the ZYNLONTA LOTIS-5 trial, which is the largest investment we are making, are expected to decrease as we complete the trial going into 2026. On a GAAP basis, we reported a net loss of $56.6 million for the second quarter of 2025, or $0.50 per basic and diluted share, as compared to a net loss of $36.5 million or $0.38 per basic and diluted share for the same period in 2024. The increase in net loss for the quarter is primarily attributable to one-time restructuring and impairment costs and higher R&D expenses. You can find the reconciliation of GAAP to non-GAAP measures in the accompanying financial tables of the press release issued earlier today and in the appendix of this presentation. As of June 30, 2025, cash and cash equivalents were $264.6 million compared to $194.7 million at March 31st, 2025.

This change was primarily driven by the net proceeds received in the company's private placement, partially offset by our use of cash in operating activities for the quarter. Across the LOTIS-5, LOTIS-7, and marginal zone lymphoma ZYNLONTA programs, we expect to have multiple data catalysts in the remainder of 2025 and 2026 with potential LOTIS-5 approval and compendia listing for all of this in the first half of 2027. For LOTIS-5, we expect to reach the pre-specified number of progression-free survival events by the end of this year, with top-line results and potential supplemental BLA submission in the first half of next year. With LOTIS-7, we intend to share fewer, more mature data toward the end of this year and expect to complete enrollment of 100 patients at the 150 microgram per kg dose in the first half of next year.

We plan to engage with regulatory authorities starting later this year. With sufficient data, we will pursue publication and a potential compendia strategy. With indolent lymphomas, we expect additional data to be shared at medical conferences this year and next by the lead investigators. Beyond ZYNLONTA, we are excited to see the advancement of our exatecan-based PSMA-targeting ADC with potential completion of IND-enabling activities toward the end of this year. Overall, we believe we have multiple value-driving catalysts within our cash runway, which is expected to extend into 2028. I will now turn the call back to Ameet.

Thank you, Patrick. 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?