ADC Therapeutics — Q3 2026 Earnings Summary

Financial Performance

• Preliminary net product revenues from ZYNLONTA sales for the third quarter ended September 30, 2026, are estimated at approximately $21.0 million.
• Cash and cash equivalents totaled $189.2 million as of September 30, 2026.
• On a pro forma basis, assuming the completion of the PIPE financing and partial loan prepayment, the company would have had approximately $196 million in cash and cash equivalents as of September 30, 2026.
• The company secured $86.6 million in gross proceeds from a private investment in public equity (PIPE) transaction, with net proceeds estimated at $76.3 million after fees and offering expenses.
• The company prepaid $70.0 million of principal on its senior secured term loan, reducing the outstanding principal balance to $50.0 million.
• HealthCare Royalty (HCR) has provided a cumulative total of $300 million in funding to the company to date.

Guidance and Future Outlook

• The strategic restructuring extends the company's expected cash runway into 2029.
• The company expects net product revenue growth in 2027.
• The company anticipates presenting data abstracts for the LOTIS-7 and MZL trials in early November, with presentations scheduled for December at the 68th American Society of Hematology Annual Meeting.
• The company intends to use net proceeds to fund continued ZYNLONTA pipeline studies, including Phase 3 trials in diffuse large B-cell lymphoma (ZYNLONTA plus glofitamab) and marginal zone lymphoma (ZYNLONTA monotherapy).

Business Segments and Product Lines

• ZYNLONTA (loncastuximab tesirine-lpyl) is the company's sole commercial product, approved by the FDA and EMA for relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy.
• ZYNLONTA is being evaluated in combination studies with other agents and in earlier lines of therapy.
• The company is advancing the LOTIS-7 trial and evaluating investigator-initiated trials for follicular lymphoma (FL) and marginal zone lymphoma (MZL).

Market and Competitive Landscape

• ADC Therapeutics is described as a commercial-stage global leader and pioneer in antibody drug conjugates (ADCs).
• ZYNLONTA has received accelerated approval from the FDA and conditional approval from the European Commission, with continued approval contingent upon verification of clinical benefit in a confirmatory trial.
• The company faces potential regulatory concerns raised by the FDA regarding the LOTIS-5 trial results and the path to full regulatory approval.

Risks and Challenges

• The company faces risks related to the adequacy of LOTIS-5 clinical trial data to support full regulatory approval and the ability to maintain accelerated approval status.
• Significant risks include the timing, content, and outcome of meetings with the FDA, the potential for the FDA to raise serious concerns regarding LOTIS-5, and the uncertainty of future LOTIS-7 results.
• The company must comply with a new minimum trailing four-quarter U.S. ZYNLONTA sales covenant of $65.0 million per quarter starting December 31, 2026; an uncured breach of this covenant or the debt limitation covenant could trigger significant penalties from HCR.
• Risks include the potential for an uncured breach of the debt limitation covenant, which would entitle HCR to receive a non-performance payment equaling 1.5 times the difference between the $300 million purchase price and actual royalty payments received.
• Uncertainties exist regarding the redomiciliation from Switzerland to Delaware, including tax analysis outcomes, shareholder approval, and the ability to complete the process on the anticipated timeline.
• The company faces risks related to international trade policies, tariffs, sanctions, and drug pricing mechanisms.

Management Commentary and Tone

• CEO Ameet Mallik expressed pleasure in the "robust set of improvements to our capital structure," citing confidence in ZYNLONTA's growth potential from long-standing and new investors, HCR, and lenders.
• Management stated the efforts extend the cash runway and increase strategic optionality as the company approaches key data presentations.

Other Key Points

• The company entered into a $86.6 million PIPE financing with new investor Bain Capital Life Sciences and existing investors Redmile, TCGX, and Nantahala Capital.
• The PIPE transaction involves the sale of 12.9 million common shares at $1.42 per share and pre-funded warrants for 48.1 million shares at $1.32 per warrant.
• The HCR Amendment eliminates a $150 million change-of-control payment and reduces the aggregate permitted third-party indebtedness to $50.0 million.
• The HCR Amendment reduces the exercise price of HCR warrants from $3.8130 to $0.10 per share and removes transfer restrictions prior to January 1, 2028.
• The Loan Agreement Amendment eliminates scheduled principal amortization, sets a bullet payment for the remaining $50.0 million principal in August 2029, and removes the minimum liquidity covenant.
• The Loan Agreement Amendment reduces the exercise price of Lender Warrants from $8.30 to $1.00 per share.
• The company is required to use its best efforts to become a Delaware corporation, subject to shareholder approval and fiduciary duties.
• The effectiveness of the HCR Amendment and Loan Agreement Amendment is conditioned upon the completion of the PIPE by October 31, 2026.
• Jefferies, Guggenheim Securities, and Cantor are acting as placement agents for the PIPE.