ADC Therapeutics S.A. Q4 FY2025 earnings call

CEO Amit Malek discussed strategic plan focusing on Zenlanta with optimized lifecycle management, including advancing LOTUS 5 and initiating LOTUS 7. Reduced operating cost structure by ~50%, refined go-to-market model. Upgraded leadership and talent. Strengthened balance sheet. 2025 had substantial progress with milestones for Zinlanta trials. Q4 2025 net product revenues strong. Lotus 5 expected to share top-line data in Q2 2026. Lotus 7 expanded target enrollment and shared data. Positive phase two data in indolent lymphomas. Entered amendment to royalty purchase agreement

Fourth quarter 2025 net product revenues were $22.3 million. Full year 2025 net product revenues were $73.6 million. Total operating expenses for Q4 2025 were $41 million and for full year 2025 were $202.9 million. On non-GAAP basis, total adjusted operating expenses for Q4 2025 were $39.4 million and for full year 2025 were $181.3 million. Net loss for Q4 2025 was $6.4 million and for full year 2025 was $142.6 million

Expect multiple data catalysts in 2026 across SYNLONDA program. Lotus 5 to provide top-line data in Q2 2026, full results by year end, potential FDA submission in H1 2027. Lotus 7 to share next update by end of 2026. Indolent lymphomas data to be shared at medical conferences by end of 2026 to mid-2027

Forward-looking statements subject to known and unknown risks and uncertainties. Actual results could differ materially. Identified and described in slide presentation and SEC filings

Q: Hi, good morning. Congrats on the progress and thanks for taking my questions. I'm going to ask one on Lotus 5. At a high level, how are PFS events tracking relative to the 262 events required to trigger the top line analysis? Is there any chance the readout could get bumped into third quarter? And then wondering if you can clarify what will be included in the top line and whether CR durability could be included in that update, or is that more likely to be reserved for a later medical conference?

A: Yeah, thanks so much for the question. So we are confident in the Q2 timing of the top line readout, so we expect to be able to hit the events in time, and we will be able to share top line data in Q2. We're very confident in that. In terms of what we expect to share, we're going to share the primary endpoint, which is PFS, for the trial. That's what the study's powered to show. In addition, we're going to share all the secondary endpoints that are mature as of the time of the top line data. as well as key safety tables. So we want to make sure that we're as transparent as possible with the market without compromising obviously publication that we expect to happen by the end of the year.

Q: Hey guys, good morning. Thanks for taking my questions. Another one on Lotus 5 and sort of just thinking about your market projections and second line DLBCL. I think you spoke about an incremental $200 to $300 million opportunity, assuming maintaining sort of a 10% share. in that setting, and I was just wondering if that is perhaps too conservative. I'm just curious how you think about the market, especially now that we've seen Monjuvi perhaps moving into first line. We see some of the bispecific antibody data reading out, you know, perhaps below expectations, and so I'm just curious if there's upside perhaps to your Lotus 5 opportunity assessment, and then I had a follow-up question.

A: Yeah, I mean, I think based on the profile we saw in the safety run and if the final results look similar, we're obviously very highly confident that we can play a meaningful role in second-line plus TLVCL with this combination. To your point, we've already achieved an approximately 10% share in the third-line plus setting as a monotherapy. And I would say, you know, it has some attributes that physicians really like, the fact that it works very quickly, very durable CRRs, manageable safety profile, convenient dosing, One of the drawbacks right now is we have a less than competitive CR rate because we're competing against combinations. So, of course, now with the combination, we expect to have competitive and potentially even differentiating CR rates with a positive phase three study. So, we do feel confident we should be able to maintain that share in the 10% range in the third line plus setting. If we're able to maintain that same 10% in second line, that would translate to $300 million. The exact, I would say... Peak sales opportunity, we're going to know when we know the clinical profile because we think we can achieve this even with a competitive profile relative to other competitors. If we have a more differentiated profile, you know, potentially we could do more. But we'll revisit the peak sales opportunity once we know the final clinical profile of the combination.

Q: Yeah, that makes sense. And then just another question, Lotus 5. So I'm just curious whether you've allowed crossover in this study. especially as it pertains to, you know, getting an early look at overall survival, you know, whether that's something that could perhaps be achieved. And then the other question, you know, related to that I had is, you know, how are you thinking about potential use of bioseasic antibodies post-progression, perhaps impacting OS? Obviously, that could happen in either arms of the study, but I'm just curious, you know, in general, perhaps, You know, how meaningful or how important you think OS could be as a differentiator in this setting, which obviously was not achieved by some of the other programs in second line?

A: Yeah, so we obviously don't know whether and how the subsequent therapies are between the different arms. So that's, you know, whether there were CAR-T bispecifics, as you said, or any other therapies, we're not obviously certain because we're completely blinded. in terms of the study, obviously, you know, subsequent therapies can affect overall survival. I think the way we look at this is, you know, we have a positive, you know, if we have a positive PFS without any detrimental effect to overall survival and overall a positive benefit risk profile, we think that we'll have a very good submission for the FDA.

Q: Hi, team. This is Alexa on for Eric, and congrats on a great year. So one question for me. So R&D spend was down about $10 million from the previous quarter. So do you expect what we're seeing in Q4 to be the current run rate going forward?

A: Thanks, guys. Thanks, Alexa. Appreciate the question. So, Pepe, I'll turn that question to you around R&D spending Q4 and what we expect going forward. Yes, thanks for the question. So, we expect that as we move to 2026 and 2027, R&D expenses should go down, assuming we maintain the current number of trials and the current pipeline that we have. As the lot of 5, Kyle, will continue to wind down, and then lot of 7 will get to a peak, but then will go down. So, RMB expenses are expected to fluctuate quarter over quarter, but in general for 26 and 27 to be going down.

Q: Hi, good morning. Thanks for taking my question. The first one, you know, given the amended health care royalty agreement, they expect to cash from way into 2028. You know, how should we think about the capital allocation priorities between commercial investment behind the NANTA or advancing combination strategies and then the potential business development angle, especially considering the remaining deferred royalty and term loan obligations?

A: Yeah, I'll start off and then Pepe feel free to add. So, you know, I would say that right now we feel pretty confident with our cash runway guidance that even with relatively stable revenues until we get to the new indications, which we expect to happen in 2027 with Lotus 5, and as well as with the cost guidance that Pepe just mentioned, for all the activities that we have currently planned, our current Lotus 5, our current Lotus 7, our current IITs, all of our current ongoing activity, as well as investing more pre-launch in both commercial and medical affairs activities. Those are all the assumptions that we have in our current guidance. Obviously, if we were to do any additional lifecycle management or new activities, that would not be currently based within our cash runway guidance that we have right now. We think the ACR agreement provides strategic flexibility now, because obviously by reducing the... reducing the change in control payment just allows more strategic flexibility and optionality for the company going forward. And so we were really pleased by that. In exchange, of course, they continued the royalties, which given that our COGS is low to mid single digit, when you add in the royalty agreement, the gross margin is still quite good for this property when you add both of those things in. But Pepe, is there anything else you would add to what I just said?

A: Yeah, I think you gave all the details. At the end of the day, we were solely focused on driving CELANTA growth, and that's by completing the LOTUS 5, LOTUS 7, and indoor uniformity trials. That capital has been allocated and is part of our cash runway, as well as all the pre-launch activities and launch activities of CELANTA in 2027 in the second line setting. It does also cover some of those expenses related to a loan. So it's all included. We believe we have a really strong cash position right now to execute on our plan.

Q: And if I could, just a second one real quick, I wanted to ask about if you can give any details on maybe your market strategy, you know, as you get some of these last final data readouts this year and, you know, looking, going towards the regulatory, you know, pathway first happened next year. Could you give us any details on how your marketing strategy could change to get into the DLBCL space, the second line space?

A: Thanks. I mean, the good thing is we have a very good footprint. So our field force already covers about 90% of the potential of DLBCL. We have a full MSL team as well and a strong headquarter team. So we will make some incremental increases both in the commercial and MSL footprint, as well as some additional expenses in terms of A&P and other expenses on a headquarters basis. But I would say incremental because we think we're already pretty well covered. Obviously, when you do the pre-launch and launch activities, and we can expand into a much bigger population, the second-line population, which we think also with a better profile than we have today, those incremental investments are going to help us. to make sure that we drive an education around the product use, particularly when we anticipate a Lotus 5 approval sometime in the middle of next year. We think Lotus 5 obviously is also key because once we get to the top line readout next year, it really actually unlocks the total value of the lifecycle management plan for Zinlanta because that is our full approval. And we think that the total opportunity that we have for Zinlanta, not just with Lotus 5, but you know, assuming we can have regulatory approvals and compendia for the other indications, it can take the total peak revenue opportunity for Zalanta to $600 million to $1 billion. So我们think that Zalanta, but as far as we know, Q2 is really a key unlocking event to start driving the value of the total asset potential.

Q: Hey, guys. Thanks for taking my question. I just wanted to ask on sort of the current commercial run rate for Zinlanta. I guess you've had a couple of stronger quarters. I guess at what point do you think that becomes a trend where you're actually seeing genuinely more enthusiasm and use from investigators in the current label indication, or is this still seasonality? And maybe what does that tell you about, you know, potential future launch of Zinlanta as you expand the indication?

A: Yeah, I mean, I think we're pleased that, you know, over the last couple of years, since buy specifics have launched, we've basically been able to maintain our share within a space that's gotten a lot more competitive. So I think we feel really good about that. If you look, you know, more broadly at 2025 versus 2024, volumes are roughly stable. You know, there's some slight increase in sales, mainly driven to slight increases in net price. So, you know, we don't provide any annual net price. revenue guys, but we expect this year sales again to remain broadly in line with what we've seen in the recent years. And the real inflection point will start when we get the approval for Lotus 5 next year, where we think we can really significantly increase the potential sales opportunity for Zonlanta