ADC Therapeutics (NYSE:ADCT) Q2 2026 Earnings Call

0:00 Good morning, ladies and gentlemen, and welcome to the ADC Therapeutics Q2 twenty twenty six Earnings Conference Call. At this time, all lines are in listen only mode. Following the presentation, we will conduct a question and answer session. This

0:23 call is being recorded on Thursday, 08/13/2026. I would now like to turn the conference over to Nicole Reilly, Head of Investor Relations and Corporate Communications. Please go ahead. Thank you, operator. Today, we issued a press release announcing our second quarter twenty twenty six financial results and business update. This release and the slides we will use in today's presentation are available on the Investors section of the ADC Therapeutics website.

0:53 I'm joined on today's call by our Chief Executive Officer, Amit Malik, who will discuss our operational performance and recent business highlights, followed by our Chief Medical Officer, Mohammad Zaki, who will provide clinical and regulatory updates and lastly, our Chief Financial Officer, Pepe Carmona, who will review our second quarter twenty twenty six 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.

1:44 They are identified and described in the accompanying slide presentation and in the company's filings with the SEC, including Form 10 ks, 10 Q, and eight ks. 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 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 twenty twenty six earnings release for information and reconciliation of historical non GAAP measures to the comparable GAAP financial measures.

2:40 I will now turn the call over to our CEO, Amit Malik. Amit? Thank you, Nicole. We are pleased to share that ZYNLATA's commercial performance in the second quarter of twenty twenty six continued to be broadly in line with recent quarters. We remain confident in the role ZYNLATA will continue to play as a differentiated single agent treatment option for third line plus DLBCL patients. Turning to our pipeline progress, as previously disclosed, we announced top line results for LOTUS V in June. Based on this data, we held a pre SBLA meeting with the FDA, and following the meeting we are assessing the best regulatory path forward. Mohamed will share more details regarding the FDA feedback and our regulatory strategy. Further to this, the full LOTUS-five data have now been submitted for presentation at ASH, and we are preparing to submit for publication with compendia submission to follow.

3:35 For LOTUS-seven, we were pleased to complete enrollment of 100 patients at the selected dose level of ZYNLATA plus glufitamab as shared in June and have submitted an abstract to ASH for presentation of the data,

3:47 which we continue to believe demonstrates the most compelling combination data generated to date in second line plus DLBCL with a safety profile generally consistent with prior LOTUS seven disclosures. With these data, we believe that ZYNLATA plus glufetamab offers an opportunity to take a leading second line position in the context of the evolving competitive landscape, solidifying ZYNLATA as a foundational therapy in DLBCL. Beyond this, we are preparing to submit for publication of the LOTUS-seven data with compendia submission to follow. Simultaneously, we are exploring the potential regulatory pathway for this combination and expect to submit for breakthrough designation this year. With respect to the multicenter investigator initiated trials of ZIMMANTA in indolent lymphomas, updated marginal zone lymphoma data was submitted to ASH with publication and compendia submission to follow.

4:43 Presentation of updated follicular lymphoma data is anticipated in the second quarter of twenty twenty seven, with publication and compendia submission to follow. We also intend to assess potential regulatory pathways for these indolent lymphomas, and expect to submit for breakthrough designation for MZL. Moving now to corporate updates. We announced a strategic reorganization in June. As part of this, we implemented a reduction in our workforce of approximately seventeen percent, as well as additional operational efficiencies, resulting in cost savings of approximately $10,000,000 on an annualized basis. As shared at that time, with these changes, we are resourced to deliver on our key clinical, regulatory, and manufacturing activities, while maintaining the full externally facing footprint to support the continued commercialization of ZYNLATA in the third line plus DLBCL setting.

5:38 Finally, we ended the second quarter of twenty twenty six with a healthy cash balance of $219,100,000 maintaining our expected cash runway at least into 2028, and enabling us to deliver against our strategy. Now I'd like to take a moment to remind everyone of our strategy to grow ZYNLATA. Currently, ZYNLATA plays a clear role in the third line plus DLBCL setting. As monotherapy, ZINLANTA has a well established profile of rapid, deep, and durable efficacy, as well as manageable safety with simple and convenient administration. Since FDA accelerated approval in 2021, ZYNLATA monotherapy has been used in treating approximately five thousand patients in The U. S. We believe this is just a starting point as we see the potential for ZYNLATA to reach significantly more patients by expanding use into earlier lines of therapy in DLBCL and into indolent lymphomas.

6:35 Now I would like to turn the call over to Mohamed, our CMO, to share more on our pipeline.

6:42 Thank you, Amit. I would now like to share more on our LOTUS V and LOTUS VII studies as we continue to work towards expansion of ZELONTA in earlier lines of DLBCL. As a reminder, LOTUS V is our Phase III confirmatory study of ZELONTA in combination with rituximab versus argemox in patients with second line DLBCL, which recently read out and met the primary endpoint of progression free survival. As noted, we held a meeting with the FDA in early August to present and discuss the totality of the LUTIS five data along with the potential regulatory pathway. During this meeting, the FDA noted substantial concerns

7:27 regarding the benefit risk or verification of taken benefit observed in LUTAZ V trial. As such, the company is now assessing the regulatory path forward. We plan to provide an update on regulatory strategy and timing in the future. Beyond this, the data has been submitted to ASH. We are simultaneously pursuing publication for LUTIS five and potential companion inclusion starting in 2027.

7:57 Turning now to LUTIS seven, our Phase 1b trial combining ZENLONTA with the highly effective bispecific glupita map in second line plus DLBCL patients, we recently announced completion of enrollment of one hundred patients at the one hundred and fifty microgram per kg dose.

8:18 Of note, consistent with other glucanumab trials, the protocol for LUTA-seven recommends prophylaxis, including vaccination for filers, fungal, and bacterial infections, including PGP and herbs virus, which was not part of the LOTUS five protocol.

8:40 Here, we continue to be encouraged by the promising data shared to date, which we believe demonstrates the potential for ZENLOTA plus glufetomac to be the best in class combination.

8:55 With data on larger number of patients with longer follow-up has been submitted to ASH for presentation. This data supports the company's belief that the Elanta plus blufidomab demonstrated the most compelling combination data generated to date in second line DLBCL with a CC profile, generally consistent with prior Luta seven disclosures.

9:23 Separately, we are preparing for submission of the full Luta seven data for publication and following that, plan to submit to compendia for potential inclusion starting in 2027. In addition, based on this potentially track changing data, the company plans to submit for breakthrough designation this year, and is assessing a phase three trial for the combination of ZELLONTA plus Glufetumab.

9:56 Moving forward, we plan to work closely with the FDA to determine the best path forward to achieve the full approval and advance ZELONTA combinations into earlier lines of therapy in DLBCL.

10:12 In the meantime, we remain confident that Zalanda will continue to play a meaningful role for patients with B cell malignancies within its currently approved third line plus ZLDCL setting. With that, I would like to turn the call over to Patrick Armano, our CFO. Thank you, Mohammad. On the financial front, zilmotinib product revenues in the second quarter of twenty twenty six were $18,600,000 as compared to $18,100,000 in the same quarter in 2025. Cost of product sales was $2,300,000 and $6,000,000 for the second quarter and six months ended 06/30/2026 as compared to $800,000 and $2,900,000 for the same periods in 2025.

11:04 The increases compared to prior year are primarily driven by a change in focus of personnel from research and development clinical supply activities to commercial manufacturing activities. Total operating expenses were $44,700,000 for the second quarter. On a non GAAP basis, total adjusted operating expenses were $37,200,000 for the quarter and were down by 22% over the prior year, primarily driven by lower R and D expenses.

11:34 As Amit noted, we expect to save an additional $10,000,000 on an annual basis as a result of the strategic reorganization we announced in June. On a GAAP basis, we reported a net loss of $16,600,000 for the second quarter of twenty twenty six as compared to a net loss of $56,600,000 for the same period in 2025.

12:00 The second quarter of twenty twenty six included a one time expense related to the strategic reorganization while the year ago quarter included restructuring, impairment and related costs from the June 2025 strategic reprioritization and restructuring plan. On a non GAAP basis, the adjusted net loss was $16,300,000 for the second quarter of twenty twenty six as compared to a net loss of $28,700,000 for the same period in 2025. The lower net loss on a non GAAP basis was primarily due to lower operating expenses. The year over year changes on a per share basis were additionally impacted by the higher number of weighted average shares outstanding.

12:48 You can find the reconciliation of GAAP to non GAAP measures for the second quarter in the companion financial tables of the press release issued earlier today and in the appendix of this presentation. At the end of the second quarter, we had cash and cash equivalents of $219,100,000 as compared to $231,000,000 as of 03/31/2026, a change primarily driven by cash used in operations. This provides us with an expected cash runway at least into 2028.

13:24 With that, I will turn the call back over to Amit. Amit?

13:30 Thank you, Pepe. To close, we are pleased by the commercial performance and the role that ZENLANTA monotherapy continues to play in third line plus DLBCL. We look forward to presentation of data from LOTUS-five, LOTUS-seven, and MZL before year end with publication and potential companion inclusion to follow. Following the FDA pre SBLA meeting, are assessing regulatory approaches to determine the best path forward for the LOTUS-five trial. At the same time, we believe we have an opportunity for Xelanto plus glafitamab to take a leading second line position in DLBCL as a potential best in class bispecific combination and are actively assessing the potential regulatory path forward. Together, we anticipate we can grow Zenlanta beginning in 2027, as we work to make a meaningful difference in the lives of many more patients with B cell malignancies.

14:20 We can now open the line for questions. Operator?

14:27 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. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any key. One moment, please, for your first question. Your first question comes from Eric Schmidt with Cantor. Please go ahead.

15:00 Thanks for taking my question. I appreciate all the updates. Maybe just on the status of the current accelerated approval for ZINLANTA, given the questions around risk benefit from LOTUS V? Was there any FDA discussion of maintaining that accelerated approval status? Yeah, so a great question. So first of all, all the discussions with the FDA were related only to the trial. All their comments were specific to the combination of the Monza plus rituximab on the trial. So there was no feedback at all about the single agent. So we remain confident that the monotherapy will stay on the market, will continue to have a thorough approval, and we're committed to working with the FDA to make sure that we can satisfy the full approval, either through LOTUS V or through another study.

15:53 Thank you, Amit. And then LOTUS VII and your characterization of the most recent efficacy data that you guys have seen as compelling and consistent in safety, have you essentially now seen the final ASH presentation, and do your comments pertain to that? In other words,

16:15 do you know exactly what you'll present, and is it consistent with that statement? Yeah, so we've already submitted the abstract for ASH, which contains the vast majority of the 100 patients that we enrolled. So the belief that I'm sharing with you about the fact that we think we have very compelling efficacy and safety data is reflective of that ASH abstract. Obviously, for disclosure reasons, can imagine we don't want to share all the details, but we do believe that we have very compelling data, both from an efficacy and a safety standpoint, within the LOTUS-seven data that was submitted to ASH. Thank you. And one more question, if I may, with regard to exploring a phase three pathway for the combination of LOTUS-seven.

17:00 Is that something you're exploring with Roche or by yourselves? Yeah, don't want to comment on that. Obviously, we have a great partnership with Roche, and they've given us great feedback throughout, but what I would say is we've had lots of discussions, but also lots of thought, as you can imagine, even independent of the feedback we have gave, about a potential phase three design, because we know that this data is so compelling that there could be significant upside to the asset by potentially pursuing phase three assets. So it's something we've been thinking about for a long time. The team has already been preparing on different design options, and we do plan to file for a breakthrough designation this year, and to discuss with the FDA potential designs.

17:47 Thank you for taking my questions. Yeah, thank you, Eric. Next question comes from Michael Schmidt with Guggenheim Securities. Please go ahead. Hey, this is Sarah on for Michael. Thanks so much for taking my question. Just wanted to follow on quickly on the Phase III plans, whether you could give any color on sort of timeline for that now that it appears to be sort of more of the future looking focus. And then additionally had a sort of a question on the LOTUS V data. So I know you've mentioned the one hundred and five day period for monitoring adverse events after treatment. I was wondering if you could comment on the timing of the death.

18:37 So first of all, I just want to emphasize we have a positive study for V, so we still are assessing possibilities to identify the best regulatory approach for LOTUS V. Specifically, we're considering whether additional data, risk management options, or modifications to the potential label can address the update concerns of OSI. So we are doing that in parallel, given that we have, we think, potentially practice changing data on hand with the LOTUS-seven, we're also in parallel going to file for breakthrough designation and explore a Phase approach there. So it's too premature at this point, as you can imagine, while we're still gathering input from the medical community and obviously have to collaborate with the FDA on a final design to talk about timing and cost, but I just want to reemphasize that those two things are going in parallel.

19:25 And then with regards to the one hundred and five day safety window in terms of capturing AEs post the last dose, that's the same, by way, in lotusatin as well. And one thing I want to emphasize is that, as Mohammad mentioned on the call, there was a big difference between LOTUS five and LOTUS seven, particularly with regards to prophylactic measures taken. So in LOTUS seven, consistent with a lot of the other GLOSSKIT trials that have been run, in LOTUS seven, we recommend prophylaxis including vaccinations for viral, fungal, and bacterial infections. That was not part of the LOTUS five protocol, so while the time period that we're capturing AEs are very similar, there was a pretty big difference in terms of prophylaxis in the protocol between five and seven. Appreciate it. Thank you.

20:15 Thank you. Your next question comes from Maury Raycroft with Jefferies LLC. Please go ahead. Hi, good morning. This is James on for Maury. Thanks for taking our questions. Can you provide more detail on the type of grade five infections that were observed in LOTUS V, and whether those events would have been expected to be mitigated by the prophylactic and vaccination strategies now incorporated in LOTUS VII? Did other infections occur that aren't addressed by those vaccines? And I have a follow-up after that. Yeah, so the primary type of infections were bacterial, which is why we think that prophylaxis could play a role. Got it. And how do you think about the potential read through from LOTUS V grade five signal to potential NCC compendia inclusion and adoption of delontaglifidemab combination within the academic community?

21:11 Could LOTUS-five impact the NCCN language, and could there be any safety monitoring requirements? Yeah, I don't think there will be any read through in terms of LOTUS-seven, including two very different studies, two different regimens, and as I mentioned, the protocol is different, which we think can help to contribute to some of the safety differences. Just as a reminder, obviously I can't speak to the data we have on hand, but I can speak to the prior disclosure that we had, we had a very low percent of grade five events, approximately four percent, if you look at our last disclosure we had in December on the forty nine patients that we reported. So I do think there's a difference, and we don't think that we'd be a read through below the seven or to any potential NCCN or any inclusion.

22:00 Got it. Very helpful. Thank you. Thank you. Now have a question from Leonid Timischev with RBC Capital Markets. Please go ahead. Hi, guys. Josh on for Leo here. Thanks for taking my question. I was wondering whether or not the FDA in their feedback in response to the Phase III, do they provide any kind of indication of what an effective path forward might look like, and what strategies you guys are thinking about at the time being? Thanks. Yeah, and I think typical in what you'd have at the pre SDLA meeting, we share the data results, and you're aligning on the package for an SBLA submission.

22:46 During that, as typical with any other pre SBLA meeting, they share concerns that they have with the data. And so right now we're basically going through the feedback and assessing whether additional data risk management options or modifications to the potential label can help to address those update concerns. And that's the basis of which we're evaluating our path forward for those five. Thanks, guys. Thank you. Your next question comes from Rob Burns with H. C. Wainwright. Please go ahead.

23:32 Hi. This is Ahmed on for Rob. Thank you for taking our questions. I was just wondering if the you saw 2Q product revenue increase versus 2Q twenty five. And I was wondering if you've seen any changes in patient starts or unit demand dosing or physician prescribing behaviors that slow despite disclosure. And then for my second question, was wondering if in your conversations with the FDA, did they focus on the PFS in patients 75 or older, and if that would influence eligibility criteria of future label? Thank you. Yeah, so with regard to SAIL, we haven't seen any impact. If you look at the volume in Q2, very consistent with prior quarters, so and we don't think that there will be. If you look overall over the past several quarters, the commercial performance of monotherapy in the third line plus setting has been relatively consistent, and that's because Zilmaz has an established place in that third line plus setting, and we don't expect any impact on monotherapy sales.

24:35 And then remind me again, I'm sorry, your second question. No problem. I was was wondering 75 or older, right? Yes, thank you. Yeah, we don't think it'll have any impact on other studies. I think obviously older patients, specifically with infection, we think that the prophylaxis can play a role, and that's also why the protocol, again, I want to stress for LOTUS-seven versus LOTUS-five are quite different. Each study is on its own, I don't think that there's a read through from this. We certainly learned a lot from LOTUS-five, and we're happy with the differences in the protocol, of course, that we're seeing in LOTUS-seven, so we don't see any research from MODIS five to either the current indication or other potential combinations.

25:24 Thank you. There are no further questions at this time, so I will now turn the call over to Amit Malik for closing remarks. Please continue. Well, thank you all for joining the call today and for your continued support. We look forward to keeping you updated on our progress. Operator, you may now end the call. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.