ADC Therapeutics SA

Previous wording

Our flagship product, ZYNLONTA, a CD19-directed ADC, received accelerated approval from the U.S. FDA, conditional approval from the European Commission, conditional approval from the China National Medical Products Administration (“NMPA”) and conditional approval by Health Canada for the treatment of relapsed or refractory DLBCL after two or more lines of systemic therapy. We are seeking to continue expanding ZYNLONTA internationally, and into earlier lines of DLBCL as a single agent and in combination through our LOTIS-5 confirmatory Phase 3 clinical trial and LOTIS-7 Phase 1b clinical trial as well as into indolent lymphomas, including marginal zone lymphoma (“MZL”) and follicular lymphoma (”FL”), through investigator-initiated trials (“IITs”) at leading institutions. In the second quarter of 2025, the company discontinued the Phase 1/2 ADCT 602 clinical trial, sponsored by The University of Texas MD Anderson Cancer Center.

Current wording

ADC Therapeutics is a commercial-stage global pioneer in the field of antibody drug conjugates (“ADCs”), transforming treatment for patients through our focused portfolio with ZYNLONTA® (loncastuximab tesirine-lpyl), a CD19-directed ADC. ZYNLONTA received accelerated approval from the U.S. Food and Drug Administration (“FDA”), conditional approval from the European Commission, the China National Medical Products Administration (“NMPA”) and Health Canada, as well as approvals in other key global markets for the treatment of relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”) after two or more lines of systemic therapy. Our goal is to be a leading ADC company bringing meaningful therapies to patients in need by leveraging our decade-long experience in the ADC field, with multiple INDs, and a proven track record of success. We are pursing expansion of ZYNLONTA internationally, and into earlier lines of DLBCL through our LOTIS-5 confirmatory Phase 3 clinical trial (rituximab combination) and LOTIS-7 Phase 1b clinical trial (bispecific combination) as well as into indolent lymphomas, including marginal zone lymphoma (“MZL”) and follicular lymphoma (”FL”), through investigator-initiated trials (“IITs”) at leading institutions.

Previous wording

We generate product revenue through the sale of ZYNLONTA in the United States. Revenue is recognized when control is transferred to the customer at the net selling price, which includes reductions for gross-to-net (“GTN”) sales adjustments such as government rebates, chargebacks, distributor service fees, other rebates and administrative fees, sales returns and allowances and sales discounts. Our product revenue may fluctuate from period to period based on a number of factors, including patient demand, as well as the timing, dose and duration of patient therapy and customers’ ordering patterns and GTN deductions. We expect a relatively consistent level of GTN sales adjustments as a percentage of gross sales, but may also experience variability in GTN sales adjustments due to additional information and actual experience such as actual rebate and return rates.

Current wording

We generate product revenue through the sale of ZYNLONTA in the United States. Revenue is recognized when control is transferred to the customer at the net selling price, which includes reductions for gross-to-net (“GTN”) sales adjustments such as government rebates, chargebacks, distributor service fees, other rebates and administrative fees, sales returns and allowances and sales discounts. Our product revenue may fluctuate from period to period based on a number of factors, including patient demand, as well as the timing, dose and duration of patient therapy and customers’ ordering patterns, pricing and GTN deductions. We expect a relatively consistent level of GTN sales adjustments as a percentage of gross sales, but may also experience variability in GTN sales adjustments due to additional information and actual experience such as actual rebate and return rates.

Previous wording

We generate license revenue and royalties from our strategic agreements for the development and commercialization of ZYNLONTA and other product candidates outside of the United States. Under these agreements, we receive upfront payments and are eligible for certain milestone payments and royalties. We are unable to predict the timing and amounts of license revenue and royalties as meeting milestones is subject to many factors outside of our control and we have limited control over our partners’ commercialization efforts.

Current wording

We generate license revenue and royalties from our strategic agreements for the development and commercialization of ZYNLONTA outside of the United States. Under these agreements, we receive upfront payments and are eligible for certain milestone payments and royalties. See “Item 1. Business—Material Contracts” in our Annual Report on Form 10-K. We are unable to predict the timing and amounts of license revenue and royalties as meeting milestones is subject to many factors outside of our control and we have limited control over our partners’ commercialization efforts.

Previous wording

License revenues and royalties were $7.1 million for the nine months ended September 30, 2025 as compared to $1.0 million for the nine months ended September 30, 2024, an increase of $6.0 million. We have an exclusive license agreement with SOBI to develop and commercialize ZYNLONTA in all territories other than the United States, greater China, Singapore and Japan. In March 2025, the Company recognized $5.0 million in license revenue in connection with a milestone due upon ZYNLONTA’s conditional approval by Health Canada for the treatment of relapsed or refractory DLBCL after two or more lines of systemic therapy, which was paid to us by SOBI in the second quarter of 2025. The increase was also attributable to increased royalty revenue from SOBI.

Current wording

License revenues and royalties were $0.8 million for the three months ended March 31, 2026 as compared to $5.6 million for the three months ended March 31, 2025. The decrease of $4.8 million was driven by a one-time $5.0 million milestone recognized during the prior year, partially offset with an increase in royalty revenue from Sobi. We received the $5.0 million milestone in connection with the conditional approval by Health Canada for the treatment of relapsed or refractory DLBCL after two or more lines of systemic therapy under our exclusive license agreement with Sobi.

Previous wording

Cost of product sales primarily includes direct and indirect costs relating to the third-party manufacture and distribution of ZYNLONTA, royalties payable to a collaboration partner based on net product sales of ZYNLONTA and inventory write-downs. We expect that cost of product sales will increase over time as we sell through pre-approval inventory that was previously expensed prior to commercialization under U.S. GAAP. Factors such as inflation, tariffs and other external factors may also increase our cost of product sales as a percentage of product revenue if we are not able to increase the price at which we sell ZYNLONTA to offset such increases in our cost of product sales.

Current wording

Cost of product sales includes costs directly and indirectly relating to the manufacture of ZYNLONTA commercial drug substance and drug product, including the third-party manufacture costs of our contract manufacturing organizations (“CMOs”), as well as internal personnel costs, including share-based compensation, associated with the production of ZYNLONTA. Cost of product sales also includes royalties payable to a collaboration partner based on net product sales of ZYNLONTA, idle capacity costs, and inventory write-downs for changes in reserves for excess inventory or write-offs of inventory that fail to meet specification. We expect that cost of product sales will continue to increase over time as we sell through pre-approval inventory that was previously expensed prior to commercialization under U.S. GAAP. Factors such as inflation, tariffs and other external factors may also increase our cost of product sales.

Previous wording

Research and development expense consists primarily of employee related expenses, including share-based compensation expense; costs for production of preclinical and clinical-stage product candidates by CMOs; fees and other costs paid to contract research organizations in connection with the performance of preclinical studies and clinical trials; costs of related facilities, materials and equipment; external costs associated with obtaining intellectual property; depreciation; and upfront fees and achieved milestone payments associated with R&D collaboration arrangements.

Current wording

Research and development expense consists primarily of costs for production of preclinical and clinical-stage product candidates by CMOs; fees and other costs paid to contract research organizations in connection with the performance of preclinical studies and clinical trials; costs of related facilities, materials and equipment; external costs associated with obtaining intellectual property; depreciation; upfront fees and achieved milestone payments associated with R&D collaboration arrangements; and employee related expenses, including share-based compensation expense.

Previous wording

Our research and development expense may fluctuate from period to period based on a number of factors, including the timing, progress and stage of clinical trials, costs associated with regulatory approval processes and manufacturing costs associated with commercialization activities prior to the receipt of regulatory approval.

Current wording

We expect our research and development expense to decrease for fiscal year 2026, as compared to 2025, primarily driven by an expected reduction in spending on discontinued programs and our preclinical product candidates and research pipeline as a result of the 2025 Restructuring, as well as reduced spend on ZYNLONTA due to the timing, progress and stage of clinical trials. Thereafter, our research and development expense may fluctuate from period to period based on a number of factors, including the timing, progress and stage of clinical trials, costs associated with regulatory approval processes and manufacturing costs associated with commercialization activities prior to the receipt of regulatory approval.

Previous wording

General and administrative expenses were $8.3 million million for the three months ended September 30, 2025 as compared to $10.0 million for the three months ended September 30, 2024, an overall decrease of $1.7 million, or 16.8%. The decrease in external costs and overhead of $0.8 million was primarily related to lower professional fees of $0.6 million as a result of lower legal expenses. The decrease in employee expenses of $0.6 million was primarily due to lower wages and benefits. The decrease in share-based compensation expense of $0.3 million was primarily due to the timing of forfeitures of awards in connection with employee terminations.

Current wording

General and administrative expenses were $9.9 million for the three months ended March 31, 2026 as compared to $10.0 million for the three months ended March 31, 2025, an decrease of $0.1 million, or 0.6%. The increase in external costs and overhead of $0.5 million was primarily related to higher IT expenses of $0.4 million, as well as a one-time VAT recovery of $0.3 million recognized in the prior year, partially offset by $0.2 million in lower legal expenses. The decrease in employee expenses of $0.8 million was primarily due to lower wages and benefits. The increase in share-based compensation expense of $0.3 million was primarily due to higher grant date fair values of RSU awards issued during the period, driven by both an increased number of awards and stock price appreciation at the time of grant.

Previous wording

Interest income was $2.5 million for the three months ended September 30, 2025 as compared to $3.4 million for the three months ended September 30, 2024, a decrease of $1.0 million, or 28.2%. The decrease was primarily due to lower yields received on our cash deposits and lower average cash balances.

Current wording

Interest income was $2.0 million for the three months ended March 31, 2026 as compared to $2.1 million for the three months ended March 31, 2025, a decrease of $0.1 million, or 2.9%. The decrease was primarily due to lower yields received on our cash deposits.

Previous wording

Interest expense is primarily related to the accretion of our deferred royalty obligation with HCR and the senior secured term loan facility. Interest expense was $13.4 million for the three months ended September 30, 2025 as compared to $13.1 million for the three months ended September 30, 2024, an increase of $0.3 million, or 2.1%. The increase was primarily related to higher accretion of our deferred royalty obligation with HCR of $0.5 million as a result of higher total revenue, net, partially offset by lower interest on our senior secured term loan facility of $0.2 million as a result of a lower effective interest rate.

Current wording

Interest expense is primarily related to the accretion of our deferred royalty obligation with HCR and the senior secured term loan facility. Interest expense was $12.3 million for the three months ended March 31, 2026 as compared to $12.2 million for the three months ended March 31, 2025, an increase of $0.1 million, or 1.0%. The increase was primarily related to higher accretion of our deferred royalty obligation with HCR of $0.3 million as a result of higher total revenue, net, as well as a higher effective interest rate as a result of the HCR Amendment, partially offset by lower interest on our senior secured term loan facility of $0.2 million as a result of a lower effective interest rate.

Previous wording

We are subject to corporate taxation in Switzerland. We are also subject to taxation in other jurisdictions in which we operate, in particular, the United States and the United Kingdom, where our two wholly-owned subsidiaries are incorporated. We recorded an income tax expense of nil for the three months ended September 30, 2025 as compared to $0.1 million for the three months ended June 30, 2024.

Current wording

We are subject to corporate income taxation in Switzerland and in other jurisdictions in which we operate, including the United States and the United Kingdom, where our two wholly-owned subsidiaries are incorporated. Under Swiss law, we are permitted to carry forward net operating losses for up toseven years, which may be used to offset future taxable income. Under U.S. tax law, research and development tax credits may generally be carried forward for up to 20 years and used to offset future tax liabilities, subject to statutory requirements. We recorded an income tax expense of nil for the three months ended March 31, 2026 as compared to $0.2 million for the three months ended March 31, 2025.

Previous wording

As of September 30, 2025, we had cash and cash equivalents of $234.7 million and believe that our current cash position and capital resources are sufficient to fund our operation and meet capital requirements for at least the next twelve months from the date of this report. After September 30, 2025, we completed the October 2025 Private Placement, which generated net proceeds of approximately $57.6 million to support expansion of ZYNLONTA in anticipation of 2L+DLBCL launch.

Current wording

As of March 31, 2026, we had cash and cash equivalents of $231.0 million and believe that our current cash position and capital resources are sufficient to fund our operation and meet capital requirements for at least the next twelve months from the date of this report.

Previous wording

We plan to continue to fund our operating needs through our existing cash and cash equivalents, revenues from sales of ZYNLONTA, milestone and royalty payments under our licensing agreements and additional equity financings, debt financings and/or other forms of financing, as well as potential funds provided by collaborations. We are continuously exploring strategic collaborations, business combinations, licensing opportunities or similar strategies for clinical development and commercialization of ZYNLONTA and/or our PSMA-targeting ADC. However, we may be unable to obtain such future financing, licensing and collaboration arrangements on favorable terms, if at all.

Current wording

We plan to continue to fund our operating needs through our existing cash and cash equivalents, revenues from sales of ZYNLONTA, potential milestone and royalty payments under our licensing agreements and additional equity financings, debt financings and/or other forms of financing, as well as potential funds provided by collaborations. We are continuously exploring strategic collaborations, business combinations, licensing opportunities or similar strategies for clinical development and commercialization of ZYNLONTA and/or our PSMA-targeting ADC. However, we may be unable to obtain such future financing, licensing and collaboration arrangements on favorable terms, if at all.

Previous wording

To date, we have financed our operations primarily through equity financings, convertible debt and senior secured term loan financings, and additional funds provided by collaborations and royalty financings and sales of ZYNLONTA in the United States. For a description of the Loan Agreement, HCR Agreement and other license and collaboration agreements, see “Item 1. Business - Material Contracts” in our Annual Report.

Current wording

To date, we have financed our operations primarily through equity financings, convertible debt and senior secured term loan financings, and additional funds provided by collaborations and royalty financings and sales of ZYNLONTA in the United States. For a description of the Loan Agreement, Amended HCR Agreement and other license and collaboration agreements, see “Item 1. Business - Material Contracts” in our Annual Report.

Previous wording

Our primary uses of capital are, and we expect will continue to be, research and development expenses, selling and marketing expenses, compensation and related expenses, interest and principal payments on debt obligations and other operating expenses. We expect to incur substantial expenses as we continue to devote substantial resources to research and development and marketing and commercialization efforts, in particular to grow ZYNLONTA in the 3L+ DLBCL setting, continue to study and advance ZYNLONTA in earlier lines of therapy and in combinations to potentially expand our market opportunity and further develop our PSMA-targeting ADC. Cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the change in our outstanding accounts payable and accrued expenses, as well as the timing of collecting receivables from the sale of ZYNLONTA and paying royalties related to our deferred royalty obligation.

Current wording

Our primary uses of capital are, and we expect will continue to be, research and development expenses, selling and marketing expenses, compensation and related expenses, interest and principal payments on debt obligations and other operating expenses. We expect to incur substantial expenses as we continue to devote substantial resources to research and development and marketing and commercialization efforts, in particular to grow ZYNLONTA in the 3L+ DLBCL setting, continue to study and advance ZYNLONTA in earlier lines of therapy and in combinations to potentially expand our market opportunity. Cash used to fund operating expenses is impacted by the timing of when we pay expenses, as reflected in the change in our outstanding accounts payable and accrued expenses, as well as the timing of collecting receivables from the sale of ZYNLONTA and paying royalties related to our deferred royalty obligation.

Previous wording

The following table summarizes our cash flows for the nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes our cash flows for the three months ended March 31, 2026 and 2025:

Previous wording

Net cash used in operating activities was $110.1 million for the nine months ended September 30, 2025 as compared to $102.0 million for the nine months ended September 30, 2024, an increase of $8.1 million. The increase was primarily due to the payment of the 2023 discarded drug rebate of $7.2 million paid in the first quarter of 2025, a $4.0 million period over period increase in annual bonus and retention payments, $3.9 million period over period decrease in interest income, $3.4 million in severance payments as a result of the 2025 restructuring, partially offset by a $2.1 million period over period increase in partner collections and the timing of other operating cash payments and receipts.

Current wording

Net cash used in operating activities was $29.7 million for the three months ended March 31, 2026 as compared to $56.3 million for the three months ended March 31, 2025, a decrease of $26.6 million. The decrease was primarily due to the prior year payment of the 2023 discarded drug rebate of $7.2 million, a $7.1 million period over period increase in the collection of accounts receivable, a $2.1 million period over period increase in partner collection and overall reduction in net loss and operating costs in connection with the 2025 Restructuring Plan.

Previous wording

Net cash used in investing activities was $0.3 million for the nine months ended September 30, 2025 as compared to $0.8 million for the nine months ended September 30, 2024, a decrease of $0.5 million. The decrease in net cash used in investing activities relates to timing of purchases of property and equipment.

Current wording

Net cash used in investing activities was nil for the three months ended March 31, 2026 as compared to $0.3 million for the three months ended March 31, 2025, a decrease of $0.2 million. The decrease in net cash used in investing activities relates to timing of purchases of property and equipment.

Previous wording

Net Cash Provided by Financing Activities

Current wording

Net cash used in financing activities was $0.6 million for the three months ended March 31, 2026. Net cash provided by financing activities was $0.3 million for the three months ended March 31, 2025. The decrease related to taxes paid related to net settled equity awards for the three months ended March 31, 2026.

Previous wording

As a result of the 2025 Restructuring, and in accordance with the UK facility lease agreement, the Company notified the landlord of its intention to terminate the lease. In accordance with the lease terms, the landlord may require the Company to return the leased space to its original condition upon termination of the lease agreement, including the removal of the Company’s leasehold improvements. The Company is in negotiations with the landlord to determine the specific works to be removed or restored, if any, and as of September 30, 2025, amounts are reasonably estimable and a liability of $0.8 million was recorded. There have been no further changes from the contractual obligations and commitments previously disclosed in our Annual Report.

Current wording

There have been no material changes from the contractual obligations and commitments previously disclosed in our Annual Report.

Previous wording

The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our unaudited condensed consolidated financial statements. There have been no material changes to the significant accounting estimates previously disclosed in our Annual Report.

Current wording

The preparation of our unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our unaudited condensed consolidated financial statements. There have been no material changes to the critical accounting estimates previously disclosed in our Annual Report.

Previous wording

Refer to Note 2 to our unaudited condensed consolidated financial statements for recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report.

Current wording

Refer to Note 2 to our unaudited condensed consolidated financial statements for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report.