Gold prices bounce off 3-week lows; demand likely longer term
On Monday, Stephens analyst Sudan Loganathan increased the price target for ADC Therapeutics (NYSE:ADCT) to $8.00, up from the previous $6.00, while maintaining an Overweight rating on the company’s stock. Currently trading at $1.63, InvestingPro analysis indicates the stock is undervalued, with analyst targets ranging from $6.00 to $10.00. The adjustment reflects optimism about the future revenue growth potential of the company’s flagship cancer drug, ZYNLONTA (loncastuximab tesirine-lpyl).
ZYNLONTA, an FDA-approved Antibody-Drug Conjugate (ADC) for the treatment of cancer, has been on the market since its accelerated approval in April 2021. The drug has successfully achieved annual revenues of around $70 million by capturing nearly 10% of the third-line and beyond relapsed/refractory diffuse large B-cell lymphoma (r/r DLBCL) market. According to InvestingPro data, this represents the company’s entire revenue stream of $70.72M for the last twelve months. This performance is notable even as new therapeutic technologies, such as bispecifics EPKINLY and COLUMVI, have entered the competitive landscape.
The Stephens analyst pointed out that ZYNLONTA’s potential expansion into second-line (2L) treatment, supported by differentiating data, could significantly increase the drug’s franchise revenues. InvestingPro Tips highlight that while the company is quickly burning through cash and stock movements are quite volatile, its strong liquidity position with a current ratio of 4.92 provides some financial flexibility. The ongoing clinical trials, LOTIS-5 and LOTIS-7, investigate ZYNLONTA as a combination backbone therapy for 2L DLBCL, and the results are encouraging a positive outlook on the drug’s market opportunity.
Loganathan’s analysis suggests that ZYNLONTA’s revenues could triple by 2027 from the current annual rate, with the peak sales opportunity in the DLBCL market surpassing $600 million. The raised price target to $8.00 from $6.00 is based on this conservative revenue growth projection and the belief that the stock is highly underappreciated at current levels.
ADC Therapeutics’ stock rating remains Overweight/Volatile, indicating a positive view on the stock with an acknowledgment of potential fluctuations in the market. The price target increase and maintained rating signal confidence in the company’s growth trajectory and the value of its ZYNLONTA franchise.
In other recent news, ADC Therapeutics has completed enrollment for its LOTIS-5 Phase 3 trial, which evaluates ZYNLONTA in combination with rituximab for treating relapsed or refractory diffuse large B-cell lymphoma. This development has prompted H.C. Wainwright to maintain its Buy rating for ADC Therapeutics, with a price target of $8.00. The trial aims to confirm ZYNLONTA’s accelerated FDA approval, with topline results expected by the end of 2025 and a regulatory submission planned for early 2026.
In another trial, ADC Therapeutics reported positive preliminary results from the LOTIS-7 Phase 1b trial, which combines ZYNLONTA with glofitamab. The trial showed a best overall response rate of 94% among patients, with a complete response rate of 72%. Despite the promising data, ADC Therapeutics’ shares saw a decline. The company plans to complete enrollment for the dose expansion phase of this trial by mid-2025 and will discuss further steps with regulatory bodies as more data emerges. The initial safety profile of the combination therapy was manageable, with no dose-limiting toxicities reported.
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