ADC Therapeutics raises $100 million in private placement

LAUSANNE, Switzerland - ADC Therapeutics SA (NYSE: ADCT), which has seen its stock surge over 78% in the past six months according to InvestingPro data, has secured $100 million through a private investment in public equity (PIPE) financing, the antibody drug conjugate developer announced Thursday.

The company is selling 13 million common shares at $3.53 per share and pre-funded warrants to purchase 15.7 million common shares at $3.43 per warrant. The transaction is expected to close on June 16, subject to customary closing conditions. With a current market capitalization of $350 million and a concerning negative EBITDA of -$124 million over the last twelve months, this financing comes at a crucial time.

The financing was led by Redmile Group with participation from other institutional investors. Jefferies, Guggenheim Securities, Cantor and RBC Capital Markets are acting as placement agents.

ADC Therapeutics plans to use the proceeds primarily to support clinical development and commercialization of its cancer drug ZYNLONTA, which has received accelerated approval from the FDA and conditional approval from the European Commission for treating relapsed or refractory large B-cell lymphoma after two or more lines of therapy.

As part of a restructuring plan, the company will advance its preclinical exatecan-based ADC targeting prostate-specific membrane antigen (PSMA) while discontinuing early development efforts for other preclinical programs in solid tumors. ADC Therapeutics will close its UK facility and reduce its global workforce by approximately 30% by September 30, incurring one-time cash restructuring charges between $6 million and $7 million. InvestingPro analysis reveals the company maintains a strong current ratio of 4.46, suggesting adequate liquidity to manage these restructuring costs despite rapidly depleting cash reserves.

The company expects these measures to extend its cash runway into 2028 while positioning it for long-term growth with reduced operating expenses. Key anticipated milestones include data from the LOTIS-7 Phase 1b trial in the second half of 2025 and topline results from the LOTIS-5 Phase 3 confirmatory trial in late 2025 or first half of 2026.

The securities sold in the private placement have not been registered under the Securities Act of 1933 and may not be resold in the United States except pursuant to an effective registration statement or applicable exemption from registration requirements, according to the press release statement. Analysts maintain an optimistic outlook, with price targets ranging from $7 to $10 per share. For deeper insights into ADCT’s financial health and growth prospects, including 10+ additional ProTips and comprehensive valuation metrics, visit InvestingPro.

In other recent news, ADC Therapeutics SA reported its fourth-quarter earnings for 2024, revealing a mixed financial outcome. The company achieved an earnings per share (EPS) of -$0.25, surpassing analyst expectations of -$0.43, but reported revenue of $16.91 million, which fell short of the projected $18.85 million. The company’s drug ZYNLONTA generated sales of $16.4 million, missing the anticipated Street consensus of $19.1 million. Guggenheim Securities responded by lowering its price target for ADC Therapeutics from $10 to $7, while maintaining a Buy rating. Meanwhile, RBC Capital Markets reiterated an Outperform rating with a price target of $8.00, citing optimism for ZYNLONTA’s future despite current sales challenges.

The company also shared promising results from its LOTIS-7 Phase 1b trial, where the combination of ZYNLONTA and glofitamab showed a 93.3% overall response rate in patients with relapsed or refractory diffuse large B-cell lymphoma (DLBCL). This combination therapy demonstrated a manageable safety profile, with no dose-limiting toxicities observed. ADC Therapeutics plans to expand enrollment for the LOTIS-7 trial to 100 patients and expects additional data by the end of 2025. The company is focusing on expanding ZYNLONTA’s clinical utility and anticipates several key data updates throughout 2025, including interim updates from the LOTIS-7 study and top-line Phase 3 results from the LOTIS-5 trial.

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