On Thursday, ADC Therapeutics (NYSE:ADCT) discussed second-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

ADC Therapeutics completed the LOTIS 7 enrollment with promising data, positioning Zynlonta plus glofitamab as a potential leading second-line therapy in DLBCL.

The company implemented a strategic reorganization, reducing the workforce by 17% and achieving $10 million in annualized cost savings, supporting the commercialization of Zynlonta.

ADC Therapeutics reported Q2 2026 net product revenues of $18.6 million, a slight increase from $18.1 million in Q2 2025, with a reduced net loss compared to the previous year.

Cash and cash equivalents stood at $219.1 million, providing a cash runway into 2028.

The company is pursuing regulatory pathways, including Breakthrough designation for both Zynlonta/glofitamab and indolent lymphoma indications.

FDA raised concerns about LOTIS 5's benefit-risk profile, prompting ADC Therapeutics to explore additional data and regulatory options.

Full Transcript

Amit Malik, CEO

Details regarding the FDA feedback and our regulatory strategy. Further to this, the full LOTIS 5 data have now been submitted for presentation at ASH and we are preparing to submit for publication, with Compendia submission to follow. For LOTIS 7, we were pleased to complete enrollment of 100 patients at the selected dose level of Zynlonta plus glofitamab, as shared in June, and have submitted an abstract to ASH for presentation of the data, which we continue to believe demonstrates the most compelling combination data generated to date in second-line DLBCL with a safety profile generally consistent with prior LOTIS 7 disclosures.

With these data, we believe that Zynlonta/glofitamab offers an opportunity to take a leading second-line position in the context of the evolving competitive landscape, solidifying Zynlonta as a foundational therapy in DLBCL. Beyond this, we are preparing to submit for publication of the LOTIS 7 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 Zynlonta in indolent lymphomas, updated marginal zone lymphoma data were submitted to ASH, with publication and Compendia submission to follow. Presentation of updated follicular lymphoma data is anticipated in the second quarter of 2027, with publication and Compendia submission to follow. We also intend to assess potential regulatory pathways for these indolent lymphomas and expect to submit for a 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 17% as well as additional operational efficiencies, resulting in cost savings of approximately $10 million 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 Zynlonta in the third-line plus DLBCL setting.

Finally, we ended the second quarter of 2026 with a healthy cash balance of $219.1 million, 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 Zynlonta. Currently, Zynlonta plays a clear role in the third-line plus DLBCL setting. As monotherapy, Zynlonta 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, Zynlonta monotherapy has been used in treating approximately 5,000 patients in the US. We believe this is just a starting point, as we see the potential for Zynlonta to reach significantly more patients by expanding use into earlier lines of therapy in DLBCL and into indolent lymphomas. Now I would like to turn the call over to Mohammad, our CMO, to share more on our pipeline.

Mohammad, CMO

Thank you, Amit. I would now like to share more on our LOTIS 5 and LOTIS 7 studies as we continue to work towards expansion of Zynlonta in earlier lines of DLBCL. As a reminder, LOTIS 5 is our Phase 3 confirmatory study of Zynlonta in combination with rituximab versus R-GemOx 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 LOTIS 5 data along with the potential regulatory pathway.

During this meeting, the FDA noted substantial concerns regarding the benefit–risk or verification of the benefit observed in the LOTIS 5 trial. As such, the company is now assessing the regulatory path forward. We plan to provide an update on regulatory status and timing in the future. Beyond this, the data have been submitted to ASH. We are simultaneously pursuing publication for LOTIS 5 and potential Compendia inclusion starting in 2027. Turning now to LOTIS 7, our Phase 1b trial combining Zynlonta with the highly effective bispecific glofitamab in second-line plus DLBCL patients, we recently announced completion of enrollment of 100 patients at the 150 microgram per kilogram dose. Of note, consistent with other glofitamab trials, the protocol for LOTIS 7 recommends prophylaxis, including vaccination, for viral, fungal, and bacterial infections including PJP and herpes virus, which was not part of the LOTIS 5 protocols. We continue to be encouraged by the promising LOTIS 7 data shared to date, which we believe demonstrate the potential for Zynlonta plus glofitamab to be the best-in-class combination, with data on a larger number of patients with longer follow-up submitted to ASH for presentation.

These data support the company's belief that Zynlonta plus glofitamab demonstrates the most compelling combination data generated to date in second-line DLBCL, with a safety profile generally consistent with prior LOTIS 7 disclosures. Separately, we are preparing for submission of the full LOTIS 7 data for publication and, following that, plan to submit to Compendia for potential inclusion starting in 2027. In addition, based on this potentially practice-changing LOTIS 7 data, the company plans to submit for Breakthrough designation this year and is assessing a Phase 3 trial for the combination of Zynlonta plus glofitamab.

Moving forward, we plan to work closely with the FDA to determine the best path forward to achieve full approval and advance our combinations into earlier lines of therapy in DLBCL. In the meantime, we remain confident that Zynlonta will continue to play a meaningful role for patients with B‑cell malignancies within its currently approved third-line plus DLBCL setting. With that, I would like to turn the call over to Pepi Tarmanu, our CFO.

Pepi Tarmanu, CFO

Thank you, Mohammad. On the financial front, Zynlonta net product revenues in the second quarter of 2026 were $18.6 million as compared to $18.1 million in the same quarter in 2025. Cost of product sales was $2.3 million and $6.0 million for the second quarter and six months ended June 30, 2026, as compared to $0.8 million and $2.9 million for the same periods in 2025. The increases compared to prior year are primarily driven by a change in focus of personnel from research and development and clinical supply activities to commercial manufacturing activities.

Total operating expenses were $44.7 million for the second quarter. On a non-GAAP basis, total adjusted operating expenses were $37.2 million for the quarter and were down by 22% over the prior year, primarily driven by lower R&D expenses. As Amit noted, we expect to save an additional $10 million 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 $16.6 million for the second quarter of 2026, as compared to a net loss of $56.6 million for the same period in 2025.

The second quarter of 2026 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 $16.3 million for the second quarter of 2026 as compared to a net loss of $28.7 million 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. You can find a reconciliation of GAAP to non-GAAP measures for the second quarter in the accompanying 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 $219.1 million as compared to $231.0 million as of March 31, 2026, a change primarily driven by cash used in operations.

This provides us with an expected cash runway at least into 2028. With that, I will turn the call back over to Amit.

Amit Malik, CEO

Thank you, Pepi. To close, we are pleased by the commercial performance and the role that Zynlonta monotherapy continues to play in third-line plus DLBCL. We look forward to presentation of data from LOTIS 5, LOTIS 7, and MZL before year-end, with publication and potential Compendia inclusion to follow. Following the FDA pre-sBLA meeting, we are assessing regulatory approaches to determine the best path forward for the LOTIS 5 trial. At the same time, we believe we have an opportunity for Zynlonta plus glofitamab 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 Zynlonta beginning in 2027 as we work to make a meaningful difference in the lives of many more patients with B-cell malignancies. We can now open the line for questions. Operator.

OPERATOR (Operator)

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 touchtone 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.

Eric Schmidt, Analyst at Cantor

Thanks for taking my question and appreciate all the updates. Maybe just on the status of the current accelerated approval for Zynlonta. Given the questions around risk–benefit from LOTIS 5, was there any FDA discussion of maintaining that accelerated approval status?

Amit Malik, CEO

Yeah, it's 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 Zynlonta 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 accelerated approval, and we're committed to working with the FDA to make sure that we can satisfy the full approval, either through LOTIS 5 or through another study.

Eric Schmidt, Analyst at Cantor

Thank you, Amit. And then on LOTIS 7 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, do you know exactly what you'll present and is it consistent with that statement?

Amit Malik, CEO

Yeah. So we've already submitted the abstract for ASH, which contains obviously 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. We're obviously, for disclosure reasons you can imagine, we don't want to share all the detail, but we do believe that we have very compelling data, both from an efficacy and a safety standpoint, within the LOTIS 7 data that was submitted to ASH.

Eric Schmidt, Analyst at Cantor

Thank you. And one more question, if I may, with regard to exploring a Phase 3 pathway for the combination in LOTIS 7, is that something you're exploring with Roche or by yourselves?

Amit Malik, CEO

Yeah, I 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, about a potential Phase 3 design, because we know that this data is so compelling that there could be significant upside to the asset by potentially pursuing Phase 3 assets. So 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.

Eric Schmidt, Analyst at Cantor

Thank you for taking my questions.

Amit Malik, CEO

Yeah, thank you, Eric.

OPERATOR (Operator)

Your next question comes from Michael Schmidt with Guggenheim Securities. Please go ahead.

Sarah (for Michael Schmidt), Analyst at Guggenheim Securities

Hey, this is Sarah on for Michael. Thanks so much for taking my question. Just wanted to follow on quickly on the Phase 3 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 LOTIS 5 data. So I know you've mentioned the 105-day period for monitoring adverse events after treatment. I was wondering if you could comment on the timing of the deaths.

Amit Malik, CEO

So first of all, I just want to emphasize we have a positive study for LOTIS 5. So we still are assessing possibilities to identify the best regulatory approach for LOTIS 5. I mean, specifically, we're considering whether additional data, risk management options, or modifications to the potential label can address the FDA concerns of LOTIS 5. So we are doing that in parallel. Given that we have, you know, we think potentially practice-changing data on hand with LOTIS 7, we're also in parallel going to file for Breakthrough designation and explore a Phase 3 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 the final design, to talk about timing and cost. But I just want to reemphasize that those two things are going in parallel. And then with regards to the 105-day safety window in terms of capturing AEs post last dose, that's the same, by the way, in LOTIS 7 as well. And one thing I want to emphasize is that, as Mohammad mentioned on the call, there was a big difference between LOTIS 5 and LOTIS 7, particularly with regards to the prophylactic measures taken.

So in LOTIS 7, consistent with the other glofitamab trials that have been run, LOTIS 7 recommends prophylaxis, including vaccinations for viral, fungal, and bacterial infections. That was not part of the LOTIS 5 protocol. So while the time period that we're capturing AEs is very similar, there was a pretty big difference in terms of prophylaxis in the protocol between 5 and 7.

Sarah (for Michael Schmidt), Analyst at Guggenheim Securities

Appreciate it. Thank you.

Amit Malik, CEO

Thank you.

OPERATOR (Operator)

Your next question comes from Mari Raycraft with Jefferies LLC. Please go ahead.

James (for Mari Raycraft), Analyst at Jefferies

Hi, good morning, this is James on for Mari. Thanks for taking our questions. Can you provide more detail on the type of grade 5 infections that were observed in LOTIS 5 and whether those events would have been expected to be mitigated by the prophylactic and vaccination strategies now incorporated in LOTIS 7? Did other infections occur that aren't addressed by those vaccines? And I have a follow-up after that.

Amit Malik, CEO

Yes. So the primary type of infections were bacterial, which is why we think that prophylaxis could play a role.

James (for Mari Raycraft), Analyst at Jefferies

Got it. And how do you think about the potential read-through from the LOTIS 5 grade 5 signal to potential NCCN Compendia inclusion and adoption of the Zynlonta–glofitamab combination within the academic community? Could the LOTIS 5 impact the NCCN language? And could there be any safety monitoring requirements?

Amit Malik, CEO

I don't think there'll be any read-through in terms of LOTIS 7 Compendia inclusion—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 that we have on hand, but I can speak to the prior disclosure that we had. We had a very low percent of grade 5 events, approximately 4%, if you look at our last disclosure we had in December on the 49 patients that we reported.

So I do think there's a difference. And we don't think there would be a read-through to LOTIS 7 or to any potential NCCN or Compendia inclusion.

James (for Mari Raycraft), Analyst at Jefferies

Very helpful, thank you.

OPERATOR (Operator)

We now have a question from Leonid Timothev with RBC Capital Markets. Please go ahead.

Leonid Timothev, Analyst at RBC Capital Markets

Hi guys. Josh, Leo here. Thanks for taking my question. I was wondering whether or not the FDA, in their feedback in response to the Phase 3, provided 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.

Amit Malik, CEO

Yeah. I think, typical in what you have with a pre-sBLA meeting, we share the data results and you're aligning on the package for an sBLA submission. During that, as is 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 FDA concerns.

And that's the basis on which we're evaluating our path forward for LOTIS 5.

Leonid Timothev, Analyst at RBC Capital Markets

Okay, thank you.

OPERATOR (Operator)

As a reminder, if you wish to ask a question, please press star followed by the one. Your next question comes from Rob Burns with H.C. Wainwright. Please go ahead.

Ahmeda (for Rob Burns), Analyst at H.C. Wainwright

Hi, this is Ahmeda on for Rob. Thank you for taking our questions. I was just wondering if you saw 2Q product revenue increase versus 2Q25, and I was wondering if you've seen any changes in patient starts or unit demand, dosing, or physician prescribing behaviors that slowed despite disclosure. And then for my second question, I 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 or future label.

Thank you.

Amit Malik, CEO

Yeah, so with regards to sales, we haven't seen any impact. If you look at the volume in Q2, very consistent with prior quarters. And we don't think that there will be—if you look overall over the past several quarters, the commercial performance as a monotherapy in the third-line plus setting has been relatively consistent. And that's because Zynlonta has an established place in that third-line plus setting. And we don't expect any impact on monotherapy sales.

And then remind me again, I'm sorry, your second question.

Ahmeda (for Rob Burns), Analyst at H.C. Wainwright

No problem. I was wondering if 75 or older, right.

Amit Malik, CEO

Yes, thank you. Yeah, we don't think it'll have any impact on other studies. You know, I think obviously, you know, older patients—specifically with infection—we think that the prophylaxis can play a role. And that's also why the protocols, again I wanted to stress, for LOTIS 7 versus LOTIS 5 are quite different. So each study is on its own. You know, I don't think that there's a read-through from this. We certainly learned a lot from LOTIS 5, and we're happy with the differences in the protocol, of course, that we're seeing in LOTIS 7.

So we don't see any read-through from LOTIS 5 to either the current indication or other potential combinations.

Ahmeda (for Rob Burns), Analyst at H.C. Wainwright

Thank you.

OPERATOR (Operator)

There are no further questions at this time. So I will now turn the call over to Amit Malik for closing remarks. Please continue.

Amit Malik, CEO

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 (Operator)

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.

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