Diving Brief:

  • ADC Therapeutics on Fridays announcement an agreement with Swedish drugmaker Sobi to develop and commercialize its cancer drug Zynlonta in Europe and other regions outside the United States
  • Under the agreement, Sobi will pay CDA $55 million upfront and an additional $50 million once the drug is approved in Europe. ADC could also receive up to $330 million in additional milestone payments, as well as royalties on Zynlonta’s net sales.
  • Zynlonta was approved in the United States in April 2021 to treat large B-cell lymphoma and is ADC’s only drug on the market. A approval decision by European regulators is expected in the first quarter of 2023.

Overview of the dive:

ADC Therapeutics raised $268 million in one of the largest IPOs of 2020. But like many other biotech companies that have gone public in the past two years, the company is feeling the effects of the global crisis. sector. slow-down and is trading well below its starting price.

Since its IPO, the company has been able to market its first product, Zynlonta. The treatment is one of several so-called antibody drug conjugates to be cleared by regulators in recent years and is approved for patients with large B-cell lymphoma whose disease has not responded to at least two treatments.

However, sales have not taken off so far. The drug generated $16.5 million last quarter, for example, less than it sold in the previous quarter and misses consensus analyst estimates of $18.4 million, according to a research note from May from Morgan Stanley analyst Matthew Harrison. The CDA cited an increase in omicron coronavirus infections as well as a decrease in patient visits, among other factors, for the lower numbers. But shares nonetheless fell more than 20% on the news.

ADC aims to accelerate its launch under new management. In May, Ameet Mallik, the former head of Novartis’ oncology division, joined ADC as CEO, replacing co-founder Chris Martin. The company is preparing to sell the drug in Europe, a commercial effort that will now be led by Sobi. ADC is also testing it in earlier treatment lines as well as in different B-cell malignancies.

In the meantime, however, the CDA is trying to take market share from CAR-T therapies, which are potently effective against lymphoma but have significant side effects and are limited to major academic centers.

ADC is therefore focusing on community oncologists to broaden the reach of the drug.

The company believes its drug offers an alternative for those “hoping to stay in a community setting instead of going to CAR-T centers,” Harrison wrote in May. Zynlonta also does not trigger the potentially serious neurological or immune side effects associated with CAR-T, which should “serve as a [a] business advantage,” according to Jefferies analyst Kelly Shi.

ADC shares soared 16%, to around $11 apiece, in Friday trading. The company went public at $19 per share in May 2021.