ThZeal - The Zeal

adc-20250331

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2025
OR
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number: 001-39071

ADC Therapeutics SA
(Exact name of registrant as specified in its charter)


Switzerland			Not Applicable
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

Biopôle Route de la Corniche 3B 1066 Epalinges Switzerland (Address of principal executive offices) (Zip code)			+41 21 653 02 00 (Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Shares, par value CHF 0.08 per share

ADCT

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of common shares outstanding was 99,178,286 as of May 1, 2025.

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PART I: FINANCIAL INFORMATION			1
Condensed Consolidated Balance Sheets (Unaudited) - M arch 31 , 202 5 and December 31, 2 024			1
Condensed Consolidated Statements of Operations (Unaudited) - Three months ended March 31 , 202 5 and 202 4			2
Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - Three months ended March 3 1 , 202 5 and 202 4			3
Condensed Consolidated Statements of Changes in Shareholders’ (Deficit) Equity (Unaudited) - Three m onths ended March 31 , 202 5 and 20 24			4
Condensed Consolidated Statements of Cash Flows (Unaudited) - Three months ended March 3 1 , 202 5 and 202 4			5
Notes to the Condensed Consolidated Financial Statements (Unaudited)			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures About Market Risk			26
Item 4. Controls and Procedures			26
PART II: OTHER INFORMATION			26
Item 1. Legal Proceedings			26
Item 1A. Risk Factors			26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			26
Item 3. Defaults Upon Senior Securities			26
Item 4. Mine Safety Disclosures			26
Item 5. Other Information			27
Item 6. Exhibits			27
Signatures			28

Unless otherwise indicated or the context otherwise requires, all references in this Annual Report to “ADC Therapeutics,” “ADCT,” the “Company,” “we,” “our,” “ours,” “us” or similar terms refer to ADC Therapeutics SA and its consolidated subsidiaries.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report contains statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future catalysts, results of operations and financial position, business and commercial strategy, market opportunities, products and product candidates, research pipeline, ongoing and planned preclinical studies and clinical trials, regulatory submissions and approvals, research and development costs, projected revenues and expenses and the timing of revenues and expenses, timing and likelihood of success, as well as plans and objectives of management for future operations are forward-looking statements. Many of the forward-looking statements contained in this Quarterly Report can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “will” and “potential,” among others.

Forward-looking statements are based on our management’s beliefs and assumptions and on information available to our management at the time such statements are made. Such statements are subject to known and unknown risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to:

•the substantial net losses that we have incurred since our inception, our expectation to continue to incur losses for the foreseeable future and our need to raise additional capital to fund our operations and execute our business plan;

•our ability to raise additional capital to fund our operations and execute our business plan, which will depend on financial, economic and market conditions, the number of authorized shares, and other factors, over which we may have no or limited control;

•our indebtedness under the loan agreement and guaranty (the “Loan Agreement”) with certain affiliates and/or funds managed by each of Oaktree Capital Management, L.P. and Owl Rock Capital Advisors LLC, as lenders, and Blue Owl Opportunistic Master Fund I, L.P., as administrative agent, and the associated restrictive covenants thereunder;

•the purchase and sale agreement (the “HCR Agreement”) with certain entities managed by HealthCare Royalty Management, LLC (“HCR”) and its negative effect on the amount of cash that we are able to generate from sales of, and licensing agreements involving, ZYNLONTA and on our attractiveness as an acquisition target;

•our ability to complete clinical trials on expected timelines, if at all;

•the timing, outcome and results of ongoing or planned clinical trials and the sufficiency of such results;

•undesirable side effects or adverse events of our products and product candidates;

•our and our partners’ ability to obtain and maintain regulatory approval for our product and product candidates;

•our and our partners’ ability to successfully commercialize our products;

•the availability and scope of coverage and reimbursement for our products;

•the complexity and difficulty of manufacturing our products and product candidates;

•the substantial competition in our industry, including new technologies and therapies;

•our ability to continue to fund, or enter into collaborative or partnership arrangements for our early research programs, and the timing, results and future clinical outcomes of such early research programs;

•our reliance on third parties for preclinical studies and clinical trials and for the manufacture, production, storage and distribution of our products and product candidates and certain commercialization activities for our products;

•our ability to obtain, maintain and protect our intellectual property rights and our ability to operate our business without infringing on the intellectual property rights of others;

•our estimates regarding future revenue, expenses, liquidity, capital resources and needs for additional financing;

•the size and growth potential of the markets for our products and product candidates;

•potential product liability lawsuits and product recalls for our products;

•and those identified in the “Item 1A. Risk Factors” of our Annual Report on Form 10-K, and in our other reports filed with the U.S. Securities and Exchange Commission (the “SEC”), from time to time thereafter.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements, whether as a result of any new information, future events, changed circumstances or otherwise.

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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

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PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share amounts)


	March 31, 2025		December 31, 2024
ASSETS
Current assets
Cash and cash equivalents	$	194,701	$	250,867
Accounts receivable, net	31,762		20,316
Inventory	17,447		18,387
Prepaid expenses	6,899		8,370
Other current assets	7,180		9,450
Total current assets	257,989		307,390

Property and equipment, net	5,156		5,075
Operating lease right-of-use assets	8,231		8,354


Other long-term assets	1,163		1,161

Total assets	$	272,539	$	321,980

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities
Accounts payable	$	15,592	$	18,029
Accrued expenses and other current liabilities	42,202		62,440

Total current liabilities	57,794		80,469

Deferred royalty obligation, long-term	326,792		320,093
Senior secured term loans	113,823		113,632
Operating lease liabilities, long-term	7,907		7,995
Other long-term liabilities	4,446		2,433
Total liabilities	510,762		524,622
Commitments and contingencies (See Note 12)
Shareholders’ (deficit) equity
Common shares, at CHF 0.08 par value	8,439		8,425
Issued shares: 101,759,684 at March 31, 2025 and 101,606,376 December 31, 2024; outstanding shares: 99,178,286 at March 31, 2025 and 98,861,402 at December 31, 2024
Additional paid-in capital	1,286,557		1,283,892
Treasury shares	(207)		(220)
At March 31, 2025: 2,581,398 and December 31, 2024: 2,744,974
Accumulated other comprehensive loss	(1,092)		(1,421)
Accumulated deficit	(1,531,920)		(1,493,318)
Total shareholders’ (deficit) equity	(238,223)		(202,642)

Total liabilities and shareholders’ (deficit) equity	$	272,539	$	321,980

The accompanying notes are an integral part of these condensed consolidated financial statements.


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ADC Therapeutics SA

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except share and per share amounts)


	For the Three Months Ended March 31,
	2025		2024
Revenue
Product revenues, net	$	17,404	$	17,848
License revenues and royalties	5,629		205
Total revenue, net	23,033		18,053
Operating expense
Cost of product sales	(2,061)		(2,510)
Research and development	(28,928)		(25,735)
Selling and marketing	(10,553)		(11,390)
General and administrative	(9,955)		(12,031)
Total operating expense	(51,497)		(51,666)
Loss from operations	(28,464)		(33,613)
Other income (expense)
Interest income	2,054		2,948
Interest expense	(12,230)		(12,496)
Other, net	203		(2,595)

Total other expense, net	(9,973)		(12,143)
Loss before income taxes	(38,437)		(45,756)
Income tax expense	(165)		(163)
Loss before equity in net losses of joint venture	(38,602)		(45,919)
Equity in net losses of joint venture	—		(687)
Net loss	$	(38,602)	$	(46,606)
Net loss per share
Net loss per share, basic and diluted	$	(0.36)	$	(0.56)
Weighted average shares outstanding, basic and diluted	107,202,374		82,552,322

The accompanying notes are an integral part of these condensed consolidated financial statements.


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ADC Therapeutics SA

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(in thousands)


	For the Three Months Ended March 31,
	2025		2024
Net loss	$	(38,602)	$	(46,606)

Other comprehensive (loss) income:
Remeasurement of defined benefit pension liability	(42)		—
Foreign currency translation adjustment	371		(78)
Other comprehensive income (loss) before share of other comprehensive loss in joint venture	329		(78)
Share of other comprehensive loss in joint venture	—		(30)
Other comprehensive income (loss)	329		(108)

Total comprehensive loss	$	(38,273)	$	(46,714)

The accompanying notes are an integral part of these condensed consolidated financial statements.


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ADC Therapeutics SA

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

For the Three Months Ended March 31, 2025



(in thousands, except share amounts)	Number of shares	Common shares, par value		Additional paid-in capital		Number of shares (held or received)/delivered	Treasury shares		Accumulated other comprehensive (loss) income		Accumulated deficit		Total
January 1, 2025	101,606,376	$	8,425	$	1,283,892	(2,744,974)	$	(220)	$	(1,421)	$	(1,493,318)	$	(202,642)
Loss for the period	—	—		—		—	—		—		(38,602)		(38,602)
Remeasurement of defined benefit pension liability	—	—		—		—	—		(42)		—		(42)
Foreign currency translation adjustment	—	—		—		—	—		371		—		371
Other comprehensive income before share of other comprehensive loss in joint venture	—	—		—		—	—		329		—		329
Share of other comprehensive loss in joint venture	—	—		—		—	—		—		—		—
Total other comprehensive income	—	—		—		—	—		329		—		329
Total comprehensive income (loss) for the period	—	—		—		—	—		329		(38,602)		(38,273)

Vestings of RSUs	153,308	14		(14)		—	—		—		—		—

Issuance of shares, 2022 Employee Stock Purchase Plan	—	—		258		163,576	13		—		—		271


Share-based compensation expense	—	—		2,421		—	—		—		—		2,421
	153,308	14		2,665		163,576	13		—		—		2,692
March 31, 2025	101,759,684	$	8,439	$	1,286,557	(2,581,398)	$	(207)	$	(1,092)	$	(1,531,920)	$	(238,223)

For the Three Months Ended March 31, 2024



(in thousands, except share amounts)	Number of shares	Common shares, par value		Additional paid-in capital		Number of shares (held or received)/delivered	Treasury shares		Accumulated other comprehensive (loss) income		Accumulated deficit		Total
January 1, 2024	89,041,946	$	7,312	$	1,180,545	(6,748,809)	$	(541)	$	(93)	$	(1,335,472)	$	(148,249)
Loss for the period	—	—		—		—	—		—		(46,606)		(46,606)

Foreign currency translation adjustment	—	—		—		—	—		(78)		—		(78)
Other comprehensive loss before share of other comprehensive loss in joint venture	—	—		—		—	—		(78)		—		(78)
Share of other comprehensive loss in joint venture	—	—		—		—	—		(30)		—		(30)
Total other comprehensive loss	—	—		—		—	—		(108)		—		(108)
Total comprehensive loss for the period	—	—		—		—	—		(108)		(46,606)		(46,714)

Vestings of RSUs	—	—		(20)		248,030	20		—		—		—
Exercise of options	—	—		32		6,384	1		—		—		33
Issuance of shares, 2022 Employee Stock Purchase Plan	—	—		305		229,675	18		—		—		323
Share-based compensation expense	—	—		158		—	—		—		—		158
	—	—		475		484,089	39		—		—		514
March 31, 2024	89,041,946	$	7,312	$	1,181,020	(6,264,720)	$	(502)	$	(201)	$	(1,382,078)	$	(194,449)

The accompanying notes are an integral part of these condensed consolidated financial statements.


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ADC Therapeutics SA

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	For the Three Months Ended March 31,
	2025		2024
Cash flows used in operating activities
Net loss	$	(38,602)	$	(46,606)
Adjustments to reconcile net loss to net cash used in operations:

Share-based compensation expense	2,421		158
Accretion expense of deferred royalty obligation	7,069		6,864
Cumulative catch-up adjustment, deferred royalty obligation	(12)		(263)
Write-downs of inventory	1,246		748
Depreciation	342		331

Amortization of operating lease right-of-use assets	459		512

Share of results in joint venture	—		687


Warrant obligations, decrease in fair value	—		3,068


Amortization of debt discount, senior secured term loan	191		503
Other	67		(174)
Changes in operating assets and liabilities:
Accounts receivable, net	(11,445)		1,995
Inventory	(306)		(568)
Prepaid expenses and other current assets	3,856		(420)
Other long-term assets	—		(281)
Accounts payable	(2,461)		(1,247)
Accrued expenses and other current liabilities	(20,631)		(3,543)

Operating lease liabilities	(489)		(514)
Other long-term liabilities	1,961		(5,345)
Net cash used in operating activities	(56,334)		(44,095)
Cash flows used in investing activities
Payment for purchases of property and equipment	(264)		(531)
Net cash used in investing activities	(264)		(531)
Cash flows provided by financing activities



Proceeds from share issuance under stock purchase plan	271		323
Proceeds from the exercise of stock options	—		33
Net cash provided by financing activities	271		356
Net decrease in cash and cash equivalents	(56,327)		(44,270)
Exchange gains (losses) on cash and cash equivalents	161		(43)
Cash and cash equivalents at beginning of period	250,867		278,598
Cash and cash equivalents at end of period	$	194,701	$	234,285
Supplemental Cash Flow Information:
Interest paid	$	3,594	$	3,900
Interest received	2,054		4,382
Payments made under royalty financing transaction	1,376		1,229

Supplemental Non-Cash Investing and Financing Activities:
Capital expenditures recorded in Accounts payable and other current liabilities	—		9

The accompanying notes are an integral part of these condensed consolidated financial statements.


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ADC Therapeutics SA
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except per share amounts)

1.Description of Business and Organization

ADC Therapeutics is a commercial-stage global pioneer in the field of antibody drug conjugates (“ADCs”) committed to advancing its proprietary ADC technology platform to transform the cancer treatment paradigm for patients with hematologic malignancies and solid tumors.

Since its inception, the Company has devoted its resources to developing a validated and differentiated technology platform with multiple payloads, linkers and conjugation chemistry, enabling the design of next-generation potent ADCs with an enhanced therapeutic index. The Company generates sales from its flagship product, ZYNLONTA, which was granted accelerated approval by the Food and Drug Administration (“FDA”) in the U.S. for the treatment of relapsed or refractory diffuse large B-cell lymphoma (“DLBCL”) in the 3L setting and has also been granted conditional approval from the European Commission, conditional approval from the China National Medical Products Administration and conditional approval by Health Canada. Additionally, the Company is seeking to expand ZYNLONTA into new indications and earlier lines of therapy while pursuing our early-stage solid tumor programs.

The Company was incorporated on June 6, 2011 under the laws of Switzerland, with its registered office located at Route de la Corniche 3B, 1066 Epalinges, Switzerland. The Company has two wholly-owned subsidiaries: ADC Therapeutics America, Inc. (“ADCT America”), which was incorporated in Delaware, USA on December 10, 2014 and ADC Therapeutics (UK) Ltd (“ADCT UK”), incorporated in England on December 12, 2014. The Company and its two subsidiaries form the ADCT Group (the “Group”).

All references to “ADC Therapeutics,” “the Company", “we,” “us,” and “our” refer to ADC Therapeutics SA and its consolidated subsidiaries unless otherwise indicated.

2.Summary of Significant Accounting Policies

Basis of preparation and principles of consolidation

These accompanying unaudited condensed consolidated financial statements, which include the accounts of the Company and its wholly-owned subsidiaries, have been prepared following the requirements of the U.S. Securities and Exchange Commission for interim reporting. As permitted under those rules, certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles, or U.S. GAAP, can be condensed or omitted. All intercompany transactions and balances have been eliminated in consolidation. The information included in this Quarterly Report on Form 10‑Q should be read in conjunction with our annual audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024.

In the opinion of management, these condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, considered necessary for the fair statement of our financial position and operating results. The results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025, for any other interim period or for any future period.

The Company’s significant accounting policies have not changed substantially from those previously described in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2024.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures in the consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.


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Recent Accounting Pronouncements

Issued but not yet adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation, and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for the Company’s annual reporting periods beginning in January 2025. Adoption is either with a prospective method or a fully retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the effect that adoption of ASU 2023-09 will have on its consolidated financial statements. The Company does not anticipate adoption of this standard will have a material impact on our financial results but may result in enhanced or expanded disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses Disclosure. The ASU requires disaggregation, in the notes to the financial statements, of certain cost and expense captions presented on the face of the Company’s interim and annual financial statements. ASU 2023-09 is effective for fiscal years beginning in January 2027 and interim periods beginning January 2028, with early adoption permitted. Adoption may be applied prospectively or retrospectively. The Company is currently evaluating the effect that adoption of ASU 2024-03 will have on its consolidated financial statements.

3.Fair value measurements

The carrying amount of Cash and cash equivalents, Accounts Receivable, net and Accounts payable is a reasonable approximation of fair value due to the short-term nature of these assets and liabilities. Financial liabilities that are not measured at fair value on a recurring basis include our senior secured term loan and deferred royalty financing obligation. The carrying value of our senior secured term loan approximates fair value as these borrowings are based on variable market rates. The fair value of our deferred royalty obligation was $312.0 million as of both March 31, 2025 and December 31, 2024 and is based on our current estimates of future royalties expected to be paid over the estimated life of the royalty purchase agreement which are level 3 inputs.

The Deerfield warrants are measured at fair value on a recurring basis and are classified as Level 2. As of March 31, 2025 and December 31, 2024 the value of the Deerfield warrants was $0. Fair values must be estimated at the end of each reporting period with regard to the Deerfield warrants. The approach to valuation follows the fair value principle, and the key input factors are described for the Deerfield warrants in Note 9, "Deerfield warrants." A Black-Scholes model was used to calculate the fair values.

There were no transfers between the respective levels during the period.

4.Inventory

As of March 31, 2025 and December 31, 2024 inventory consisted of the following:


(in thousands)	March 31, 2025		December 31, 2024

Work in progress	$	17,238	$	18,338
Finished goods	209		49
Total inventory, net	$	17,447	$	18,387

Inventory write-downs of $1,246 and $748 were recognized and charged to cost of product sales in the Company’s unaudited condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024, respectively.


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5.Property and equipment

Property and equipment as of March 31, 2025 and December 31, 2024 consisted of the following:


(in thousands)	March 31, 2025		December 31, 2024
Leasehold improvements	$	3,989	$	3,873
Laboratory equipment	4,817		4,415
Office equipment	994		970
Hardware and computer software	1,153		1,137

	10,953		10,395
Less: accumulated depreciation	(5,797)		(5,320)
Property and equipment, net	$	5,156	$	5,075

Depreciation expense was $342 and $331 for the three months ended March 31, 2025 and 2024, respectively.

6.Income taxes

Income tax expense for the three months ended March 31, 2025 was $0.2 million relative to loss before income taxes of $38.4 million. The income tax expense for the three months ended March 31, 2024 was $0.2 million relative to loss before income taxes of $45.8 million. The expense for the three months ended March 31, 2025 and 2024 was the result of income generated by our UK operations for which tax expense has been recognized based on a full year estimated income tax liability, and the inability to recognize benefit on losses in the U.S. and Switzerland. We retain a full valuation allowance against all deferred tax assets, and each reporting period, we evaluate the need for a valuation allowance on our deferred tax assets by jurisdiction and adjust our estimates as more information becomes available.

7.Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:


(in thousands)	March 31, 2025		December 31, 2024
Accrued R&D costs	$	18,722	$	20,523
Accrued payroll and benefits	4,509		13,600

Gross-to-net sales adjustments, short-term	8,192		15,697
Operating lease liabilities, short-term	1,368		1,371
Other	9,411		11,249
	$	42,202	$	62,440


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8.Senior secured term loan facility

On August 15, 2022, the Company, ADCT UK and ADCT America entered into the Loan Agreement, pursuant to which the Company may borrow up to $175.0 million principal amount of secured term loans, including (i) a First Tranche and (ii) Future Tranches. On August 15, 2022, the Company drew down $120.0 million principal amount of term loans under the Loan Agreement.

On August 15, 2022, the Company also issued to the lenders under the Loan Agreement warrants to purchase an aggregate of 527,295 common shares, which warrants have an exercise price of $8.30 per share. Each warrant is exercisable, on a cash or a cashless basis, at the option of the holder at any time on or prior to August 15, 2032. The warrants are freestanding financial instruments that are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, these warrants are recognized in equity and accounted for as a component of additional paid-in capital at the time of issuance.

On August 15, 2022, the Company also entered into the Share Purchase Agreement with the lenders under the Loan Agreement to purchase 733,568 common shares of the Company.

For the three months ended March 31, 2025 and 2024, the Company recorded interest expense on the senior secured term loan in the amount of $3,785 and $4,403, respectively, which was recorded in interest expense in the unaudited condensed consolidated statements of operations. The effective interest rate (“EIR”) at March 31, 2025 was 16.15%.

The following table provides a summary of the interest expense for the Company’s senior secured term loan for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	2025		2024
Contractual interest expense	$	3,594	$	3,900
Amortization of debt discount	191		503
Total	$	3,785	$	4,403

The amount at which the senior secured term loan is presented as a liability in the unaudited condensed consolidated balance sheets represents the net present value of all future cash outflows associated with the loan discounted at the EIR. The carrying value of the senior secured term loan is $113.8 million and $113.6 million as of March 31, 2025 and December 31, 2024, respectively.

Contractual payments due under our senior secured term loans, including exit fees are as follows (in thousands):


2025 (remainder)	$	—
2026 (commencing third quarter)	3,090
2027	9,330
2028	12,480
2029	99,840
Total	$	124,740


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9.Deerfield warrants

Pursuant to the Exchange Agreement with Deerfield entered into on August 15, 2022, the Company issued warrants to purchase an aggregate of 4,412,840 common shares. The warrants consist of warrants to purchase an aggregate of 2,631,578 common shares at an exercise price of $24.70 per share and warrants to purchase an aggregate of 1,781,262 common shares at an exercise price of $28.07 per share. Each warrant is exercisable, on a cash or a cashless basis, at the option of the holder, at any time on or prior to May 19, 2025. The warrant obligation, which is included in other long-term liabilities in the unaudited condensed consolidated balance sheets, is remeasured to fair value at the end of each reporting period. Changes in the fair value losses of the warrant obligation at the end of each period are recorded in the unaudited condensed consolidated statements of operations.

During the three months ended March 31, 2025 and 2024, the Company recognized expense of $0 and $3,068, respectively, as a result of changes in the fair value of the warrant obligation. This amount was recorded to Other, net in the unaudited condensed consolidated statements of operations. The fair value of the warrant obligation as of March 31, 2025 and December 31, 2024 was $0. See Note 14, "Other income (expense)" for further information.

The Company valued the Deerfield warrant obligation using a Black-Scholes option-pricing model. Key inputs for the valuation of the warrant obligation as of March 31, 2025 and December 31, 2024 were as follows:


	As of		As of
	March 31, 2025		December 31, 2024
Exercise price in $	24.70 and 28.07		24.70 and 28.07
Share price in $	1.41		1.99
Risk-free interest rate	4.4	%	4.3	%
Expected volatility	83.3	%	83.0	%
Expected term (years)	0.14 years		0.39 years
Dividend yield	—		—
Black-Scholes value in $	nil and nil		nil and nil

10.Deferred royalty obligation

On August 25, 2021, the Company entered into a royalty purchase agreement with certain entities managed by HCR for up to $325.0 million. Under the terms of the agreement, the Company received gross proceeds of $225.0 million upon closing (the “First Investment Amount”) and received an additional $75.0 million during the year ended December 31, 2023 upon the first commercial sale of ZYNLONTA in the United Kingdom or any European Union country (the “Second Investment Amount”) and together with the First Investment Amount, the “Investment Amount”).

The table below provides a rollforward of the Company’s debt obligation relating to the royalty purchase agreement.


(in thousands)
Liability balance at January 1, 2024	$	309,613
Less: royalty payments	5,384
Plus: interest expense	33,608
Less: cumulative catch-up adjustment, Other, net	11,178
Liability balance at December 31, 2024	326,659

Less: royalty payments	1,376
Plus: interest expense	8,445
Less: cumulative catch-up adjustment, Other, net	12
Liability balance at March 31, 2025	$	333,716


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11.Pension and post-retirement benefit obligations

The pension plan for Swiss employees is a defined benefit pension plan. The Company contracted with the Swiss Life Collective BVG Foundation based in Zurich for the provision of occupational benefits. All benefits in accordance with the regulations are reinsured in their entirety with Swiss Life SA within the framework of the corresponding contract. This pension solution fully reinsures the risks of disability, death and longevity with Swiss Life. Swiss Life invests the vested pension capital and provides a 100% capital and interest guarantee. The pension plan is entitled to an annual bonus from Swiss Life comprising the effective savings, risk and cost results.

Although, as is the case with many Swiss pension plans, the amount of ultimate pension benefit is not defined, certain legal obligations of the plan create constructive obligations on the employer to pay further contributions to fund an eventual deficit; this results in the plan nevertheless being accounted for as a defined benefit plan.

The net periodic benefit cost for the three months ended March 31, 2025 and 2024 is as follows:


	Three Months Ended March 31,
(in thousands)	2025		2024
Net periodic benefit cost:
Service cost	$	188	$	164
Interest cost	25		38
Expected return on plan assets	(65)		(59)
Amortization of prior service cost	(42)		(41)
Amortization of actuarial losses	5		—


Net periodic benefit cost	$	111	$	102

The components of net periodic benefit cost are included in operating expense on the unaudited condensed consolidated statements of operations.

12.Commitments and contingencies

Manufacturing Commitments

Some of our inventory components require long lead times to manufacture. Therefore, we make long-term investments in our supply chain in order to ensure we have enough drug product to meet current and future revenue forecasts. Third party manufacturing agreements include non-cancelable obligations related to the supply of ZYNLONTA and the company’s product candidates. There have been no material changes related to our non-cancelable obligations under these arrangements as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Contingent liabilities

From time to time, we may be involved in various legal matters generally incidental to our business. Although the results of litigation and claims cannot be predicted with certainty, after discussion with legal counsel, we are not aware of any matters for which the likelihood of a loss is probable and reasonably estimable and which could have a material impact on our consolidated financial condition, liquidity, or results of operations.

13.Revenue

The table below provides a disaggregation of revenues by type and customer location for the three months ended March 31, 2025 and 2024:


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	Three Months Ended March 31,
(in thousands)	2025		2024
Types of goods and services
Product revenues, net	$	17,404	$	17,848
License revenues	5,000		—
Royalties	629		205
Total revenue	$	23,033	$	18,053

Customer Location
U.S.	$	17,404	$	17,848
EMEA(1)	5,629		205

Total revenue	$	23,033	$	18,053

(1) Europe, the Middle East and Africa

Product revenues, net

The table below provides a rollforward of the Company’s accruals related to the gross-to-net (“GTN”) sales adjustments for the three months ended March 31, 2025 and March 31, 2024:


(in thousands)	Discarded Drug Rebate		Other Adjustments		Total
Balance as of January 1, 2024	$	7,391	$	3,946	$	11,337
GTN accruals for current period	2,046		4,458		6,504
Prior period adjustments	(44)		(229)		(273)
Credits, payments and reclassifications	—		(4,407)		(4,407)
Balance as of March 31, 2024	$	9,393	$	3,768	$	13,161

Balance as of January 1, 2025	$	15,103	$	2,386	$	17,489
GTN accruals for current period	1,949		4,106		6,055
Prior period adjustments	(200)		(332)		(532)
Credits, payments and reclassifications	(7,180)		(3,793)		(10,973)
Balance as of March 31, 2025	$	9,672	$	2,367	$	12,039

The table below provides the classification of the accruals related to the GTN sales adjustment included in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2025 and December 31, 2024.


(in thousands)	March 31, 2025		December 31, 2024
Accounts receivable, net	$	1,898	$	1,792
Other current and non-current liabilities	10,141		15,697
	$	12,039	$	17,489

Customers from which we derive more than 10% of our total product revenues for the three months ended March 31, 2025 and 2024 are as follows:


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	Three Months Ended March 31,
	2025		2024
McKesson	34	%	43	%
AmerisourceBergen Corporation(1)	42	%	38	%
Cardinal Health	24	%	19	%

(1) AmerisourceBergen also operates under the name Cencora

License revenues

On July 8, 2022, the Company entered into exclusive license agreement with Sobi for the development and commercialization of ZYNLONTA for all hematologic and solid tumor indications outside of the U.S., greater China, Singapore and Japan. Under the terms of the agreement, the Company is eligible to receive regulatory and net sales-based milestones. In March 2025, the Company recognized $5.0 million in license revenue upon ZYNLONTA’s conditional approval by Health Canada for the treatment of relapsed or refractory DLBCL after two or more lines of systemic therapy. The payment was received in the second quarter of 2025.

14.Other income (expense)

Interest Income

Interest income includes interest received from banks on our cash balances. Interest income was $2.1 million and $2.9 million for the three months ended March 31, 2025 and 2024, respectively.

Interest Expense

The components of Interest expense for the three months ended March 31, 2025 and 2024 are as follows:


	Three Months Ended March 31,
(in thousands)	2025		2024

Deferred royalty obligation interest expense	$	8,445	$	8,093
Effective interest expense on senior secured term loan facility	3,785		4,403

Interest expense	$	12,230	$	12,496

Other, net

The components of Other, net for the three months ended March 31, 2025 and 2024 are as follows:


	Three Months Ended March 31,
(in thousands)	2025		2024
Deerfield warrant obligation, change in fair value expense	$	—	$	(3,068)
Cumulative catch-up adjustment, deferred royalty obligation	12		263




Exchange differences loss	(90)		(37)
R&D tax credit gain	281		247
Other, net	$	203	$	(2,595)


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15.Share-based compensation

The Company has adopted various share-based compensation incentive plans. Under these plans the Company may at its discretion grant to the plan participants, such as directors, certain employees, and service providers awards in the form of restricted shares and restricted share units (“RSUs”), share options, share appreciation rights, performance awards and other share-based awards. The 2019 Equity Incentive Plan was adopted in November 2019 while the Conditional Share Capital Plan and the Inducement Plan were adopted in December 2023.

2019 Equity Incentive Plan

In November 2019, the Company adopted the 2019 Equity Incentive Plan. Under the 2019 Equity Incentive Plan, the Company may at its discretion grant to plan participants, such as directors, certain employees and service providers, awards in the form of restricted shares and RSUs, share options, share appreciation rights, performance awards and other share-based awards. The Company has reserved 17,741,355 common shares for future issuance under the 2019 Equity Incentive Plan (including share-based equity awards granted to date less awards forfeited). As of March 31, 2025, the Company has 1,382,040 common shares available for the future issuance of share-based equity awards.

As of March 31, 2025 and December 31, 2024, the cumulative amount recorded as a net increase to additional paid-in capital within equity on the unaudited condensed consolidated balance sheets in respect of the 2019 Equity Incentive Plan was $162,554 and $160,945, respectively. The amounts of expense (reversal) recognized for all awards for services received during the three months ended March 31, 2025 and 2024 were $1,609 and $(981).

Conditional Share Capital Plan

In December 2023, the Company adopted the Conditional Share Capital Plan. Under the Conditional Share Capital Plan, the Company may at its discretion grant to plan participants, such as directors, certain employees and service providers, awards in the form of restricted shares and RSUs, share options, share appreciation rights, performance awards and other share-based awards. The Company has reserved 8,000,000 common shares for future issuance under this plan. On February 13, 2025 the Company issued its 2025 annual equity award under the Conditional Share Capital Plan, which was approved by the Compensation Committee of the Board of Directors and by the Board of Directors for the senior management team, consisted of 5,015,765 RSUs. No share options were issued in connection with this award. As of March 31, 2025, the Company has 1,429,378 common shares available for the future issuance of share-based equity awards.

As of March 31, 2025 and December 31, 2024, the cumulative amount recorded as a net increase to additional paid-in capital within equity on the unaudited condensed consolidated balance sheet in respect of the Conditional Share Capital Plan was $3,512 and $2,964. The amounts of expense for all awards recognized for services received during the three months ended March 31, 2025 and 2024 was $548 and $1,063.

Inducement Plan

In December 2023, the Company adopted the Inducement Plan. Under the Inducement Plan, the Company may at its discretion grant to any employee who is eligible to receive an employment inducement grant in accordance with NYSE Listed Company Manual 303A.08. The maximum number of common shares in respect of which awards may be granted under the Inducement Plan is 1,000,000 common shares (including share-based equity awards granted to date, less awards forfeited), subject to adjustment in the event of certain corporate transactions or events if necessary to prevent dilution or enlargement of the benefits made available under the plan. Equity incentive awards under the Inducement Plan may be granted in the form of options, share appreciation rights, restricted shares, restricted share units, performance awards or other share-based awards but not “incentive stock options” for purposes of U.S. tax laws. As of March 31, 2025, the Company has 323,600 common shares available for the future issuance of share-based equity awards under this plan.

As of March 31, 2025 and December 31, 2024, the cumulative amount recorded as a net increase to additional paid-in capital within equity on the unaudited condensed consolidated balance sheet in respect of the Inducement Plan was $817 and $554. The amounts of expense for all awards recognized for services received during the three months ended March 31, 2025 and 2024 was $263 and $0.


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Share Options

Pursuant to the 2019 Equity Incentive Plan, the Conditional Share Capital Plan and Inducement Plan (the “Share-based Compensation Plans”), the Company may grant share options to its directors, certain employees and service providers working for the benefit of the Company at the time. The exercise price per share option is set by the Company at the fair market value of the underlying common shares on the date of grant, as determined by the Company, which is generally the closing share price of the Company’s common shares traded on the NYSE. The awards generally vest 25% on the first anniversary of the date of grant, and thereafter evenly on a monthly basis over the subsequent three years. The contractual term of each share option award granted is ten years. Under the grant, the options may be settled only in common shares of the Company. Therefore, the grants of share options under the 2019 Equity Incentive Plan and Inducement Plan have been accounted for as equity-settled under US GAAP. As such, the Company records a charge for the vested portion of award grants and for partially earned but non-vested portions of award grants. This results in a front-loaded charge to the Company’s unaudited condensed consolidated statements of operations and a corresponding increase to additional paid-in capital within equity on the unaudited condensed consolidated balance sheets.

The expense (reversal) recognized for services received during the three months ended March 31, 2025 and 2024 was $1,129 and $(1,434), respectively.

Movements in the number of awards outstanding under the Plans described above and their related weighted average strike prices are as follows:


	Weighted average strike price per share (in $ per share)	Number of awards	Weighted average remaining life in years	Aggregate Intrinsic Value (in $ thousands)
Outstanding as of December 31, 2024	$8.69	10,697,288	7.56	$	—
Granted	1.76	46,800
Forfeited	2.97	(63,587)
Expired	21.11	(36,733)

Outstanding as of March 31, 2025	$8.66	10,643,768	7.31	$	—

As of March 31, 2025, 6,332,858 awards are vested and exercisable out of the total outstanding awards of 10,643,768 common shares. As of March 31, 2025, the weighted average strike price and weighted average remaining life for vested and exercisable awards is $11.96 and 6.64 years, respectively. Awards outstanding as of March 31, 2025 have expiration dates through 2035. The weighted average grant date fair value of the awards granted during the three months ended March 31, 2025 was $1.43. The aggregate intrinsic value of vested and exercisable options was zero. As of March 31, 2025, the unrecognized compensation cost related to 4,310,913 unvested share options expected to vest was $6.1 million. This unrecognized cost will be recognized over an estimated weighted-average amortization period of 1.49 years.

The fair values of the options granted under the 2019 Equity Incentive Plan and the Inducement Plan were determined on the date of the grant using the Black-Scholes option-pricing model.

The fair values of the options granted during the three months ended March 31, 2025 and 2024 were determined on the date of grant using the following assumptions:


	Three Months Ended March 31,
	2025	2024
Share price, in $	1.58-2.00	1.69-4.86
Strike price, in $	1.58-2.00	1.69-4.86
Expected volatility, in %	100	95
Award life, in years	6.08	6.08
Expected dividends	—	—
Risk-free interest rate, in %	4.40-4.43	3.75-4.10


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Expected volatility is historical volatility of our common stock. The award life for options granted was based on the time interval between the date of grant and the date during the ten-year life after which, when making the grant, the Company expected on average that participants would exercise their options.

RSUs

Pursuant to the Share-based Compensation Plans, the Company may grant RSUs to its directors, certain employees and service providers working for the benefit of the Company at the time. The awards generally vest annually over a period of two to three years commencing on the first anniversary of the date of grant. The RSUs may be settled only in common shares of the Company. Therefore, the grant of RSUs under both the 2019 Equity Incentive Plan and Conditional Share Capital Plan have been accounted for as equity-settled under US GAAP. As such, the Company records a charge for the vested portion of award grants and for partially earned but non-vested portions of award grants. This results in a front-loaded charge to the Company’s unaudited condensed consolidated statements of operations and a corresponding increase to additional paid-in capital within equity on the unaudited condensed consolidated balance sheets. The expense recognized for services received during the three months ended March 31, 2025 and 2024 is $1,291 and $1,516, respectively.

The following table summarizes the RSU awards outstanding as of March 31, 2025:


	Number of awards	Weighted average grant date fair value (in $ per share)
December 31, 2024	3,106,310	$1.81
Granted	5,015,765	1.61
Vested	(153,308)	6.60
Forfeited	(53,769)	1.35
March 31, 2025 (1)	7,914,998	$1.59

(1) Includes 6,570,622 RSUs outstanding in connection with the Conditional Share Capital Pan.

The total fair value of RSU awards vested (as measured on the date of vesting) during the three months ended March 31, 2025 was $260.

Employee Stock Purchase Plan

In June 2022, the Company adopted the 2022 Employee Stock Purchase Plan (“ESPP”), which allows eligible employees to purchase designated shares of the Company's common shares at a discount, over a series of offering periods through accumulated payroll deductions. The Company offers the ESPP to employees twice a year with each having a six-month offering period. The first offering period is generally from January 1st through June 30th and the second offering period is from July 1st through December 31st. The grant date is the first day of each offering period.

The ESPP is not available for enrollment during the first offering period from January 1, 2025 through June 30, 2025.

The expense recognized related to the ESPP during the three months ended March 31, 2025 and 2024 is $0 and $76, respectively.

16.Loss per share

The basic loss per share is calculated by dividing the net loss attributable to shareholders by the weighted average number of shares in issue during the period, excluding common shares owned by the Company and held as treasury shares, as follows:


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	Three Months Ended March 31,
(in thousands, except share and per share amounts)	2025		2024
Net loss	$	(38,602)	$	(46,606)
Weighted average number of shares outstanding	107,202,374		82,552,322
Basic and diluted loss per share	$	(0.36)	$	(0.56)

For the three months ended March 31, 2025 and 2024, basic and diluted loss per share are calculated on the weighted average number of shares issued and outstanding and also include the Pre-funded warrants issued in connection with the 2024 Equity Offering. The calculation excludes shares to be issued under the Share-based Compensation Plans, the Company’s Deerfield warrants and shares to be issued under the 2022 ESPP as the effect of including those shares would be anti-dilutive. See Note 8, “Senior secured term loan facility,” Note 9, “Deerfield warrants”, and Note 15, “Share-based compensation,” for further information.

Potentially dilutive securities that were not included in the diluted per share calculations because the effect of including them would be anti-dilutive were as follows:


	Three Months Ended March 31,
	2025	2024
2019 Equity Incentive Plan - Share Options	9,967,368	10,607,005
Inducement Plan - Share Options	676,400	—
2019 Equity Incentive Plan - RSUs	3,491,144	620,800
Conditional Share Capital Plan - RSUs	4,423,854	5,385,591
Outstanding warrants	4,940,135	4,940,135

	23,498,901	21,553,531

17.Segment reporting

The Company is managed and operated as one reportable segment, which includes all global activities related to the development and commercialization of targeted ADC cancer therapies. The determination of a single reportable segment is consistent with the consolidated financial information regularly provided to the Company’s CODM, which is its chief executive officer. The CODM uses loss from operations and consolidated net loss for purposes of assessing performance, making operating decisions, allocating resources and planning and forecasting for future periods. The CODM allocates resources and plans for the long-term growth of the Company based on the Company's available cash resources, forecasted cash flow, and expenditures on a consolidated basis, as well as an assessment of the probability of success of its research and development activities. Resource allocation and long-term growth decisions are informed by budgeted and forecasted expense information, along with actual expenses incurred to date. The measure of segment assets is reported on the consolidated balance sheets as total assets.

The following table is the summary of the segment profit or loss information, including the significant expense categories for the three months ended March 31, 2025 and 2024, respectively:


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	Three Months Ended March 31,
	2025		2024
Total revenues, net	$	23,033	$	18,053
Significant operating expenses:
Cost of product sales	(2,061)		(2,510)
Research and development(1)	(27,936)		(26,285)
Selling and marketing(1)	(10,317)		(12,030)
General and administrative(1)	(8,762)		(10,683)
Share-based compensation	(2,421)		(158)
Total operating expenses	(51,497)		(51,666)
Loss from operations	(28,464)		(33,613)
Other segment items(2)	(10,138)		(12,993)
Net loss	$	(38,602)	$	(46,606)

(1)Excludes share-based compensation

(2)Includes Other expense, net, Income tax expense and Equity in net losses of joint venture


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements, including the notes thereto, included in this Quarterly Report, as well as our audited consolidated financial statements, including the notes thereto, included in our Annual Report on Form 10-K. The following discussion includes forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements. See “Forward-Looking Statements.”

Business Overview

ADC Therapeutics is a commercial-stage global pioneer in the field of antibody drug conjugates (“ADCs”). The Company is advancing its proprietary ADC technology to transform the treatment paradigm for patients with hematologic malignancies and solid tumors. We have a validated and differentiated technology platform with multiple payloads, linkers and conjugation chemistry, enabling the design of next-generation potent ADCs with an enhanced therapeutic index. Our strategy is focused on expanding and maximizing the ZYNLONTA opportunity in hematology and pursuing our early-stage research portfolio in solid tumors. We are a pioneer and leader in the ADC field with specialized end-to-end capabilities for developing optimized ADCs. This includes a strong, integrated research & development organization and a validated technology platform with clinical-stage product candidates currently in the pipeline, multiple next-generation ADCs being developed and a proven executional track record that includes ZYNLONTA.

In our hematology program, 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 and indolent lymphomas, including marginal zone lymphoma (“MZL”) and follicular lymphoma (”FL”), 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 through investigator-initiated trials (“IITs”) at leading institutions. Based on the available clinical data, we have made the decision to discontinue the Phase 1/2 ADCT-602 clinical trial, sponsored by The University of Texas MD Anderson Cancer Center, evaluating ADCT-602 in patients with relapsed or refractory B-cell acute lymphoblastic leukemia.

In our solid tumor program, we have early stage preclinical research programs, including a portfolio of next-generation investigational ADCs targeting Claudin-6, PSMA, NaPi2b, and ASCT2, the most advanced of which are PSMA and Claudin-6. In addition, we are advancing research with a range of payloads, linkers and conjugation technologies against undisclosed targets. The Company is seeking to maximize the value of its solid tumor program through strategic partnerships, collaborations and license arrangements for one or more of its research programs.

Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following table summarizes our results of operations for the three months ended March 31, 2025 and 2024:


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	Three Months Ended March 31,
(in thousands, except percentages and per share)	2025		2024		Change		% Change
Revenue
Product revenues, net	$	17,404	$	17,848	$	(444)	(2.5)	%
License revenues and royalties	5,629		205		5,424		N/A
Total revenue, net	23,033		18,053		4,980		27.6	%

Operating expense
Cost of product sales	(2,061)		(2,510)		449		(17.9)	%
Research and development	(28,928)		(25,735)		(3,193)		12.4	%
Selling and marketing	(10,553)		(11,390)		837		(7.3)	%
General and administrative	(9,955)		(12,031)		2,076		(17.3)	%
Total operating expense	(51,497)		(51,666)		169		(0.3)	%
Loss from operations	(28,464)		(33,613)		5,149		(15.3)	%

Other income (expense)
Interest income	2,054		2,948		(894)		(30.3)	%
Interest expense	(12,230)		(12,496)		266		(2.1)	%
Other, net	203		(2,595)		2,798		(107.8)	%
Total other expense, net	(9,973)		(12,143)		2,170		(17.9)	%

Loss before income taxes	(38,437)		(45,756)		7,319		(16.0)	%
Income tax expense	(165)		(163)		(2)		1.2	%
Loss before equity in net losses of joint venture	(38,602)		(45,919)		7,317		(15.9)	%
Equity in net losses of joint venture	—		(687)		687		(100.0)	%
Net loss	$	(38,602)	$	(46,606)	$	8,004	(17.2)	%


Net loss per share, basic and diluted	$	(0.36)	$	(0.56)	$	0.20	(35.7)	%

Revenue

Product Revenues, net

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. In the long term, we expect that our product revenue will increase as we execute our business strategy, although 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’ buying 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.

Product revenues, net, were $17.4 million for the three months ended March 31, 2025 as compared to $17.8 million for the three months ended March 31, 2024, a decrease of $0.4 million, or 2.5%. The decrease is primarily attributable to lower sales volume, partially offset by a higher price and favorability in GTN sales adjustments.

License Revenues and Royalties

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.

License revenues and royalties were $5.6 million for the three months ended March 31, 2025 as compared to $0.2 million for the three months ended March 31, 2024, an increase of $5.4 million. In March 2025, the Company recognized $5.0


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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.

Operating Expenses

Cost of Product Sales

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 may 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.

Cost of product sales were $2.1 million for the three months ended March 31, 2025 as compared to cost of product sales of $2.5 million for the three months ended March 31, 2024, a decrease of $0.4 million, or 17.9%. The decrease in cost of product sales was primarily driven by a $1.1 million batch cancellation fee recognized during the three months ended March 31, 2024 and a $0.6 million increase in our excess inventory reserve during the three months ended March 31, 2024, partially offset by an inventory write-down of $1.2 million during the three months ended March 31, 2025.

Research and Development Expenses

The following table summarizes our research and development expenses for our major development programs for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024		Change
ZYNLONTA	$	14,370	$	14,999	$	(629)

ADCT-601(1)	2,035		3,324		(1,289)


Preclinical product candidates and research pipeline	7,762		3,691		4,071

Other discontinued programs(2)	1,052		1,984		(932)
Not allocated to specific programs(3)	2,717		2,287		430
Share-based compensation expense (reversal)	992		(550)		1,542
Research and development expenses	$	28,928	$	25,735	$	3,193

(1) ADCT-601 was discontinued in November 2024.

(2) For the three months ended March 31, 2025, Cami, ADCT-901, ADCT-212 and ADCT-602 were included in Discontinued programs. For the three months ended March 31, 2024 these programs were separately presented as major development programs. Prior periods have been recast to conform to the current period presentation.

(3 )Includes third-party contracting and employee expenses, as well as expense for preclinical research, storage, shipping and lab consumables that span multiple programs.

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.

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.

Our R&D expenses were $28.9 million for the three months ended March 31, 2025 as compared to $25.7 million for the three months ended March 31, 2024, an increase of $3.2 million, or 12.4%, driven by the following programs and activities.


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ZYNLONTA

Research and development expenses for ZYNLONTA were $14.4 million for the three months ended March 31, 2025 as compared to $15.0 million for the three months ended March 31, 2024, a decrease of $0.6 million, or 4.2%. The overall decrease was primarily due to a net decrease in external clinical trial costs of $1.5 million including a net decrease in costs associated with LOTIS 9 and other trials (as a result of the wind down of those trials) and timing of LOTIS 7 expenses, partially offset by fewer expenses being shared and reimbursed by our partners under our cost sharing arrangements as well as higher personnel expenses of $0.8 million.

ADCT-601

Research and development expenses for ADCT-601 were $2.0 million for the three months ended March 31, 2025 as compared to $3.3 million for the three months ended March 31, 2024, a decrease of $1.3 million, or 38.8%. The decrease is primarily attributable to fewer patients on study as the ADCT-601 program was discontinued in November 2024.

Preclinical product candidates and research pipeline

Research and development expenses associated with our preclinical product candidates and research pipeline were $7.8 million for the three months ended March 31, 2025 as compared to $3.7 million for the three months ended March 31, 2024, an increase of $4.1 million, or 110.3%. The increase is primarily attributable to a $4.8 million net increase in spending on our next-generation investigational ADCs, partially offset by a net decrease of $0.7 million in spend on other research strategy, platform and pipeline initiatives.

Discontinued programs

Research and development expenses associated with our discontinued programs including Cami, ADCT-901, ADCT-212 and ADCT-602 have decreased to $1.1 million for three months ended March 31, 2025 from $2.0 million for the three months ended March 31, 2024, a decrease of $0.9 million, or 47.0%. The decrease was attributable to decreased spending on Cami of $1.0 million, ADCT-212 of $0.1 million and ADCT-602 of $0.1 million, partly offset by an increase of $0.3 million for ADCT-901.

Share-based compensation

Share-based compensation expense was $1.0 million for the three months ended March 31, 2025 as compared to a reversal of $0.6 million for the three months ended March 31, 2024, an increase of $1.5 million. The increase was primarily driven by the timing of forfeitures of awards in connection with employee terminations.

Selling and Marketing Expenses

The following table summarizes our selling and marketing expenses for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024		Change
External costs and overhead	$	4,627	$	5,812	$	(1,185)
Employee expenses(1)	5,690		6,218		(528)
Share-based compensation expense (reversal)	236		(640)		876
Selling and marketing expenses	$	10,553	$	11,390	$	(837)

(1)Excludes share-based compensation expense (reversal).

Selling and marketing costs (“S&M”) are expensed as incurred and are primarily attributable to commercialization of ZYNLONTA in the United States. S&M includes employee costs and share-based compensation expense for commercial employees and external costs related to commercialization (including professional fees, communication costs and IT costs, travel expenses and depreciation of property and equipment).

Selling and marketing expenses were $10.6 million for the three months ended March 31, 2025 as compared to $11.4 million for the three months ended March 31, 2024, a decrease of $0.8 million or 7.3%. The net decrease in external costs and overhead was primarily attributable to a reduction of $1.1 million in marketing and advertising and travel-related expenses as a result of cost cutting initiatives. The decrease in employee expenses was primarily due to lower wages and


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benefits of $0.5 million. The increase in share-based compensation expense of $0.9 million was primarily due to the timing of forfeitures of awards in connection with employee terminations.

General and Administrative Expenses

The following table summarizes our general and administrative expenses for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024		Change
External costs and overhead	$	3,712	$	5,877	$	(2,165)
Employee expenses(1)	5,050		4,806		244
Share-based compensation expense	1,193		1,348		(155)
General and administrative expenses	$	9,955	$	12,031	$	(2,076)

(1)Excludes share-based compensation expense.

General and administrative expense includes employee related costs (including wages, benefits and share-based compensation expense) for general and administrative employees, external costs (including, in particular, professional fees, legal fees and costs associated with maintaining patents and other intellectual property, communications costs and IT costs, facility expenses and travel expenses) and depreciation of property and equipment and right-of-use assets.

General and administrative expenses were $10.0 million for the three months ended March 31, 2025 as compared to $12.0 million for the three months ended March 31, 2024, an overall decrease of $2.1 million, or 17.3%. The decrease in external costs and overhead of $2.2 million was primarily related to lower professional fees of $1.4 million primarily as a result of lower legal and accounting expenses and VAT recoveries of $0.5 million. The increase in employee expenses was primarily due to higher wages and benefits of $0.4 million, partially offset by lower recruitment costs of $0.1 million. The decrease in share-based compensation expense was primarily due to the timing of forfeitures of awards in connection with employee terminations.

Other Income (Expense)

Interest Income

Interest income includes interest received from banks on our cash balances. Our policy is to invest funds in a variety of capital preservation instruments, which may include all or a combination of cash and cash equivalents, short-term and long-term interest-bearing instruments, investment-grade securities, and direct or guaranteed obligations of the U.S. government.

Interest income was $2.1 million for the three months ended March 31, 2025 as compared to $2.9 million for the three months ended March 31, 2024, a decrease of $0.9 million, or 30.3%. The decrease was primarily due to lower yields received on our cash deposits and lower average cash balances.

Interest Expense

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 $12.2 million for the three months ended March 31, 2025 as compared to $12.5 million for the three months ended March 31, 2024, a decrease of $0.3 million, or 2.1%. The overall decrease was related to lower interest on our senior secured term loan facility of $0.6 million as a result of a lower effective interest rate, partially offset by higher accretion of our deferred royalty obligation with HCR of $0.3 million.

Other, net

Other, net consists primarily of the change in the fair value losses of the Deerfield warrant obligation; and cumulative catch-up adjustments related to our deferred royalty obligation.

Other, net for the three months ended March 31, 2025 and 2024 included the following:


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	Three Months Ended March 31,
(in thousands)	2025		2024		Change

Deerfield warrant obligation, change in fair value expense	—		$	(3,068)	$	3,068
Cumulative catch-up adjustment, deferred royalty obligation	12		263		(251)
Exchange differences loss	(90)		(37)		(53)
R&D tax credit gain	281		247		34
Total	$	203	$	(2,595)	$	2,798

Deerfield Warrant Obligation, Change in Fair Value Expense

Pursuant to an Exchange Agreement with Deerfield entered into on August 15, 2022, the Company issued warrants to Deerfield to purchase an aggregate of 4,412,840 common shares. The Deerfield warrant obligation has been recorded at its initial fair value at the time the agreement was entered into on August 15, 2022 and is remeasured to fair value at the end of each reporting period. The fair value of the warrant obligation as of March 31, 2025 and December 31, 2024 was $0 and therefore no change in fair value expense was recognized during the three months ended March 31, 2025. The expense of $3.1 million for the three months ended March 31, 2024 was primarily due to the increase in fair value of the underlying shares during the respective period.

Income Tax Expense

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 $0.2 million for both the three months ended March 31, 2025 and March 31, 2024.

Equity in Net Losses of Joint Venture


	Three Months Ended March 31,
(in thousands)	2025		2024		Change
Share of Overland ADCT BioPharma net loss	$	—	$	(687)	$	687

We recorded our proportionate share of Overland ADCT BioPharma’s net loss of $0.7 million for the three months ended March 31, 2024. We recorded our share of Overland ADCT Biopharma’s net loss up until the point at which our share of losses exceeded our interest in Overland ADCT BioPharma. Losses were not recognized in excess of our total investment, as we have not incurred legal or constructive obligations or committed to additional funding on behalf of the joint venture.

Liquidity and Capital Resources

As of March 31, 2025, we had cash and cash equivalents of $194.7 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.

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 our early-stage research pipeline and for clinical development and commercialization of ZYNLONTA and/or our product candidates. However, we may be unable to obtain such financing, licensing and collaboration arrangements on favorable terms, if at all, and if we are unable to do so we may need to prioritize our portfolio and reduce our investment in early stage research and development activities.

Sources of Liquidity and Capital Resources

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.


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Uses of Capital Resources

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 pipeline and our ADC platform. 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.

Cash Flows

The following table summarizes our cash flows for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
(in thousands)	2025		2024		Change
Net cash (used in) provided by:
Operating activities	$	(56,334)	$	(44,095)	$	(12,239)
Investing activities	(264)		(531)		267
Financing activities	271		356		(85)
Net change in cash and cash equivalents	$	(56,327)	$	(44,270)	$	(12,057)

Net Cash Used in Operating Activities

Net cash used in operating activities was $56.3 million for the three months ended March 31, 2025 as compared to $44.1 million for the three months ended March 31, 2024, an increase of $12.2 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 and the timing of other operating cash payments and receipts.

Net Cash Used in Investing Activities

Net cash used in investing activities was $0.3 million for the three months ended March 31, 2025 as compared to $0.5 million for the three months ended March 31, 2024, a decrease of $0.3 million. The decrease in net cash used in investing activities relates to timing of purchases of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $0.3 million for the three months ended March 31, 2025 as compared to $0.4 million for the three months ended March 31, 2024, a decrease of $0.1 million. The decrease primarily relates to the timing of share issuances under our employee stock purchase plan.

Off-Balance Sheet Arrangements

During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements.

Contractual Obligations and Commitments

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

Critical Accounting Estimates

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.


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Recently Issued and Adopted Accounting Pronouncements

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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are not required to provide the information required by this Item 3 as we are a smaller reporting company.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer, has concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes to internal control over financial reporting during the period covered by this report that would have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may be subject to various legal proceedings and claims that arise in the ordinary course of our business activities. The results of litigation and claims cannot be predicted with certainty. As of the date of this Quarterly Report, we do not believe that we are party to any claim or litigation, the outcome of which would, individually or in the aggregate, be reasonably expected to have a material adverse effect on our business.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

There were no sales of unregistered equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

There were no purchases of our equity securities by or on behalf of us or any affiliated purchaser during the period covered by this report.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable.


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Item 5. Other Information

Insider Trading Arrangements

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the period covered by this report.

Item 6. Exhibits

Exhibits

The exhibits listed below are filed with or incorporated by reference into this Quarterly Report.

Incorporation by Reference

Exhibit No.

Description

Form

File No.

Exhibit No.

Filing Date

3.1

Articles of Association of ADC Therapeutics SA

10-K

001-39071

3.1

March 27, 2025

31.1*

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Taxonomy Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded with the Inline XBRL document and contained in Exhibit 101)

* Filed herewith.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ADC Therapeutics SA

		/s/ Ameet Mallik
Date: May 14, 2025	By:	Ameet Mallik
		Chief Executive Officer
		(Principal Executive Officer)


		/s/ Jose Carmona
Date: May 14, 2025	By:	Jose Carmona
		Chief Financial Officer
		(Principal Financial Officer)


		/s/ Lisa Kallebo
Date: May 14, 2025	By:	Lisa Kallebo
		Corporate Controller and Chief Accounting Officer
		(Principal Accounting Officer)