ADC Therapeutics sells capped royalty interest on ZYNLONTA and Cami for $225 million upon closing with an additional $100 million in potential near-term milestone payments
Royalty of 7% terminates upon payment of 2.25x to 2.50x the purchase price
Proceeds to be used for continued development and commercialization of ZYNLONTA and Cami
ADC Therapeutics SA (NYSE:ADCT), a commercial-stage biotechnology company leading the development of novel antibody drug conjugates (ADCs) to treat hematological malignancies and solid tumors, today announced it had entered into a royalty purchase agreement with HealthCare Royalty Partners (HealthCare Royalty).
Under the terms of the $325 million financing agreement, ADC Therapeutics will receive $225 million upon closing, and is eligible to receive an additional $75 million upon the first commercial sale of ZYNLONTA (loncastuximab tesirine) in Europe and an additional $25 million upon the achievement of a near-term commercial milestone for ZYNLONTA. In exchange, HealthCare Royalty will receive a 7% royalty on worldwide net sales and licensing revenue from ZYNLONTA, with the exception of greater China, Singapore and South Korea, and a 7% royalty on worldwide net sales and licensing revenue from Cami (camidanlumab tesirine) (subject to limited carve-outs). Based on performance tests in 2026 and 2027, these royalty rates are subject to potential upward adjustment, up to a maximum of 10%. The total royalty payable by ADCT to HealthCare Royalty is capped in the range of 2.25x to 2.50x of the amount paid to ADCT, dependent upon the amount of royalties paid by 2029. Once the cap is hit, the agreement terminates. Upon closing of this transaction, and together with the Company’s current cash balance and anticipated business plan, ADC Therapeutics will have a substantial multi-year working capital runway.
“This transaction reflects the significant value of ZYNLONTA and Cami. We are delighted to partner with HealthCare Royalty, a leading healthcare investment firm, to continue the development and commercialization of ZYNLONTA in combination with other drugs, in earlier lines of therapy and in new histologies, as well as to continue our development and commercialization plans for Cami,” said Chris Martin, Chief Executive Officer of ADC Therapeutics. “With this transaction, we are well-positioned to continue executing on our plans and improving the lives of patients.”
“We are pleased to partner with ADC Therapeutics to reach their vision of developing and commercializing potent and targeted ADCs for patients with hematological malignancies and solid tumors,” said Clarke Futch, Chairman and Chief Executive Officer of HealthCare Royalty. “Our investment reflects our belief in both ZYNLONTA and Cami to deliver value, and underscores our mission to facilitate innovation by high growth biopharmaceutical companies globally.”
The agreement includes customary provisions for a transaction of this nature, a repayment provision at the Company's option, and change of control provisions. The Company expects to close the transaction in early September. The Company has concurrently filed a Form 6-K which includes further details.
Morgan Stanley & Co. LLC acted as Sole Structuring Agent and Ropes & Gray LLP and Davis Polk LLP acted as legal advisors to ADC Therapeutics on the transaction. Gibson Dunn LLP acted as legal advisors to HealthCare Royalty.