ADC Therapeutics announced a comprehensive financial restructuring that includes an $86.6 million private placement, amendments to its HealthCare Royalty agreement, and a refinancing of its senior secured loan. The company said the combined transactions are designed to strengthen its balance sheet, reduce leverage, increase strategic flexibility, and extend its expected cash runway into 2029.
ADC Therapeutics entered into securities purchase agreements with institutional investors including new investor Bain Capital Life Sciences and existing investors Redmile, TCGX, and Nantahala Capital.
The $86.6 million private investment in public equity financing includes 12.9 million common shares priced at $1.42 per share.
ADC Therapeutics is also selling pre-funded warrants to purchase 48.1 million common shares at $1.32 per warrant, reflecting the common share price less the CHF 0.08 exercise price.
Gross proceeds are expected to total approximately $86.6 million, assuming cash exercise of the pre-funded warrants.
The PIPE is expected to close on October 22, 2026, subject to customary closing conditions.
ADC Therapeutics plans to use the proceeds to support continued development of ZYNLONTA, including Phase 3 trials in diffuse large B-cell lymphoma and marginal zone lymphoma.
The funds will also support working capital, general corporate purposes, and balance sheet strengthening.
Separately, ADC Therapeutics amended its royalty agreement with entities managed by HealthCare Royalty Management.
HealthCare Royalty has provided $300 million of funding to ADC Therapeutics to date.
The amendment eliminates a $150 million payment that otherwise would have been triggered solely by a change of control.
The amended agreement also reduces the amount of third-party indebtedness ADC Therapeutics and its subsidiaries are permitted to incur to $50 million.
The amendment modifies approximately 9.8 million warrants previously issued to HealthCare Royalty, reducing their exercise price from $3.813 per share to $0.10 per share.
The changes also introduce beneficial ownership limitations and remove certain transfer restrictions that had applied through January 1, 2028.
The HealthCare Royalty amendment is conditioned on completion of the PIPE by October 31, 2026, along with effectiveness of the amended loan agreement.
ADC Therapeutics also amended its senior secured loan agreement with Blue Owl Opportunistic Master Fund I and participating lenders.
The company plans to prepay $70 million of term loan principal, along with related accrued interest, fees, and premiums.
Following the prepayment, the outstanding principal balance will be reduced to $50 million.
The remaining $50 million will be payable at maturity in August 2029 unless accelerated earlier.
The revised loan eliminates subsequent scheduled principal amortization and removes the minimum liquidity covenant.
It also establishes a minimum trailing four-quarter U.S. ZYNLONTA sales covenant of $65 million beginning with the quarter ending December 31, 2026.
Warrants covering 527,295 shares that were issued to lenders in 2022 will also be amended.
Their exercise price will decline from $8.30 per share to $1 per share, subject to effectiveness of the loan amendment.
ADC Therapeutics expects ZYNLONTA net product revenue of approximately $21 million for the third quarter ended September 30, 2026.
The company reported approximately $189.2 million of cash and cash equivalents as of September 30.
On a pro forma basis, after estimated net PIPE proceeds of approximately $76.3 million and the approximately $69.6 million loan prepayment including fees, ADC Therapeutics would have held approximately $196 million of cash and cash equivalents as of that date.
Jefferies, Guggenheim Securities, and Cantor are serving as placement agents for the PIPE.
Davis Polk & Wardwell and Homburger are serving as legal advisors to ADC Therapeutics.
KEY QUOTES:
“We are pleased to announce this robust set of improvements to our capital structure which reflect confidence in ZYNLONTA’s growth potential from both long-standing and new investors as well as from HCR and our lenders.”
“These efforts extend our expected cash runway and increase strategic optionality, as we approach much anticipated LOTIS-7 and MZL data abstracts in early November with presentations in December at the 68th American Society of Hematology Annual Meeting.”
Ameet Mallik, CEO of ADC Therapeutics
