ADC Therapeutics Faces Competitive Oncology Market But Analyst Sees 100% Upside – Here’s Why
Stephens analyst has initiated coverage on ADC Therapeutics SA (NYSE:ADCT), a commercial-stage oncology-focused biotechnology company developing antibody-drug conjugates (ADCs) for patients with hematological malignancies and solid tumors.
The company's lead asset, Zynlonta (loncastuximab tesirine-Ipyl), is a CD19-directed ADC with a pyrrolobenzodiazepine (PBD) payload.
The drug received accelerated FDA approval in January 2021 for adult patients with relapsed/refractory (r/r) large B-cell lymphoma (DLBCL) after two or more lines of systemic therapy.
The analyst points out that Zynlonta has faced stiff competition, and while it reached an annualized revenue run rate of about $80 million at its peak in the first quarter of 2023, it has struggled in the market.
The analyst expects Zynlonta’s peak revenue in the third-line treatment setting to reach $110 million in the U.S. by 2032.
The analyst’s outlook depends on the expectation that Zynlonta will receive approval for use in second-line treatment for diffuse large B-cell lymphoma (DLBCL), based on positive results from the LOTIS-5 and LOTIS-7 clinical trials.
Preclinical data suggests that combining Zynlonta with rituximab, an anti-CD20 antibody, may improve tumor control and provide longer-lasting results. The company is looking to expand Zynlonta’s use to treat second-line DLBCL and indolent lymphomas, either alone or in combination with other treatments.
Although the analyst supports Zynlonta's approval for second-line DLBCL, they are cautious about its revenue potential in this space.
Stephens has initiated with an Overweight rating, with a price target of $6.
The second-line DLBCL market is competitive with many treatment options available. However, the analyst sees value in Zynlonta due to its promising efficacy, with an 80% overall response rate and a 50% complete response rate. They estimate that Zynlonta could contribute about $172 million in revenue from second-line DLBCL by 2032.
In addition, ADCT has a broad pipeline of antibody-drug conjugates (ADCs) targeting other solid tumor indications, giving the company multiple opportunities for growth outside of Zynlonta.
Price Action: ADCT stock is up 0.68% at $2.95 at the last check on Friday.
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