ADC Therapeutics has announced a series of major strategic transactions involving hundreds of millions of dollars allowing it to advance its lead candidate and pipeline drugs.
The Swiss company has entered into a new $175 million senior secured loan with certain funds of Owl Rock – a division of Blue Owl Capital, Inc. and funds managed by Oaktree Capital Management L.P. with an upfront tranche of $120 million received at the end of today (August 16).
The company has settled in full the $115 million aggregate principal amount of senior secured convertible notes held by Deerfield Management Company due May 2025 for $117.3 million in cash, including the contractual exit fee on principal repayment.
It also includes 2,390,297 common shares approximately equal to the value of the remaining interest due on the convertible debenture to the end of term. It also warrants to purchase an aggregate of 4,412,840 common shares at exercise prices of $24.70 and $28.07 per share.
ADC has entered into a share purchase agreement with certain funds of Owl Rock for an investment of $6.25 million or 733,568 common shares.
Ameet Mallik, chief executive officer of ADC Therapeutics, said: “We are pleased to enter into this agreement with Owl Rock and Oaktree, the proceeds of which will be used to pay the cash consideration in the exchange of the secured convertible credit notes held by Deerfield.
“This new debt facility has a term of seven years and enables us to continue maximizing the potential of Zylonta and advancing our pipeline of novel antibody drug conjugates for hematologic malignancies and solid tumors. The continued equity support of Deerfield and the additional equity support from Owl Rock is also very positive, and we are pleased to maintain our cash runway into early 2025 as this deal is approximately cash neutral during that timeframe.”
In April last year, the U.S. Food and Drug Administration (FDA) approved ADC’s Zylonta (loncastuximab tesirine-lpyl) for the treatment of adult patients with relapsed or refractory large B-cell lymphoma.
Pursuant to the loan and guaranty agreement, ADC Therapeutics completed an initial drawdown of $120 million on August 15, 2022. This amount was used by ADC to fund the cash consideration as part of the settlement of Deerfield’s senior secured convertible notes. Up to two additional tranches in the amount of $27.5 million each can be drawn by the company upon meeting certain conditions within 18 months.
Share capital increase
Owl Rock also agreed to purchase 733,568 common shares for $8.52 per share, which represents the 5-day volume-weighted average price as of Friday, August 12, 2022. The transaction is expected to close upon registration of the necessary share capital increase with the commercial register in Switzerland.
Sandip Agarwala, managing director at Owl Rock said: “This transaction displays our ability to integrate our life sciences sector expertise and tailored multi-security approach to help provide growth capital to companies like ADC Therapeutics. We are pleased to invest in ADC Therapeutics’ strong team, portfolio and track record of success in developing and commercializing life-saving cancer therapies including Zylonta.”