ADC Therapeutics SA

ADC Therapeutics SA is a clinical-stage cancer medication discovery and development business situated in Switzerland. It creates ADCs (antibody-drug conjugates) for the treatment of solid and hematological malignancies. To specifically target and destroy cancer cells, it uses monoclonal antibodies specific to certain tumor antigens coupled to PBD-based warheads. Multiple PBD-based ADCs are now in clinical studies, ranging from first-in-human to pivotal Phase II trials, and the company also has several preclinical ADCs in development.

Key Developments

• Chris Martin, DPhil, resigned as Chief Executive Officer of ADC Therapeutics SA on May 9, 2022. Dr. Martin has joined the Company's Board of Directors as a non-executive member and Chair of the Science and Technology Committee. For the following three months, he will also work as an advisor to the Company to facilitate a smooth transition. Mr. Ameet Mallik has been named as the new Chief Executive Officer of ADC Therapeutics.
• ADC Therapeutics SA, announced on May 12, 2022, that the results of the pivotal Phase 2 clinical trial of camidanlumab tesirine (Cami) in patients with relapsed or refractory Hodgkin lymphoma have been accepted for an oral presentation at the European Hematology Association 2022 Hybrid Congress, which will be held virtually and in Vienna, Austria from June 9-12, 2022.
• ADCT stock is in a downtrend from the previous year July after making a high of USD 56.59 and since then has corrected almost 87.17%. The current price is below both short-term (50-day) SMA and long-term (200-day) SMA. With current consolidating in the range of USD 6.34 to USD 7.77. A break outside this range towards upside might bring some bullishness into the stock price.
  

Important financial highlights from Q1 FY22 Financial result

• For the quarter, product revenue (net) was USD 16.5 million, compared to nil for the same quarter in 2021. ZYNLONTA, which gained expedited clearance from the FDA on April 23, 2021, generated net revenues in the United States.
• As of March 31, 2022, cash and cash equivalents were USD 430.9 million, compared to USD 466.5 million as of December 31, 2021.
• For the quarter ended March 31, 2022, R&D costs were USD 49.0 million, compared to USD 39.2 million for the same quarter in 2021. Because of increased investment in initiatives to assess ZYNLONTA in early lines of therapy and the company’s broad portfolio, R&D spending rose for the quarter ended March 31, 2022, compared to the same period in 2021.
• For the quarter ended March 31, 2022, the company lost USD 16.7 million, or USD 0.22 per basic and diluted share. In the same quarter of 2021, the company had a net loss of USD 51.5 million, or USD 0.67 per basic and diluted share. The decrease in net loss for the quarter ended March 31, 2022, compared to the same period in 2021, was largely attributable to USD 30 million in licensing income from the MTPC deal, which was partially offset by higher R&D and S&M expenditures.

Stock Recommendation

ADCT's stock price has fallen 67.93% in the past six months and is currently leaning toward the lower end of its 52-week range of USD 6.18 to USD 32. 

Given the stock's considerable bearish price movement over the past six months, financial results, and technical analysis, we propose a "Watch" rating on the stock at its closing price of USD 7.26, as of May 26, 2022, with a further analysis when ADCT breaks the range of USD 6.34 to USD 7.77.

1-Year Technical Chart, as of May 26, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

* Closing price as of May 26, 2022.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Technical Indicators Defined: -

 Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.