ADC Therapeutics Announces $175 million Senior Secured Term Loan from Owl Rock and Oaktree and Settlement of Existing Senior Secured Convertible Notes

By: ADC Therapeutics SA via Business Wire

August 15, 2022 at 16:30 PM EDT

Upfront $120 million tranche used to finance the full settlement of existing convertible notes held by Deerfield Management Company

Deerfield Management Company to take equity as part of the settlement of existing convertible notes

Owl Rock to make $6.25 million equity investment

Seven-year term loan matures in 2029 and Company maintains cash runway into early 2025

ADC Therapeutics SA (NYSE: ADCT) today announced that it has completed a series of strategic transactions in which it:

Entered into a new $175 million senior secured term loan with certain funds of Owl Rock, a division of Blue Owl Capital, Inc. (“Owl Rock”), and funds managed by Oaktree Capital Management, L.P. (“Oaktree”) with an upfront tranche of $120 million received upon closing today;
Settled in full the $115 million aggregate principal amount of senior secured convertible notes held by Deerfield Management Company (“Deerfield”) due May 2025 for (i) $117.3 million in cash including the contractual exit fee on principal repayment, (ii) 2,390,297 common shares approximately equal to the value of the remaining interest due on the convertible debenture to the end of term, and (iii) warrants to purchase an aggregate of 4,412,840 common shares at exercise prices of $24.70 and $28.07 per share;
Entered into a share purchase agreement with certain funds of Owl Rock, a division of Blue Owl Capital Inc., for an investment of $6.25 million for 733,568 common shares.

“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,” said Ameet Mallik, Chief Executive Officer of ADC Therapeutics. “This new debt facility has a term of seven years and enables us to continue maximizing the potential of ZYNLONTA 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.”

Pursuant to the loan and guaranty agreement, the Company completed an initial drawdown of $120 million on August 15, 2022. This amount was used by the Company 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. The term loan matures on August 15, 2029 and accrues interest at an annual rate of secured overall financing rate (SOFR) plus 7.50% or a base rate plus 6.50% for the first five years of the term loans and at an annual rate of SOFR plus 9.25% or a base rate plus 8.25% thereafter. In addition, the Company issued to the lenders under the term loan warrants to purchase an aggregate number of common shares equal to $4.375 million divided by the volume weighted-average price of the common shares for the ten trading days prior to their issuance and the ten trading days on and after their issuance, which warrants are exercisable for ten years from their issuance.

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 with Owl Rock commented, “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 ZYNLONTA.”

"We are excited to partner with ADC Therapeutics as it continues to develop a pipeline of novel ADCs for hematologic malignancies and solid tumors,” said Aman Kumar, Co-Portfolio Manager of Life Sciences Lending at Oaktree. “This is an important time in the Company’s development with its first product approval validating its first-in-class ADC platform. This commitment of capital represents our belief in the long-term potential of ADC Therapeutics and we look forward to working with the Company’s leadership team during this next phase of growth."

Elise Wang, Partner, Head of Private Equity Capital Markets at Deerfield said: “We have been a supporter of ADC Therapeutics dating back to its successful IPO in May 2020 as both an equity investor in the IPO and also providing the convertible debenture that is being retired today. We are very pleased to take a significant portion of the repayment consideration in ADCT stock and look forward to continuing to support the company going forward.”

The transactions described herein are further described in a Report on Form 6-K filed today with the Securities and Exchange Commission. The descriptions herein are qualified in their entirety by reference to the further descriptions included in the Report on Form 6-K.

This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

Morgan Stanley & Co. LLC acted as the sole placement agent to ADC Therapeutics on this transaction.

About ADC Therapeutics

ADC Therapeutics (NYSE: ADCT) is a commercial-stage biotechnology company improving the lives of those affected by cancer with its next-generation, targeted antibody drug conjugates (ADCs). The Company is advancing its proprietary PBD-based ADC technology to transform the treatment paradigm for patients with hematologic malignancies and solid tumors.

ADC Therapeutics’ CD19-directed ADC ZYNLONTA (loncastuximab tesirine-lpyl) is approved by the FDA for the treatment of relapsed or refractory diffuse large b-cell lymphoma after two or more lines of systemic therapy. ZYNLONTA is also in development in combination with other agents. Cami (camidanlumab tesirine) is being evaluated in a pivotal Phase 2 trial for relapsed or refractory Hodgkin lymphoma and in a Phase 1b clinical trial for various advanced solid tumors. In addition to ZYNLONTA and Cami, ADC Therapeutics has multiple ADCs in ongoing clinical and preclinical development.

ADC Therapeutics is based in Lausanne (Biopôle), Switzerland and has operations in London, the San Francisco Bay Area and New Jersey. For more information, please visit https://adctherapeutics.com/ and follow the Company on Twitter and LinkedIn.

ZYNLONTA® is a registered trademark of ADC Therapeutics SA.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, cash runway, business and commercial strategy, market opportunities, products and product candidates, research pipeline, ongoing and planned preclinical studies and clinical trials, regulatory submissions and approvals, projected revenues and expenses and the timing of revenues and expenses, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including those described in our filings with the U.S. Securities and Exchange Commission. No assurance can be given that such future results will be achieved. Such forward-looking statements contained in this document speak only as of the date of this press release. We expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this press release to reflect any change in our expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law. No representations or warranties (expressed or implied) are made about the accuracy of any such forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220815005541/en/

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Eugenia Litz

ADC Therapeutics

Eugenia.Litz@adctherapeutics.com

+44 7879 627205

Amanda Hamilton

ADC Therapeutics

amanda.hamilton@adctherapeutics.com

+1 917-288-7023

Media

Mary Ann Ondish

ADC Therapeutics

maryann.ondish@adctherapeutics.com

+1 914-552-4625

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ADC Therapeutics Announces $175 million Senior Secured Term Loan from Owl Rock and Oaktree and Settlement of Existing Senior Secured Convertible Notes

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