ADC Therapeutics Dips Despite Stellar Cancer Trial Results
Shares fall in a 'sell the news' reaction as investors grapple with positive new data seemingly overshadowed by outdated reports from a discontinued study.
ADC Therapeutics SA (NYSE: ADCT) shares fell Wednesday in a perplexing move that defied the release of highly positive clinical trial data for its Zynlonta cancer therapy, leaving investors to sort through the noise of conflicting information.
The Swiss biotechnology firm saw its stock drop by more than 7% to an intraday low of $4.23 after it announced impressive updated results from its LOTIS-7 trial. The decline follows a strong rally on Tuesday, where shares surged 8.5% to close at $4.60 in anticipation of the news.
Early Wednesday, the company reported that its combination therapy for diffuse large B-cell lymphoma (DLBCL), a type of aggressive non-Hodgkin lymphoma, showed a 98.2% overall response rate (ORR) and an 83.6% complete response (CR) rate in 55 evaluable patients. The results, from a study combining its flagship drug Zynlonta with other treatments, represent a significant improvement over previously reported figures and signal a promising path forward for patients with relapsed or refractory forms of the disease.
Despite the robust clinical data, the market’s reaction was decidedly negative. The sell-off appears to be fueled by confusion stemming from news headlines recirculating information about a separate, unrelated trial that was discontinued over a year ago. Several reports highlighted patient deaths that occurred in the LOTIS-9 trial, which ADC Therapeutics halted in July 2023 due to safety concerns.
That news, while significant at the time, is irrelevant to the positive data presented today from the ongoing LOTIS-7 study, creating a classic case of mistaken identity that may have spooked investors acting on headlines without deeper analysis.
The data presented Wednesday morning detailed the efficacy of Zynlonta combined with glofitamab in heavily pre-treated lymphoma patients. According to the company's official announcement, the combination therapy also demonstrated a durable response, with the median progression-free survival—a key measure of how long a patient lives without the disease worsening—not yet reached after a median follow-up of 28 months.
For ADC Therapeutics, a company focused on developing antibody-drug conjugates (ADCs), the positive results are critical. Zynlonta is its lead commercial product, and expanding its application into earlier lines of therapy and in combination with other drugs is central to its growth strategy. The company's market capitalization stands at approximately $525 million.
Wall Street analysts have maintained a generally positive outlook on the stock, with a consensus price target of $8.00, suggesting significant upside from its current trading levels. The six analysts covering the stock offer a collective 'Strong Buy' rating, likely based on the long-term potential of Zynlonta and the company's ADC pipeline.
The divergence between Wednesday's promising clinical news and the negative stock performance highlights the inherent volatility and headline risk in the biotechnology sector. Investors will now be watching to see if the market digests the nuances of the situation and refocuses on the strong LOTIS-7 results or remains skittish due to the lingering shadow of the discontinued LOTIS-9 trial. The company will likely need to intensify its communication efforts to ensure the market properly distinguishes between its successful ongoing programs and historical setbacks.