ADC Therapeutics amends credit agreement with Blue Owl

By Wendy Van Sickle

Columbus, Ohio, Jan. 19 – ADC Therapeutics SA amended its Aug. 15, 2022 loan agreement with Blue Owl Opportunistic Master Fund I, LP as administrative on Wednesday, according to an 8-K filing with the Securities and Exchange Commission.

The amendment provides that, with respect to certain out-licensing arrangements for preclinical compounds and certain technologies that provide gross cash proceeds exceeding $75 million, versus $50 million prior to the amendment, the company will only be required to use 25%, compared to 30% before the amendment, of gross cash proceeds to repay outstanding borrowings under the credit agreement.

The amendment also requires the company to achieve minimum levels of Zynlonta net sales in the United States, tested on a quarterly basis, with minimum amounts increasing from $45.5 million for the three-quarter period ending June 30, 2024 to $67.7 million for the four-quarter period ending June 30, 2026 to $90 million for the four-quarter period ending June 30, 2028 to $94.2 million for the four-quarter period ending June 30, 2029.

This revenue covenant is subject to a customary cure right in favor of the company, which may be exercised by making certain prepayments. The cure right may be exercised up to three times during the term of the credit agreement but no more than two cure rights may be exercised in consecutive quarters.

The revenue covenant does not have to be tested for any quarter where the 30-day average market capitalization is at least $650 million. In addition, the lenders to the credit agreement consented to some potential reorganization transactions to facilitate a change in the company’s jurisdiction of incorporation.

ADC said it believes that the amendment provides additional flexibility to pursue out-licensing arrangements for preclinical compounds and technologies, while adding a Zynlonta net sales covenant that it expects to be able satisfy.

Also on Wednesday, the lenders waived unspecified potential non-financial events of default that were alleged to have occurred under the credit agreement.

Based in Lausanne, Switzerland, ADC is a commercial stage biotechnology company focused on cancer.

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