Item 1.01. Entry into a Material Definitive Agreement.
Amendment to the Loan Agreement
On January 16, 2024, the Company and certain of its subsidiaries entered into the First Amendment (the "Amendment") to the loan agreement and guaranty, dated August 15, 2022, among the Company, its subsidiaries party thereto, the lenders party thereto and Blue Owl Opportunistic Master Fund I, L.P., as administrative agent and collateral agent (the "Credit Agreement"). The Amendment, among other things, (i) provides that, with respect to certain out-licensing arrangements for preclinical compounds and certain technologies that provide gross cash proceeds exceeding $75 million (as compared to $50 million prior to the Amendment), the Company will only be required to use 25% (as compared to 30% prior to the Amendment) of gross cash proceeds from such arrangements to repay the outstanding borrowings under the Credit Agreement and (ii) requires the Company achieve minimum levels of ZYNLONTA net sales in the United States (the "Revenue Covenant"), tested on a quarterly basis, with minimum amounts increasing from $45.5 million for the prior three quarter period ending June 30, 2024 to $67.7 million for the prior four quarter period ending June 30, 2026 to $90.0 million for the prior four quarter period ending June 30, 2028 to $94.2 million for the prior four quarter period ending June 30, 2029. The 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 certain potential reorganization transactions to facilitate a change in the Company's jurisdiction of incorporation. The Company 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. In addition, on January 16, 2024, the lenders to the Credit Agreement waived potential non-financial events of default that were alleged to have occurred thereunder. The foregoing description of the Amendment is not complete and is qualified in its entirety by the Amendment, which is filed as Exhibit 10.1 hereto and incorporated by reference into this description.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements, including statements regarding the Company's ability to comply with the net sales covenant contained in the Amendment and to enter into out-licensing arrangements. Forward-looking statements are based on our management's beliefs and assumptions and on information available to our management at the time such statements are made. Such statements are subject to known and unknown risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to: the Company's ability to obtain and maintain regulatory approval for ZYNLONTA; the Company's ability to successfully commercialize ZYNLONTA and future revenue; the availability and scope of coverage and reimbursement for ZYNLONTA; the substantial competition in the industry; the outcome and results of ongoing or planned clinical trials or pre-clinical research programs; the Company's ability to identify and execute out-licensing arrangements and the amount of monies received from the same; and those identified in the "Risk Factors" section of the Company's Annual Report on Form 20-F and in the Company's other periodic reports and filings with the Securities and Exchange Commission.
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ADC Therapeutics SA published this content on 19 January 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 January 2024 21:34:20 UTC.