ABCs of ADCs: A Guide to Evaluating the Next Generation

Overview:

• Antibody drug conjugates (ADCs) combine targeted therapy and chemotherapy to deliver therapeutic payloads directly to diseased cells and limit systemic exposure to toxic drugs.
• The 13 approved ADCs have been transformative, achieving US$11.5 billion in 2024 sales.
• The market is focused on target, carrier, payload and conjugation to assess the best path to success.
• We sought the opinions of approximately 40 key opinion leaders (KOLs) to provide a roadmap within.

The TD Cowen Insight

ADCs have transformed cancer treatment, with 13 approved therapies amounting to a US$11.5 billion market in 2024 that we expect to grow to US$31 billion by 2030. Our extensive KOL work suggests the next generation of ADCs should add meaningfully as multiple levers of differentiation could separate the likely winners. Of top emerging interest is target selection, alternative payloads and bispecific formats.

Our Thesis

Antibody drug conjugates (ADCs) are an exciting, innovative class of cancer treatments that combine targeted therapy (i.e. monoclonal antibodies) and chemotherapy to deliver therapeutic payloads directly to diseased cells, acting as a “silver bullet” to limit systemic exposure to toxic drugs. ADCs represent a very large market, encompassing US$11.5 billion of sales in 2024, dominated by breast cancer (US$7 billion; n=4 approved), lymphoma (US$2.4 billion, n=4 approved) and urothelial carcinoma (US$1.6 billion, n=1 approved). Consensus estimates the ADC market will grow to US$31 billion by 2030, despite drawbacks of toxicity and resistance.

On the back of this sturdy validation, there are currently over 130 next-gen ADCs in development at various stages across 13 indications (40% in multiple tumor types, approximately 14% in lymphoma, approximately 10% in lung, and approximately 8% in breast cancer), with several potentially affirming catalysts upcoming. The market is focusing on new questions regarding selection of target, payload and conjugation technology, as well as development strategy (including indication and combination approaches). Our team of eight analysts consulted with nearly 40 experts to evaluate the best path to success, as this newer class should add substantially to the already robust ADC market.

The three main components of an ADC are antibody/carrier, linker/conjugation and payload; all of which offer an opportunity for differentiation. As outlined in our 130-page report, the most exciting novel developments are in several areas, including targeted antibodies/carriers, where novel targets including CDH17, HER3, TROP2 and B7-H4 are the ones to watch. Topo inhibiting payloads offer the best safety, but oligonucleotides or immunostimulatory agents are the most interesting to KOLs. Bispecific and biparaptopic ADCs are rising stars, too. KOLs largely believe the next wave of approvals will target oncology indications outside of breast, bladder, lung and lymphoma (e.g. prostate, endometrial), though lung and breast cancer were also highly cited.

Novel linkers and conjugation strategies are less important per KOLs as there are several validated and licensable linker solutions, but within we highlight several avenues upon which this component can nevertheless be improved.

Physicians note that careful payload selection is critical for designing the ideal ADC as this could determine the treatment's therapeutic window. The vast majority (88%) of physicians in our survey believed that topoisomerase inhibitors led to the best therapeutic window, while our KOLs emphasized the impressive data demonstrated by the approved topo1i ADCs to date. Due to this, the KOLs noted that these payloads are attractive from a development perspective as there is clinical validation and the manufacturing has been established, but some remained cautious about the lack of differentiation in the pipeline. Most late-stage developmental therapies can be categorized as either topo1 inhibitors, microtubules inhibitors or DNA damaging agents. This leads to a significant opportunity for companies that are developing novel payloads either within these classes or separate from them.

Several companies are developing novel topo1 ADCs to potentially mitigate some of the risks associated with the currently approved topo1 ADCs, including the lung toxicity or resistance. KOLs believe that novel topo inhibitors could prove most useful with new targets or indications or with a biparatopic carrier antibody, but physicians are selective about when they would use new topo inhibitors. Beyond topo inhibitors, several companies are developing nontopo1 cytotoxic payload-based ADCs. While these therapies have demonstrated promise in achieving superior results compared to standard of care, there is a need to carefully tune toxicity. It is possible to develop such ADCs, though this may require additional dose selection work to ensure the dose is within the narrow therapeutic window so that a benefit can be achieved without reaching high toxicity.

KOLs noted that there is a need for non-topo1 payloads given the resistance that is arising, and this could include the non-topo1 cytotoxic ADCs or potentially a new payload class such as immunostimulatory agents or oligonucleotides. In our survey, most physicians (52%) were most excited about non-chemotherapy-based mechanisms and indicated that stimulator of interferon genes (STING) agonists or toll-like receptors (TLRs) demonstrated promise.

Additionally, KOLs noted that protein degraders could be used to ensure a more targeted approach with less off-tumor toxicity. Finally, physicians believed that oligonucleotides offered an underappreciated opportunity as these ADC-like molecules could have potential in both oncology and non-oncology indications.

Overall, KOLs considered linkers of lesser importance in design considerations relative to the target and payload, but they remain central to controlling payload release kinetics and, in turn, safety and efficacy. Furthermore, 90% of surveyed KOLs believe that precise control of payload release kinetics is the most critical characteristic of linker technology in a best-in-class ADC. Experts noted that most linkers would work and that in-licensing an established linker is a suitable path for developers.

Protease-cleavable linkers have had the greatest clinical success to date, and KOLs remain enthusiastic about them going forward. Successful next-generation protease linkers will go beyond valine-citrulline and feature novel peptides recognized by more tissue- or cell-type-specific proteases, helping overcome the non-specific cleavage observed with the most frequently used valine-citrulline-based linkers. Additionally, the most promising linkers will more readily incorporate hydrophilic moieties to prevent aggregation and promote more favorable ADC pharmacokinetics.

Traditional conjugation approaches (e.g., cysteine conjugation) still have utility, as site-specific conjugation can add unnecessary complexity and cost. These legacy manufacturing methods are simple, inexpensive, and well established.

However, the majority (76%) of KOLs prefer site-specific conjugation methods for the next generation of ADCs, with a slight preference for enzymatic-based methods (40%) over genetic engineering-based methods (36%).

Site-specific conjugation offers manufacturing benefits and results in optimal drug/product properties. Among the many approaches to achieving site-specific conjugation, KOLs did not express a strong preference for one over another.

While the goal of site-specific conjugation is to attain a homogeneous drug-to-antibody ratio (DAR), most experts noted that there is no one-size-fits-all DAR. Each ADC must tune the DAR to balance potency, PK, hydrophobicity, and antigen density. Furthermore, there is no “free lunch” when it comes to DAR and toxicity: lowering the DAR may reduce payload exposure but can shift toxicity from being payload-driven to carrier/target-driven.

Finally, on clinical implications, the majority of surveyed KOLs (76%) believe ADC combinations with systemic immuno-oncology therapies will play the most central role in treatment over the next five years. Mechanistically, monomethyl auristatin E (MMAE) payloads can induce immunogenic cell death and modulation of the tumor micro-environment (TME), creating a plausible synergy with checkpoint blockade; by contrast, the evidence for topo1i / PD-(L)1 synergy is less robust.

In addition to checkpoint inhibitors, a range of bispecific T-cell engagers (TCEs) and novel immunomodulators is being studied in combination with ADCs to explore whether immune activation can be amplified.

There is also growing appetite among surveyed KOLs for multiple payload or multi-ADC strategies, but KOLs remain split on an optimal path forward – with 32% favoring dual-payload ADCs, 28% favoring ADC+ADC combos, and 28% supporting sequential ADC use. A minority of KOLs (12%) did not believe two ADCs payload for a single patient would be clinically relevant.

ADC+ADC combinations aim to co-target heterogeneous tumors or distinct resistance mechanisms via two payloads.

These combinations may enhance efficacy and could therefore be positioned for accelerated evaluation in the frontline setting if toxicities are not additive or overlapping.

Dual-payload ADCs extend this concept into a single construct, delivering two distinct cytotoxic mechanisms through a single antibody. This remains an intriguing, albeit less explored, approach for KOLs, who note preclinical data demonstrate potential advantages of releasing two payloads in the lysosome versus treating with those two payloads separately in an ADC+ADC combination. However, some KOLs still favor ADC+ADC combinations for their dosing flexibility, as each agent's schedule and intensity can be independently adjusted. In contrast, dual-payload ADCs must optimize the DAR and dosing for two payloads within one construct.

ADC Opportunity For Bioproduction/Life Science Tools

The biologic production market represents arguably the most attractive segment of the Life Science Tools industry, given its growth, margins and oligopolistic nature. ADCs are an important contributor today and are expected to be one of if not the most significant demand driver over the next 3+ years. In our Tools' team recent Ahead of the Curve, their survey (sample size of 20) of manufacturing and process development executives across Biopharma original equipment manufacturers (OEMs) and contract development and manufacturing organization (CDMOs) supported this view: namely per production executives, ADCs were expected to be the most significant demand driver (followed by biosimilars and cell therapies) among a host of different modalities, while for Process Development executives, ADCs were important but ranked behind four other modalities.

What Is Proprietary?

We have gathered substantial feedback from KOLs and industry leaders through our proprietary consulting calls, survey work, and our annual Health Care/Therapeutics conferences. This report is informed by calls with 14 experts, including 10 industry experts (i.e. strategic advisors and research consultants) and 4 leading academics spanning medical oncology and medicinal chemistry. In addition, we surveyed 25 leading experts in ADC development across academia, industry, and the clinic. By synthesizing insights from these resources, we address key activities and evaluation metrics that have important implications for product approval success.

Financial And Industry Model Implications

The ADC approach is clinically validated, with 13 ADCs approved in the US across multiple cancer types (e.g., breast, lymphoma, urothelial, ovarian, and cervical).

The market is projected to approach US$31 billion by 2030, based solely on currently approved ADCs. However, we anticipate further growth as novel ADCs introduce new targets, expand into additional indications, and move into earlier lines of treatment – suggesting that the market potential could be even more significant.