Multibillion dollar deal for antibody-drug conjugates

The new wave of cancer treatments

Late October 19, the Japanese pharmaceutical company Daiichi Sankyo and US based Merck, both holdings in Arctic Aurora LifeScience, announced a licensing and co-development agreement for three of Daiichi’s drug candidates. The transactional details reveal one of the most value-rich collaboration agreements in the industry’s history. Daiichi will receive a USD 4bn upfront cash payment from Merck and potentially an additional USD 1.5 billion in the next 12-24 months pending development progression of two the drugs. In addition, each drug comes with USD 5.5bn commercial milestones or potentially USD 16.5 billion in aggregate. Except for Merck taking a lion share of initial R&D costs, the companies will then split global expenses and profits equally between them apart from Japan where Daiichi retains all rights.

Three drug candidates for treating cancer

For the first of the drug candidates, patritumab deruxtecan, clinical Phase 2 data was presented last month for a specific subset of patients with lung cancer and the companies now plan to submit the data for accelerates regulatory drug approval by the end of the first quarter next year. The second drug, ifinataman deruxtecan, is currently in Phase 2 trials in an additional type of lung cancer, and the third, raludotatug deruxtecan, recently moved into a Phase 1 trial in ovarian cancer patients with initial results to be showcased at a major oncology conference in Madrid the coming week.

The ADC platform: Antibodies are target seeking the cancer cell..

Behind the exotic candidate drug names lies a technology that have drastically changed the outcome of many cancer treatments as all of them are examples of so called antibody-drug conjugates or ADCs. Antibodies are proteins programmed by our immune system to attach to foreign material such as viruses or bacteria. When they bind to intruders, this alerts the immune system to attack those particles at which antibodies have bound to. During the 80ies and 90ies, synthetic antibodies emerged as therapeutic drugs. By programming the antibodies to attach to for example cancer cell, a new effective and specific drug class was born.

..loaded with chemotherapy enables more efficient, selective treatment

Lately further development of antibody therapies in the cancer field has led to the emergence of the ADC technology. Here, to the target-seeking antibody, drug developers have attached chemotherapy agents that are released into cancer cell once the antibodies attach. This way, oncologists can circumvent the issues with having chemotherapy circulating throughout the body with many side effects while at the same time increasing the efficacy, sometimes to a jaw-dropping extent.

Such is the case with the drug Enhertu, part of another large deal for Daiichi Sankyo as AstraZenece in-licensed the drug in setup not to dissimilar to the Merck agreement in 2019. Following impressive clinical data in breast cancer, Enhertu was approved not long after the AstraZeneca deal was struck. In 2022 the drug reached commercial blockbuster status. The agreement with AstraZeneca has since been amended with further drug candidates that are now in late-stage development.

ADC as important parts in future cancer treatment generates large USD dollar deals

In March 2023, Pfizer agreed to acquire the US-based ADC specialists Seagen for USD 43 billion. Seagen has three ADC drug on the market for Hodgkin’s lymphoma, bladder and urinary tract cancer, and cervical cancer respectively. (In fact Merck tried to buy Seagen before Pfizer did but failed, the Daiichi deal now partly compensating for their ambition within ADC:s) Upon the announcement of the agreement, Pfizer forecasted 2030 sales of their new ADC business to reach over USD 10 billion from today’s roughly USD 3 billion in Seagen revenue. This both underpins the commercial value of this new drug class, but also that the widening use of these drugs are adding considerable patient benefit compares to previous treatments.

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