Day One Biopharmaceuticals has agreed to acquire struggling cancer drug developer Mersana Therapeutics for $129 million upfront, gaining control of an experimental antibody-drug conjugate (ADC) that targets a rare and aggressive form of cancer. The deal, announced Thursday, offers Mersana stockholders $25 per share, representing a 180% premium to Wednesday's closing price, though the acquisition price remains 29% below where shares traded in January.
The transaction includes contingent value rights that could deliver an additional $30.25 per share if development milestones are achieved, potentially bringing the total deal value to $285 million. However, the full payout requires FDA approval and annual sales exceeding $300 million by 2037 for the lead asset.
Strategic Focus on Rare Cancer Treatment
Day One's primary interest lies in Mersana's B7-H4-targeting ADC emiltatug ledadotin (emi-le), which the acquiring company plans to develop for adenoid cystic carcinoma type 1 (ACC-1). This rare and aggressive tumor type represents what Day One describes as a "clear unmet need" with limited effective treatment options currently available.
"This acquisition will add a potential game-changing new medicine to the Day One portfolio and, if approved, will broaden our opportunities for patient impact and for continued growth and value creation," said Day One CEO Jeremy Bender.
The strategic pivot makes sense for Day One, which successfully secured accelerated approval last year for Ojemda, a RAF kinase inhibitor for pediatric brain cancer. However, the company has limited pipeline assets beyond Ojemda, which has been licensed ex-US to Ipsen, and the PTK7 inhibitor DAY301, acquired from MabCare for $55 million upfront in mid-2024.
Clinical Data and Development Challenges
Emiltatug ledadotin has shown mixed results across different cancer types. In triple-negative breast cancer, the drug demonstrated a 31% response rate at the American Society of Clinical Oncology meeting earlier this year, with higher response rates observed in patients who had undergone four or more lines of treatment.
For adenoid cystic carcinoma, preliminary data from Mersana's solid tumor trial showed four confirmed responses among nine patients with type 1 adenoid cystic carcinoma. Day One believes this early anti-tumor activity "may support a fast path to registration" given the lack of effective treatment options for this indication.
However, the B7-H4 target has faced challenges across the industry. Pfizer discontinued its B7-H4-targeting ADC felmetatug vedotin, and recent discontinuations by Genmab and Pfizer/AbbVie have raised questions about the target's viability. Mersana's own clinical experience with emiltatug ledadotin suggests the drug may be active only in the highest B7-H4 expressers, based on heavily curated solid tumor data that caused Mersana's shares to fall 17% when announced in May.
Technology Platform and Financial Considerations
The acquisition provides Day One with Mersana's Dolasynthen ADC technology platform, which the company describes as generating site-specific, homogeneous ADCs using a proprietary payload. The technology can match drug-to-antibody ratios between two and 18 to specific targets and has attracted interest from Johnson & Johnson, which paid $40 million upfront in a research collaboration that appears ongoing.
Day One will also gain Mersana's cash position of approximately $77 million as of mid-2025. The acquisition comes after Mersana slashed its workforce in May and focused entirely on its B7-H4 program following previous setbacks, including the 2023 discontinuation of anti-Napi2b ADC upifitamab rilsodotin.
For Day One, the deal addresses rising research costs, which reached $31 million in the third quarter, nearly matching the company's $40 million in revenue from drug sales and licensing agreements. Mersana spent $16 million on pipeline development in the second quarter, largely tied to emiltatug ledadotin advancement.
Deal Structure and Timeline
The Mersana board has unanimously approved the transaction, which is expected to close by the end of January 2026. Shareholders could receive an additional $4 per share if Day One initiates a pivotal trial in ACC-1 patients, with another $9 per share following FDA approval.
The deal represents a rescue for Mersana investors, who had seen the stock lose 75% of its value year-to-date before the announcement. The acquisition provides the only meaningful positive outcome for shareholders, particularly benefiting those who purchased shares in recent months anticipating a potential buyout.
