Hiroyuki Okuzawa stepped into the CEO role at Daiichi Sankyo two months ago with a remarkable inheritance: a company whose antibody-drug conjugate (ADC) platform has secured three of the pharmaceutical industry's largest licensing deals over the past half-decade. Now, the veteran executive faces the complex challenge of determining what comes next for the Japanese drugmaker's oncology ambitions.
At the American Society of Clinical Oncology's annual meeting in Chicago, Enhertu once again captured attention by demonstrating potential as part of standard frontline therapy for advanced breast cancer. This marks the third consecutive ASCO meeting where the ADC has shown promising results, following similar presentations in 2022 and 2024.
Ambitious Growth Targets Drive Strategic Vision
Daiichi Sankyo's confidence in its ADC portfolio extends far beyond Enhertu. The company is developing five ADCs in partnership with AstraZeneca and Merck & Co., with plans to secure approvals across more than 30 tumor types by 2030. This expansion would enable treatment of nearly 400,000 cancer patients annually.
"We'd like to become one of the most important players in oncology," Okuzawa stated, noting aspirations to crack the top 10 companies by cancer drug sales. "Our senior leaders are now talking about not only top 10, but maybe top 5. We're very much confident in our ADCs."
The foundation of this confidence rests on Daiichi Sankyo's proprietary DXd technology, developed and refined over 15 years. This platform serves as the backbone for Enhertu, the recently approved breast cancer medicine Datroway, and three experimental ADCs currently in development.
Lucrative Partnerships Validate Technology Platform
The pharmaceutical industry's validation of Daiichi Sankyo's ADC approach is reflected in the scale of its partnerships. AstraZeneca provided $1.35 billion in 2019 for rights to Enhertu, followed by another $1 billion upfront payment in 2020 for what became Datroway. Merck subsequently acquired rights to three experimental ADCs for $5.5 billion in payments spread over two years in 2023.
Combined, these partnerships promise up to $27 billion in conditional fees upon reaching regulatory and sales milestones, though the majority of these payments remain unrealized.
Next-Generation Pipeline Takes Shape
While current growth will be driven by the five existing ADC programs over the coming five years, Okuzawa is already identifying potential successors. Two candidates stand out as particularly promising: DS-3939, which combines an antibody licensed from Glycotope with the DXd backbone, and DS-9606, which utilizes new payload technology that Daiichi Sankyo hopes will generate additional medicines.
"There are a lot of opportunities in the ADC space. On the other hand, [our scientists] are also pursuing discovery research outside of ADCs," Okuzawa explained. "We have rich ideas for new modalities."
Development Challenges and Market Pressures
Despite the overall success, Daiichi Sankyo faces execution challenges with its existing partnerships. While Enhertu generated approximately $3.7 billion in sales last year and remains on track to meet expectations, other programs have encountered obstacles.
AstraZeneca and Daiichi Sankyo narrowed their development plans for Datroway in lung cancer following mixed study results. Additionally, Merck and Daiichi Sankyo withdrew an approval application for patritumab deruxtecan in lung cancer after the drug failed to extend survival in a study presented at ASCO.
"Further biomarker analyses of the [study] are being conducted to determine if certain patient populations might differentially benefit as we explore the path forward for patritumab deruxtecan in lung cancer," a Daiichi Sankyo spokesperson confirmed. "However, we remain confident in the broad clinical development program of patritumab deruxtecan, which includes multiple clinical trials across 15 types of cancer."
External Pressures and Manufacturing Strategy
Development setbacks may partially explain Daiichi Sankyo's stock performance, with shares falling by one-quarter over the past year in U.S. over-the-counter trading to approximately $26 per share. This represents roughly the same valuation as the start of the current five-year planning cycle in 2021.
Okuzawa must also navigate potential trade policy challenges. The Trump administration is investigating whether U.S. pharmaceutical imports pose national security risks, with expected tariffs on drugs shipped from abroad.
"I'm concerned that the tariffs could disrupt the global supply chain and may cause drug shortages for U.S. patients," Okuzawa said. "We would like to avoid such a situation."
To address supply chain concerns, Daiichi Sankyo plans to invest $350 million in expanding an Ohio manufacturing plant for ADC production, with additional investments under consideration to accelerate manufacturing capacity.
