Daiichi Sankyo and Merck have entered into a landmark $22 billion collaboration agreement to jointly develop and commercialize three promising antibody-drug conjugates (ADCs) globally, the companies announced on October 19, 2023. The deal represents one of the largest oncology partnerships in recent years and significantly expands both companies' cancer treatment portfolios.
Under the terms of the agreement, Merck will pay Daiichi Sankyo $4 billion upfront, with an additional $1.5 billion in continuation payments over the next 24 months. The collaboration could reach a total value of $22 billion if all sales milestones are achieved.
The partnership focuses on three investigational DXd ADCs: patritumab deruxtecan (HER3-DXd), ifinatamab deruxtecan (I-DXd), and raludotatug deruxtecan (R-DXd). These potentially first-in-class therapies utilize Daiichi Sankyo's proprietary DXd technology to deliver cytotoxic payloads directly to cancer cells expressing specific surface antigens.
Clinical Development Status
Patritumab deruxtecan, targeting HER3, has already shown promising results in clinical trials. The U.S. Food and Drug Administration granted it Breakthrough Therapy Designation in December 2021 for EGFR-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC) in patients whose disease progressed after treatment with a third-generation tyrosine kinase inhibitor and platinum-based therapies.
Data from the HERTHENA-Lung01 Phase 2 trial, recently presented at the IASLC 2023 World Conference on Lung Cancer and published in the Journal of Clinical Oncology, supports a planned biologics license application submission by the end of March 2024.
Ifinatamab deruxtecan, which targets B7-H3, is currently in Phase 2 clinical trials for previously treated extensive-stage small cell lung cancer (SCLC) through the IDeate-01 study. Recent data from a Phase 1/2 trial in SCLC patients was presented at the IASLC 2023 World Conference on Lung Cancer.
The third candidate, raludotatug deruxtecan, targets CDH6 and is in Phase 1 clinical trials. Updated results in patients with advanced ovarian cancer will be presented at the upcoming European Society for Medical Oncology (ESMO) Congress 2023.
Strategic Significance
"The promising results from clinical trials of patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan continue to demonstrate the broad applicability of Daiichi Sankyo's DXd ADC technology across multiple targets," said Sunao Manabe, Representative Director, Executive Chairperson and CEO of Daiichi Sankyo.
Robert M. Davis, Chairman and CEO of Merck, emphasized the strategic importance of the collaboration: "The pioneering work by Daiichi Sankyo scientists has highlighted the far-reaching potential of ADCs to provide meaningful new options for patients with cancer. We look forward to forging this collaboration to deliver the next generation of precision cancer medicines."
Financial Structure and Flexibility
The financial structure of the deal includes specific allocations for each program. Merck will pay $1.5 billion upfront for ifinatamab deruxtecan, while payments for patritumab deruxtecan and raludotatug deruxtecan are structured as $750 million upon execution with additional $750 million payments due after 12 and 24 months, respectively.
Notably, Merck has opt-out provisions for patritumab deruxtecan and raludotatug deruxtecan, allowing flexibility if development challenges arise. For raludotatug deruxtecan, Merck will cover 75% of the first $2 billion in R&D expenses.
The companies will equally share expenses and profits worldwide, except in Japan, where Daiichi Sankyo maintains exclusive rights and Merck will receive royalties on sales. Daiichi Sankyo will generally book sales worldwide and remain solely responsible for manufacturing and supply.
ADC Technology Platform
All three candidates utilize Daiichi Sankyo's proprietary DXd ADC technology, which has already demonstrated success with ENHERTU, a HER2-directed ADC jointly developed with AstraZeneca. Each ADC consists of a monoclonal antibody attached to topoisomerase I inhibitor payloads (an exatecan derivative, DXd) via tetrapeptide-based cleavable linkers.
This technology allows for targeted delivery of cytotoxic agents directly to cancer cells expressing specific surface antigens, potentially improving efficacy while reducing systemic toxicity compared to conventional chemotherapy.
Market Impact
The collaboration is expected to have multi-billion dollar worldwide commercial revenue potential for each company approaching the mid-2030s. For Merck, the transaction will result in a pretax charge of $5.5 billion, or approximately $1.70 per share, in the fourth quarter of 2023.
Industry analysts view this partnership as a strategic move by Merck to strengthen its oncology portfolio beyond its flagship immunotherapy Keytruda, while Daiichi Sankyo gains access to Merck's global development and commercialization capabilities to accelerate the advancement of these promising ADCs.
The deal represents a significant expansion of the ADC landscape, which has seen increasing interest from major pharmaceutical companies due to the modality's ability to deliver potent cytotoxic agents directly to cancer cells while sparing healthy tissue.
