Kelun-Biotech Secures $37.5M Upfront Payment from Merck for Innovative Bispecific ADC SKB571

Sichuan Kelun Pharmaceutical Co., Ltd. (hereinafter referred to as "the Company" or "Kelun") announced on August 20, 2024, that the progress of the cooperation projects between its holding subsidiary, Sichuan Kelun-Biotech Biopharmaceutical Co., LTD (hereinafter referred to as "Kelun-Biotech"), and MERCK SHARP & DOHME LLC. (together with its affiliates, hereinafter collectively referred to as "MSD") is as follows:

1. Progress of the SKB264/MK2870 Project (currently referred to as the “Sac-TMT” Project)In May 2022, Kelun-Biotech granted MSD an exclusive license for the development, use, manufacture, and commercialization of SKB264 (currently referred to as “Sac-TMT”) outside of Greater China. For more details, please refer to the announcement titled "Disclosure of the Paid Licensing of Project A from Kelun-Biotech to MSD for Commercial Development Outside of China" (Announcement No.: 2022-080).

As of June 30, 2024, MSD has initiated ten global Phase 3 clinical trials of Sac-TMT as a single agent or in combination with pembrolizumab or other drugs for various indications:

1. Triple-Negative Breast Cancer (TNBC): Sac-TMT in combination with pembrolizumab versus treatment of physician's choice (TPC) for TNBC patients who did not achieve pathological complete response (pCR) after prior neoadjuvant therapy and surgery;

2. Hormone Receptor-Positive/Human Epidermal Growth Factor Receptor 2-Negative Breast Cancer (HR+/HER2-BC): Sac-TMT as a single agent and in combination with pembrolizumab compared to TPC for the treatment of unresectable locally advanced or metastatic HR+/HER2-BC subjects (after one or more endocrine therapies);

3. Non-Small Cell Lung Cancer (NSCLC): Sac-TMT in combination with pembrolizumab versus pembrolizumab for the treatment of adult subjects with resectable NSCLC who did not achieve pCR after receiving neoadjuvant pembrolizumab combined with platinum-based doublet chemotherapy post-surgery;

4. Non-Small Cell Lung Cancer (NSCLC): Sac-TMT in combination with pembrolizumab versus pembrolizumab monotherapy for first-line treatment of metastatic NSCLC subjects with PD-L1 greater than or equal to 50%;

5. Non-Small Cell Lung Cancer (NSCLC): Sac-TMT monotherapy compared with standard chemotherapy for the treatment of advanced or metastatic NSCLC with epidermal growth factor receptor (EGFR) mutations or other genomic mutations that have been previously treated (after having received 1 or 2 prior EGFR-tyrosine kinase inhibitor (TKI) treatments, and after disease progression during or after EGFR-TKI treatment, followed by one platinum-based chemotherapy);

6. Non-Small Cell Lung Cancer (NSCLC): Sac-TMT versus pemetrexed and carboplatin combination therapy for the treatment of advanced non-squamous NSCLC subjects with EGFR mutations whose disease has progressed after prior treatment with EGFR-TKI;

7. Non-Small Cell Lung Cancer (NSCLC): Sac-TMT in combination with pembrolizumab versus pembrolizumab as maintenance therapy for metastatic squamous NSCLC after first-line induction therapy with pembrolizumab combined with carboplatin and paclitaxel or nab-paclitaxel;

8. Endometrial Cancer (EC): Sac-TMT monotherapy compared with chemotherapy for the treatment of EC patients who have previously received platinum-based chemotherapy and immunotherapy;

9. Cervical Cancer (CC): Sac-TMT monotherapy versus TPC as second-line treatment for recurrent or metastatic CC participants;

10. Gastric Esophageal Adenocarcinoma (GEA): Sac-TMT for third-line and above treatment of advanced/metastatic GEA.

Kelun-Biotech is also collaborating with MSD to conduct multiple global Phase 2 basket trials of Sac-TMT as a monotherapy or in combination with other drugs for the treatment of various solid tumors, and these trials are currently ongoing.

2. Progress of Preclinical and Early Clinical Stage ADC Assets

In addition to Sac-TMT, Kelun-Biotech has also collaborated with MSD on several early-stage clinical and preclinical ADC assets. For more details, please refer to the announcement "Regarding the Paid Licensing of Kelun-Biotech Project B for Global Commercial Development by MSD (Announcement No.: 2022-113)" and the announcement "Regarding the Authorization of Seven In-House ADC Projects to MSD (Announcement No.: 2022-174)." Both parties are continuously exploring the optimal ADC pipeline combination. On one hand, they aim to cover a broader range of cancer indications through ADC pipelines targeting different antigens; on the other hand, they apply differentiated payload-linker strategies to achieve better efficacy and/or improved safety profiles for ADCs targeting various antigens, while also exploring diverse combination therapy strategies for ADCs.

Based on the above strategies, Kelun-Biotech and MSD are also adjusting and optimizing the scope of cooperation for the early pipeline. Gradually, from the perspective of the partner’s future global commercialization, an optimal early licensing pipeline portfolio is being formed that complements the strengths of Sac-TMT and other late-stage ADC pipelines. The main progress of related projects is as follows:

1. Kelun-Biotech recently received a written notice from MSD, stating that MSD will exercise its exclusive option for the SKB571 project and pay Kelun-Biotech US$37.5 million. Upon achieving specific development and sales milestones, MSD will make additional milestone payments to Kelun-Biotech. After the commercialization of SKB571, MSD will also pay tiered royalties based on net sales. Kelun-Biotech will retain the rights to develop, use, manufacture, and commercialize SKB571 in mainland China, Hong Kong, and Macao.

SKB571 is an innovative bispecific antibody-drug conjugate (ADC), primarily targeting various solid tumors such as lung cancer and gastrointestinal tumors. Through scientifically selected target combinations and a differentiated bispecific antibody molecular design, it enhances tumor targeting and helps overcome tumor heterogeneity, improving efficacy. By incorporating the highly hydrophilic toxin-linker strategy from the OptiDC® platform, the product not only exhibits uniform DAR values but also demonstrates favorable in vivo pharmacokinetic properties. Preclinical studies have shown that the product displays promising anti-tumor effects and safety in multiple patient-derived xenograft (PDX) models and cynomolgus monkeys. An IND application for this product will be submitted soon.

2. While exercising the option for SKB571, MSD will return to Kelun-Biotech the global rights for the development, use, manufacturing, and commercialization of the SKB315 project. According to the terms of the agreement signed by both parties, Kelun-Biotech is not required to refund the upfront payment and milestone payments already received from MSD for this project.

Early clinical data of SKB315 shows positive efficacy and good safety in the field of CLDN18.2 overexpression in gastric cancer, and relevant data will be published at subsequent academic conferences. Given the large number of gastric cancer patients in China, Kelun-Biotech is highly confident in the prospects of SKB315 in the Chinese market, will continue to accelerate its development in China, and adopt appropriate methods to expand into overseas markets.

In addition, Kelun-Biotech also plans to submit IND applications for other preclinical ADC assets that have reached licensing cooperation with MSD in the near future, while continuing to explore new cooperation opportunities with MSD.

At the same time, Kelun Pharmaceutical pointed out that the R&D process of innovative drugs is long-cycle and multi-link, and whether it can be successfully developed and commercialized has certain uncertainties. Investors are advised to make prudent decisions and pay attention to prevent investment risks. The company will timely fulfill its information disclosure obligations according to the subsequent progress.