Merck in $22 Billion ADC Deal with Daiichi Sankyo for Global Rights to Three Novel Antibody-Drug Conjugates

On October 19, 2023, MSD and Daiichi Sankyo publicly disclosed a collaboration on their official websites. MSD acquired the global (excluding Japan) rights to three ADC products from Daiichi Sankyo for a total amount of up to 22 billion US dollars.

Under the terms of the collaboration, MSD paid an upfront payment of $4 billion and an additional $1.5 billion over the following 24 months. Furthermore, the total value of the collaboration could reach up to $16.5 billion based on achieved sales milestones. This collaboration grants MSD global rights (excluding Japan) to three ADC products from Daiichi Sankyo: patritumab deruxtecan (HER3-DXd), ifinatamab deruxtecan (I-DXd), and raludotatug deruxtecan (R-DXd).

According to the news on Daiichi Sankyo's official website, of the $4 billion upfront payment, HER3-DXd accounted for $750 million, I-DXd accounted for $1.5 billion, and R-DXd accounted for $750 million (totaling $3 billion). In addition, MSD also paid $500 million each for the research and development costs related to HER3-DXd and I-DXd.

Moreover, MSD has the option to pay the remaining $750 million for HER3-DXd after one year and the remaining $750 million for R-DXd after two years. The maximum sales milestone of up to $16.5 billion corresponds to a maximum sales milestone of $5.5 billion for each product.

The details of this cooperation agreement show that the partnership between MSD and Daiichi Sankyo is a significant and complex transaction involving a substantial amount of funds and future payment options. This will enable MSD to promote and sell these three ADC products globally (except in Japan) and achieve sales milestones based on their successful development and sales, further driving commercial growth for both parties.

MSD's Product Layout in the ADC Field

This collaboration agreement between MSD and Daiichi Sankyo is considered a significant milestone in the ADC field. The upfront payment is as follows:

patritumab deruxtecan (HER3-DXd)

The down payment is $750 million.

ifinatamab deruxtecan (I-DXd)

The down payment is $1.5 billion

raludotatug deruxtecan (R-DXd)

The down payment is $750 million.

Figure 1: Details of the MSD and Daiichi Sankyo Transaction

HER3-DXd, I-DXd, and R-DXd are first-in-class ADC products targeting HER3, B7-H3, and CDH6, respectively. Among them, HER3-DXd is the most advanced HER3 ADC, having received Breakthrough Therapy Designation from the U.S. Food and Drug Administration (FDA) in December 2021. It is intended for third-line treatment of patients with EGFR-mutated non-small cell lung cancer (EGFRm NSCLC) and is expected to submit a Biologics License Application (BLA) to the FDA by the end of March 2024 (based on the HERTHENA-Lung01 trial).

According to the HERTHENA-Lung01 clinical data disclosed this year for HER3-DXd, the trial treated NSCLC patients who had received EGFR-TKI and platinum-based chemotherapy with HER3-DXd at a dose of 5.6mg/kg Q3W. Among 225 patients, a complete or partial response rate (cORR) of 29.8% was achieved, with a median duration of response (mDOR) of 6.4 months, a median progression-free survival (mPFS) of 5.5 months, and a median overall survival (mOS) of 11.9 months. Responses were observed across various HER3 membrane expression levels.

In terms of safety, the HERTHENA-Lung01 trial showed a median treatment duration (DOT) of 5.5 months, with 64.9% of patients experiencing treatment-related adverse events (TEAEs) of grade 3 or higher, and 28.9% experiencing grade 4 or higher TEAEs. The most common grade 3 or higher adverse reactions were hematological toxicities. TEAEs leading to dose interruption occurred in 40.4% of patients, those leading to dose reduction occurred in 21.3%, those leading to treatment discontinuation occurred in 7.1%, and treatment-related TEAEs associated with death occurred in 1.8%. A total of 12 patients (5.3%) were diagnosed with interstitial lung disease (ILD), including one patient with grade 1, eight patients with grade 2, two patients with grade 3, and one patient with grade 5.

These data indicate that HER3-DXd demonstrates certain therapeutic effects in third-line EGFRm NSCLC patients, but also comes with some safety concerns. This study provides a basis for further evaluation of the efficacy and safety of HER3-DXd and supports its future clinical application and development.

The clinical layout of HER3-DXd shows that the Phase 2 pivotal clinical trial for third-line treatment (3L) of EGFR-mutated non-small cell lung cancer (EGFRm NSCLC) has been completed, and the Phase 3 clinical trial for second-line treatment (2L) of EGFRm NSCLC (head-to-head comparison with platinum-based chemotherapy regimens) has been initiated.

In addition, HER3-DXd has also been laid out in early clinical trials for first-line and second-line treatment of EGFRm NSCLC as well as other indications such as breast cancer.

The purpose of these clinical trials is to evaluate the efficacy and safety of HER3-DXd across different treatment stages and indications. By completing the clinical trials and obtaining relevant data, MSD can further understand the performance of HER3-DXd in diverse patient populations and provide support for its future regulatory submissions and clinical applications.

It should be noted that the results of clinical trials may be influenced by subsequent studies, so specific clinical data and progress may be subject to adjustment. These clinical layouts and advances are based on the information provided and current research plans, which may change over time.

Figure 2: HER3-DXd HERTHENA-Lung01 Clinical Efficacy Data

cORR (Overall Response Rate)Reached 29.8%

mDOR (Duration of Response)For 6.4 months

mPFS (Progression-Free Survival)For 5.5 months

mOS (Overall Survival)For 11.9 months

It is worth mentioning that,The therapeutic effect of HER3-DXd is independent of the HER3 membrane expression level in patients, which means that HER3-DXd has potential therapeutic effects across different patient populations.

In terms of safety, the average duration of treatment (DOT) with HER3-DXd was 5.5 months, indicating that patients can tolerate relatively prolonged treatment. However, attention must be paid to adverse reactions during treatment. Among patients, 64.9% experienced treatment-related adverse events (TEAEs) of Grade 3 or higher, while 28.9% experienced TEAEs of Grade 4 or higher. The most common Grade 3 or higher adverse reactions were hematological toxicities. Additionally, 40.4% of patients experienced TEAEs leading to dose interruptions, 21.3% experienced TEAEs leading to dose reductions, and 7.1% experienced TEAEs leading to treatment discontinuation, with 1.8% experiencing treatment-related TEAEs associated with death. Among 12 patients (5.3% of the total), ILD (interstitial lung disease) was identified: one case was Grade 1, eight cases were Grade 2, two cases were Grade 3, and one case was Grade 5.

These data reveal the potential therapeutic effects of HER3-DXd, but caution is needed when managing treatment-related adverse events, particularly with regard to the occurrence of hematological toxicity.

HER3-DXd demonstrates high efficiency and broad coverage in clinical development.Currently, the drug has successfully completed the pivotal third-line (3L) clinical trial for EGFR-mutated non-small cell lung cancer (EGFRm NSCLC), indicating that the therapeutic effect of HER3-DXd in patients with advanced EGFR-mutated NSCLC has been preliminarily validated. Meanwhile, HER3-DXd is undergoing a second-line (2L) clinical trial for EGFRm NSCLC, with a head-to-head comparison against platinum-based chemotherapy regimens. This clinical study design will provide valuable data support for the application of HER3-DXd in earlier treatment stages.

By completing these clinical trials, the efficacy and safety of HER3-DXd have been evaluated across different treatment stages and patient populations. The results of these trials are of great significance for further advancing the regulatory submission and clinical application of HER3-DXd.

Figure 3 HER3-DXd Clinical Layout

In addition, the clinical research scope of HER3-DXd is not limited to EGFR-mutated non-small cell lung cancer (EGFRm NSCLC) but also includes first-line and second-line treatments for EGFRm NSCLC as well as other indications such as breast cancer. This broad research layout demonstrates the potential of HER3-DXd as a multi-indication drug. By conducting multi-level clinical studies across different treatment stages and various types of cancer, HER3-DXd not only expands its therapeutic range but also offers hope to more patients, further solidifying its position in the field of oncology.

Daiichi Sankyo's HER3-DXd is clearly the fastest-progressing HER3 ADC globally.However, it is worth noting that there are other promising HER3 ADC projects in the global ADC field.

Figure 4: Global R&D Progress of HER3 ADC

In addition to Daiichi Sankyo's HER3-DXd, there are other promising HER3 ADC projects in the global ADC field. These projects include:

1. BL-B01D1 by Baili Tianheng: BL-B01D1 is a bispecific antibody-drug conjugate (ADC) targeting EGFR and HER3. This dual targeting may offer enhanced efficacy and is applicable to specific patient populations, making it a highly anticipated drug candidate.

2. Hengrui Medicine's SHR-A2009: Hengrui Medicine has been continuously expanding its oncology treatment pipeline, and SHR-A2009 may become part of its ADC drug portfolio. It is Hengrui Medicine’s candidate drug in the HER3 field, and its research and development progress is worth noting.

3. YL202 by Yilian Biologics: Yilian Biologics has also conducted early research in the HER3 field. The development progress of YL202 is still under observation, but it represents potential competitiveness in this field.

4. DualityBio's DB-1310: DB-1310 is another ADC with HER3 targeting currently under investigation. DualityBio has made progress in its development and is worth close attention.

These global R&D projects collectively demonstrate the activity in the HER3 field and the promising future of ADC technology. As a precise treatment method, ADCs have potentially huge market prospects, and the investments and competition from different companies are driving progress in this field. This further highlights the promising future and potential of ADCs in the oncology treatment area, offering more treatment options for patients.

Data updates presented at this year's World Conference on Lung Cancer (WCLC) meeting revealed clinical outcomes for I-DXd in an extensive subgroup of patients with extensive-stage small cell lung cancer (ES-SCLC).I-DXd is an ADC targeting B7-H3, currently in a Phase 2 clinical trial (IDeate-01) for later-line treatment of ES-SCLC.

In this trial, the researchers conducted dose escalation and expansion studies, treating ES-SCLC patients with a median of 2 prior treatment lines using I-DXd doses exceeding 6.4mg/kg. The encouraging clinical efficacy data showed positive results.

Figure 4 I-DXd Clinical Efficacy Data in ES-SCLC

ORR (Overall Response Rate)Reached 52.4%

Among themCR (Complete Remission)Is 4.8%

PR (Partial Response)At 47.6%

mDOR (Duration of Response)For 5.9 months

mPFS (Progression-Free Survival)For 5.6 months

mOS (Overall Survival)For 12.2 months

However, it is important to note that treatment-related adverse events (TEAEs) associated with I-DXd were observed to some extent in the study. Data showed that 36.4% of patients experienced Grade 3 or higher TEAEs, and 22.7% of patients discontinued treatment due to TEAEs. This indicates that while I-DXd demonstrates promising efficacy in treating small cell lung cancer, potential adverse events must be carefully managed.

Globally,Advances in the B7-H3 ADC Field Are Receiving Significant Attention.Among them, MacroGenics' MGC-018 is the first B7-H3 ADC to enter the clinical stage. Currently, MGC-018 is undergoing a Phase 2/3 clinical trial for the indication of metastatic castration-resistant prostate cancer (mCRPC). This milestone progress is of great significance, as research on B7-H3 as a tumor target is rapidly expanding, offering new therapeutic hope to more patients.

Figure 5 I-DXd Clinical Layout and Global B7-H3 ADC Development Progress

Compared with MGC-018, I-DXd is currently in Phase 2 clinical trials and is actively under development.B7-H3, as an emerging tumor target, has attracted the attention of many pharmaceutical companies.In addition to MGC-018 and I-DXd, several other B7-H3 ADC molecules are currently in the early stages of development, indicating that there may be more treatment options for B7-H3-targeted therapies in the future. Pharmaceutical companies are actively researching and developing drugs targeting B7-H3, which will provide cancer patients with more therapeutic opportunities.

Figure 6 R-DXd Clinical Layout

R-DXd is a CDH6 ADC currently undergoing a Phase 1 clinical trial for the first human use.According to data presented by Daiichi Sankyo at this year's European Society for Medical Oncology (ESMO) Congress, this trial has yielded some encouraging results.

In the Phase 1 dose-escalation trial, researchers gradually increased the dose of R-DXd from 1.6 mg/kg to 9.6 mg/kg. The results showed that the dose of 8.0 mg/kg was identified as the maximum tolerated dose (MTD), a key indicator of safety. Subsequently, the study further expanded the dose range from 4.8 to 8.0 mg/kg to gain deeper insights into efficacy and safety.

In terms of safety, the incidence of treatment-related grade 3 or higher adverse events (TEAEs) was 50%, and the incidence of adverse events (AEs) leading to discontinuation was 14%. This indicates that the use of R-DXd may be associated with some adverse events, requiring effective management during treatment.

Among 34 evaluable patients, the overall response rate (cORR) was 38%. Specifically, the cORR reached 67% in the 4.8mg/kg dose group, 33% in the 6.4mg/kg dose group, and 31% in the 8.0mg/kg dose group. These data indicate that R-DXd shows potential clinical efficacy in CDH6-targeted therapy, particularly with higher response rates observed at lower doses.

GSK and Hansoh Pharma Reach ADC Collaboration

Hansoh Pharma Recently Announces Major Collaboration: Global Rights (Excluding Greater China) for B7-H4 ADC Product HS-20089 Licensed to GSK

MSD Terminates Part

Preclinical projects in collaboration with Kelun-Biotech

MSD recently announced the termination of part of its collaboration projects with Kelun-Biotech. This includes terminating the exclusive license granted by Kelun-Biotech to MSD for the development, manufacturing, and commercialization of a preclinical ADC asset, as well as not exercising the exclusive option granted by Kelun-Biotech to obtain an exclusive license for another preclinical ADC asset. Previously, Kelun-Biotech and MSD had signed multiple licensing and collaboration agreements to jointly develop up to nine ADC assets, three of which have advanced to the clinical stage.

Despite ending the collaboration on these two preclinical assets, Merck Sharp & Dohme AG (MSD) will continue to advance products that have entered the clinical stage, such as SKB264, SKB315, and SKB410. These products play a significant role in MSD’s global strategy. SKB264/MK-2870, the core product of the collaboration between Kelun-Biotech and MSD, is currently undergoing a global multicenter clinical trial for EGFRm NSCLC 3L. This project complements Daiichi Sankyo's products and provides strategic support for MSD’s pipeline in major disease areas such as lung cancer and breast cancer.

MSD's decision underscores their strategic shift in the ADC field, focusing resources on core projects. Although collaborations on some preclinical products have been terminated, this will not impact the advancement of other products.

ADC, as a precision therapy, has expanded the target scope of cancer treatment and demonstrated potential when used in combination with current therapies. Across multiple indications, ADCs have shown excellent clinical data, highlighting their potential advantages in the field of cancer treatment.

Some domestically produced ADC projects adopt differentiated molecular designs, are at the forefront of global R&D progress, and demonstrate outstanding early clinical data. These projects have the potential to enter the global market through external licensing and become competitors. Therefore, leading domestic ADC companies with global innovation capabilities, such as Kelun Biotech-B, Hengrui Medicine, and Baili Tianheng-U, are expected to play significant roles in the international market and seize more growth opportunities.

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