WuXi Biologics and DAC Biotech Strike $849M ADC Deal with Aadi Bioscience

On December 20, WuXi Biologics and DAC Biotech jointly announced the execution of a research services collaboration agreement with Aadi Bioscience. Under this partnership, Aadi will obtain exclusive global rights to develop, manufacture, and commercialize three preclinical-stage antibody-drug conjugate (ADC) candidates. Pursuant to the terms of the agreement, Aadi will pay WuXi Biologics and DAC Biotech an upfront payment of $44 million, development milestone payments of up to $265 million, commercial milestone payments of up to $540 million, and single-digit tiered royalties on net sales. The total potential value of the collaboration amounts to $849 million, approximately RMB 6.2 billion.

Why is Aadi collaborating with two Chinese pharmaceutical companies simultaneously? Because the three products involved in this collaboration combine the technical strengths of WuXi Biologics and DAC Biotech, leveraging WuXi Biologics’ innovative antibody discovery technology platform and DAC Biotech’s advanced payload and linker platform technologies.

The collaboration between WuXi Biologics and DAC Biotech dates back three years.In August 2021, WuXi Biologics and DAC Biotech announced a strategic collaboration focused on the discovery of novel antibody-drug conjugate (ADC) therapeutics. Under the agreement, the two parties will leverage DAC Biotech’s proprietary expertise in various payloads and linkers, combined with WuXi Biologics’ leading proprietary antibody discovery technology platform, to develop multiple innovative ADC candidates. Furthermore, WuXi XDC, WuXi Biologics’ CDMO subsidiary specializing in end-to-end bioconjugation services, will accelerate the R&D and manufacturing processes of these innovative ADC drugs through its leading integrated CMC capabilities.

WuXi Biologics’ leading position in the ADC CDMO sector speaks for itself. Its subsidiary, WuXi XDC, ranks as the world’s second-largest and China’s largest CRDMO for antibody-drug conjugates (ADCs) and other bioconjugated therapeutics, based on 2022 revenue and the total number of overall projects in this field. Furthermore, as of the end of May 2023, WuXi XDC had secured ADC development contracts in China for all ADC candidates that have submitted investigational new drug (IND) applications and/or biologics license applications (BLAs) in both China and the United States.

DAC Biotech, another Chinese enterprise involved in this collaboration, is also one of the few niche leaders in China focusing on the ADC field.According to the announcement, the three ADC candidate molecules licensed out in this transaction utilize DAC Biotech’s CrossConjuTM site-specific bridging technology and Top1 payload-linker technology. Their indications cover respiratory, gastrointestinal, and gynecologic tumors—areas with significant unmet clinical needs. These candidates have demonstrated excellent performance in preclinical studies and possess the potential to be best-in-class.

DAC Biotech, founded in 2012, has established an ADC drug technology platform with independent intellectual property rights after more than a decade of R&D accumulation. The company possesses full-process capabilities for ADC drugs, spanning early-stage research and development, process development, and commercial-scale manufacturing.

Currently, DAC Biotech’s proprietary ADC drug platform encompasses: over 50 novel intelligent linkers (including site-specific conjugation); five major classes of high-potency small-molecule compounds with distinct mechanisms of action, comprising approximately 100 molecules in total, including anti-tubulin agents (Tubulysin), DNA minor groove binders (PBD), DNA alkylating agents (Duocarmycin), RNA polymerase II inhibitors (Amanitin), and topoisomerase inhibitors (CPT); comprehensive technologies for antibody discovery, engineering, and manufacturing process optimization; and a complete system for in vivo and in vitro evaluation of ADC drugs, structural confirmation, and development and validation of analytical methods.

Furthermore, DAC Biotech holds nearly 30 PCT international patent applications, with over 600 patent applications filed in major developed countries and more than 20 patents granted in the United States alone. Currently, DAC Biotech boasts a robust product pipeline covering most common solid tumors worldwide, comprising over 40 antibody-drug conjugate (ADC) candidates at various stages of development, six of which are in clinical trials.

DAC Biotech’s Public Pipeline, Source: DAC Biotech Official Website

In recent years, in addition to partnering with WuXi Biologics, DAC Biotech has also established collaborations with Janssen Pharmaceuticals (a subsidiary of Johnson & Johnson), Junshi Biosciences, Biocytogen, and Hengyu Bio, jointly contributing to the advancement of the ADC industry.

The other partner, Aadi, is a company focused on precision oncology. It was incorporated in Delaware on November 16, 2007, and founded by Dr. Neil Desai, the inventor of Abraxane (paclitaxel protein-bound particles for injectable suspension, albumin-bound) and the albumin-based technology platform. Aadi’s primary objective is to deliver transformative therapies to cancer patients with alterations in mTOR pathway drivers, such as TSC1 or TSC2 gene mutations, where mTOR inhibitors have not been or cannot be effectively utilized due to challenges related to pharmacology, effective drug delivery, safety, or efficacy.

Currently, Aadi’s primary product is Fyarro (sirolimus albumin-bound nanoparticles for injectable suspension, nab-sirolimus, ABI-009), a targeted albumin-bound nanoparticle mTOR inhibitor based on sirolimus (also known as rapamycin). Fyarro received FDA approval in November 2021 for the treatment of adult patients with unresectable locally advanced or metastatic malignant perivascular epithelioid cell tumors (PEComa). It is the first therapy approved for treating adult patients with PEComa and the second product developed using albumin technology to reach the market, following paclitaxel protein-bound particles for injectable suspension. As of the first half of this year, cumulative sales of this product reached $45 million.

It is worth noting that as of the end of June this year, Aadi’s cash and short-term investments totaled $78.6 million. The upfront payment for its collaboration with WuXi Biologics and DAC Biotech amounted to $44 million, indicating that the company has committed the majority of its resources to the antibody-drug conjugate (ADC) field. Furthermore, to support this partnership and alleviate financial pressure, Aadi disclosed in its announcement that it had entered into a subscription agreement with certain qualified institutional buyers and accredited investors for a private investment in public equity (“PIPE”) financing. The gross proceeds from this transaction are expected to be approximately $100 million, before deducting placement agent fees and other offering expenses.

News of Aadi’s bet on ADCs also impacted its stock. As of 4:50 p.m. Beijing time, Aadi’s share price surged 71.98% in after-hours trading.

Aadi’s After-Hours Stock Price, Image Source: East Money

In fact, China has gradually become the global epicenter of ADC innovation and the world’s largest country for outbound ADC licensing deals. According to incomplete statistics from BioPharma Era, there were 25 ADC licensing transactions involving Chinese companies from 2021 to April 2024, with a total transaction value reaching nearly $40 billion. In early 2024, Yilian Biologics’ licensing deal with Roche, valued at over $1 billion, marked the first major overseas expansion in the ADC field for the new year. By the end of 2024, the collaboration agreement among WuXi Biologics, DAC Biotech, and Aadi, worth up to $849 million, brought a perfect conclusion to this sector for the year.

References: “Raking in Nearly $40 Billion! A Review of 25 ADC Out-licensing Deals,” “$850 Million: Aadi Biosciences Partners with WuXi Biologics and DAC Biotech to Develop Three Novel ADC Drugs”