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Merck to pay Daiichi Sankyo up to $22bn to collaborate on 3 new cancer drugs

In a deal potentially worth up to US$22 billion, Merck (known as MSD outside of the United States and Canada) has entered into a collaboration agreement with Japan-based Daiichi Sankyo to co-develop and co-commercialize three of Daiichi Sankyo’s DXd antibody-drug conjugate (ADC) candidates: patritumab deruxtecan (HER3-DXd), ifinatamab deruxtecan (I-DXd) and raludotatug deruxtecan (R-DXd).

The companies will jointly develop and potentially commercialize these ADC candidates worldwide, except in Japan where Daiichi Sankyo will maintain exclusive rights. Daiichi Sankyo will be solely responsible for manufacturing and supply. In aggregate, the three programmes are forecast to have multi-billion dollar worldwide commercial revenue potential for each company approaching the mid-2030s. Under the terms of the agreement, Merck will pay Daiichi Sankyo upfront payments of $1.5 billion for ifinatamab deruxtecan due upon execution; $1.5 billion for patritumab deruxtecan, where $750 million is due upon execution and $750 million is due after 12 months; and $1.5 billion for raludotatug deruxtecan, where $750 million is due upon execution and $750 million is due after 24 months. Merck also will pay Daiichi Sankyo up to an additional $5.5 billion for each DXd ADC contingent upon the achievement of certain sales milestones. When combined with an additional refundable upfront payment of $1 billion, total potential consideration across the three programmes is up to $22 billion.

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All three potentially first-in-class DXd ADCs are in various stages of clinical development for the treatment of multiple solid tumours both as monotherapy and/or in combination with other treatments. Patritumab deruxtecan was granted Breakthrough Therapy Designation by the U.S. Food and Drug Administration in December 2021 for the treatment of patients with EGFR-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC) with disease progression on or after treat-ment with a third-generation tyrosine kinase inhibitor (TKI) and platinum-based therapies. The submission of a biologics license application (BLA) in the U.S. is planned by the end of March 2024 for patritumab deruxtecan, which is based on data from the HERTHENA-Lung01 Phase 2 trial (; NCT04619004 ( ) recently presented at the IASLC 2023 World Conference on Lung Cancer and simultaneously published in the Journal of Clinical Oncology ( )

finatamab deruxtecan is currently being evaluated as monotherapy in IDeate-01 (; NCT05280470 ( ), a Phase 2 clinical trial in patients with previously treated extensive-stage small cell lung cancer (SCLC). Updated results from a subgroup analysis of a Phase 1/2 trial of ifinatamab deruxtecan in SCLC were recently presented at the IASLC 2023 World Conference on Lung Cancer. Raludotatug deruxtecan is currently being evaluated in a first-in-human Phase 1 clinical trial (; NCT04707248 ( )  Designed using Daiichi Sankyo’s proprietary DXd ADC technology to target and deliver a cytotoxic payload inside cancer cells that express a specific cell surface antigen, each ADC consists of a monoclonal antibody attached to a number of topoisomerase I inhibitor payloads (an exatecan derivative, DXd) via tetrapeptide-based cleavable linkers.

“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, with each of these medicines having the potential to change clinical practice as has been already seen with ENHERTU,” said Sunao Manabe, Representative Director, Executive Chairperson and CEO, Daiichi Sankyo Company. “As Daiichi Sankyo continues its transformation into a global oncology leader by increasingly building our infrastructure and talent, we recognize that a collaboration with Merck, a company with remarkable oncology experience and strong in-house development capabilities and resources, will help us deliver on our obligation to deliver these potential new DXd ADCs to more patients as quickly as possible.” Merck may opt out of the collaboration for patritumab deruxtecan and raludotatug deruxtecan and elect not to pay the two continuation payments of $750 million each that are due after 12 months and 24 months, respectively. If Merck opts out of patritumab deruxtecan and/or raludotatug deruxtecan, the upfront payments already paid will be retained by Daiichi Sankyo and rights related to such DXd ADCs will be returned to Daiichi Sankyo. Merck will pay an additional upfront payment of $1 billion ($500 million each for patritumab deruxtecan and ifinatamab deruxtecan), a prorated portion of which may be refundable in the event of early termination of development with respect to each programme.