October 19, 2023, 7:30 p.m. ET
The collaboration combines Daiichi Sankyo’s proven ADC expertise and DXd technology with Merck’s extensive oncology experience and clinical development capabilities to advance and expand the reach of ADCs to patients across various cancer types
Daiichi Sankyo and Merck will co-develop and commercialize patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan worldwide, except in Japan, where Daiichi Sankyo retains exclusive rights
Merck will pay Daiichi Sankyo an upfront payment of $4 billion in addition to $1.5 billion in ongoing payments over the next 24 months and may make additional payments of up to $16.5 billion, depending from achieving future sales milestones, for potential total compensation of up to $16.5 billion to $22 billion
BASKING RIDGE, NJ & RAHWAY, NJ, October 19, 2023 – Daiichi Sankyo (TSE: 4568) and Merck (known as MSD outside the United States and Canada) (NYSE: MRK) have entered into a global development and commercialization agreement for 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 these ADC candidates and potentially commercialize them worldwide, except for Japan, where Daiichi Sankyo retains exclusive rights. Daiichi Sankyo will be solely responsible for manufacturing and delivery.
All three potentially first-in-class DXd ADCs are in various stages of clinical development for the treatment of multiple solid tumors, both as monotherapy and/or in combination with other treatments. Patritumab deruxtecan received Breakthrough Therapy designation from the U.S. Food and Drug Administration in December 2021 for the treatment of patients with EGFR-mutant locally advanced or metastatic non-small cell lung cancer (NSCLC) with disease progression on or after treatment with given to a third-party drug. Generation of tyrosine kinase inhibitors (TKIs) and platinum-based therapies. A U.S. Biologics License Application (BLA) is scheduled to be submitted by the end of March 2024 for patritumab deruxtecan, based on data from the Phase 2 HERTHENA-Lung01 trial (ClinicalTrials.gov; NCT04619004) recently presented at the IASLC 2023 World Conference on Lung Cancer and published simultaneously in the Journal of Clinical Oncology.
Ifinatamab deruxtecan is currently being evaluated as monotherapy in IDeate-01 (ClinicalTrials.gov; NCT05280470), a phase 2 clinical trial in patients with previously treated, advanced-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 (ClinicalTrials.gov; NCT04707248) and updated results in patients with advanced ovarian cancer will be presented at the upcoming European Society for Medical Oncology (ESMO) Congress 2023.
Each ADC was designed using Daiichi Sankyo’s proprietary DXd ADC technology to target and deliver a cytotoxic payload into cancer cells expressing a specific cell surface antigen. Each ADC consists of a monoclonal antibody linked to a series of topoisomerase I inhibitor payloads (an exatecan derivative, DXd) via cleavable tetrapeptide-based linkers.
“The promising clinical trial results of patritumab deruxtecan, ifinatamab deruxtecan and raludotatug deruxtecan continue to demonstrate the broad applicability of Daiichi Sankyo’s DXd ADC technology for multiple targets, with each of these medicines having the potential to transform clinical practice, as previously observed became ENHERTU®,” said Sunao Manabe, Representative Director, Executive Chairman and CEO, Daiichi Sankyo Company, Limited. “As Daiichi Sankyo continues its transformation into a global oncology leader by increasingly building our infrastructure and talent, we recognize that collaboration with Merck, a company with notable oncology experience and strong internal development capabilities and resources will help achieve our goals.” Commitment to making these potential new DXd ADCs available to more patients as quickly as possible.”
“At Merck, we continue to expand and diversify our oncology pipeline while building on our immuno-oncology foundation,” said Robert M. Davis, Chairman and Chief Executive Officer of Merck. “The pioneering work of Daiichi Sankyo scientists has highlighted the far-reaching potential of ADCs to provide meaningful new options for cancer patients. We look forward to forging this collaboration to develop the next generation of precision cancer medicines, driven by our mutual compassion for patients around the world.”
Financial highlights
Under the terms of the agreement, Merck Daiichi will make upfront payments to Sankyo of $1.5 billion for ifinatamab deruxtecan upon closing; $1.5 billion for patritumab deruxtecan, with $750 million due at closing and $750 million due after 12 months; and $1.5 billion for raludotatug deruxtecan, with $750 million due upon execution and $750 million due after 24 months. Merck will also pay Daiichi Sankyo up to an additional $5.5 billion for each DXd ADC, depending on the achievement of certain sales milestones. Combined with the additional $1 billion repayable upfront payment described below, the total potential consideration for the three programs is up to $22 billion.
Merck may withdraw from the collaboration for patritumab deruxtecan and raludotatug deruxtecan and elect not to pay the two continuation payments of $750 million each, which are due after 12 and 24 months, respectively. If Merck withdraws from Patritumab Deruxtecan and/or Raludotatug Deruxtecan, the advance payments already paid will be retained by Daiichi Sankyo and the rights associated with such DXd ADCs will be returned to Daiichi Sankyo.
As noted above, Merck will pay an additional upfront payment of $1 billion ($500 million each for patritumab deruxtecan and ifinatamab deruxtecan), a prorated portion of which will be paid in the event of early termination of development for each program can be refunded. For raludotatug deruxtecan, Merck will be responsible for 75% of the first $2 billion in research and development costs. Except as set forth above with respect to R&D expenses, companies share both expenses and profits equally worldwide, with the exception of Japan, where Daiichi Sankyo retains exclusive rights and Merck receives a royalty based on sales revenue. Daiichi Sankyo will typically record sales worldwide.
Overall, the three programs have global commercial revenue potential of several billion dollars for each company by the mid-2030s.
The impact on Daiichi Sankyo’s consolidated results for the fiscal year ended March 31, 2024 will be announced in due course in the future. The collaboration is expected to contribute to increasing Daiichi Sankyo’s corporate and shareholder value in the medium to long term.
In connection with this transaction, Merck will record a total pre-tax charge of $5.5 billion, or approximately $1.70 per share, which includes the upfront payment of $4 billion and the subsequent payments of $1 .5 billion US dollars. The impact of this charge will result in a reduction in GAAP and non-GAAP results for both the fourth quarter and full year 2023. In addition, Merck will invest in the pipeline assets and incur costs to finance the transaction, which will result in a negative impact on earnings per share of approximately $0.25 in the first 12 months following the closing of the transaction.
About Daiichi Sankyo’s DXd ADC portfolio
Daiichi Sankyo’s DXd ADC portfolio currently consists of six ADCs in clinical development across multiple cancer types. ENHERTU, a HER2-driven ADC, and datopotamab deruxtecan (Dato-DXd), a TROP2-driven ADC, are being co-developed with AstraZeneca and commercialized globally. Patritumab deruxtecan (HER3-DXd), a HER3-targeting ADC, ifinatamab deruxtecan (I-DXd), a B7-H3-targeting ADC, and raludotatug deruxtecan (R-DXd), a CDH6-targeting ADC, are being co-developed with Merck worldwide developed and marketed. DS-3939, a TA-MUC1 controlled ADC, is developed by Daiichi Sankyo.
Each ADC was designed using Daiichi Sankyo’s proprietary DXd ADC technology to target and deliver a cytotoxic payload into cancer cells expressing a specific cell surface antigen. Each ADC consists of a monoclonal antibody linked to a series of topoisomerase I inhibitor payloads (an exatecan derivative, DXd) via cleavable tetrapeptide-based linkers.
Datopotamab Deruxtecan, Ifinatamab Deruxtecan, Patritumab Deruxtecan, Raludotatug Deruxtecan and DS-3939 are investigational products that are not approved for any indication in any country. Safety and effectiveness have not been established.
About Daiichi Sankyo
Daiichi Sankyo is an innovative global healthcare company that contributes to the sustainable development of society and discovers, develops and delivers new standards of care to improve the quality of life around the world. With more than 120 years of experience, Daiichi Sankyo leverages its world-class science and technology to develop new modalities and innovative medicines for people with cancer, cardiovascular disease and other diseases with high unmet medical needs. For more information, visit www.daiichisankyo.com.
About Merck
At Merck, known as MSD outside the United States and Canada, we have a common purpose: harnessing the power of cutting-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. Our goal is to be the leading research-intensive biopharmaceutical company in the world – and today we are at the forefront of research to deliver innovative healthcare solutions that advance the prevention and treatment of disease in people and animals. We promote a diverse and inclusive global workforce and act responsibly every day to ensure a safe, sustainable and healthy future for all people and communities. For more information, visit www.merck.com and contact us at TwitterFacebook, Instagram, YouTube and LinkedIn.
Forward-looking statement of Merck & Co., Inc., Rahway, NJ, USA
This press release from Merck & Co., Inc., Rahway, NJ, USA (the “Company”) contains “forward-looking statements” within the meaning of the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995. These statements are based on the current beliefs and expectations of management and are subject to significant risks and uncertainties. For pipeline candidates, there can be no assurance that the candidates will receive necessary regulatory approvals or that they will prove to be commercially successful. Should the underlying assumptions prove incorrect or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements.
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