The ESMO ADC Files: After Enhertu success, Daiichi and AstraZeneca branch off for next phase of pipelines

MADRID—Daiichi Sankyo started off the European Society for Medical Oncology (ESMO) Congress with a mic drop moment: a $4 billion upfront deal giving Merck & Co. rights to the Japanese antibody-drug conjugate (ADC) powerhouse’s next three prospects.

“We realize we have a core competency in drug discovery, ADC technology and we understand that a company like Merck clearly has core competency in clinical development capabilities, oncology, clinical research capabilities. So we saw the potential for a nice collaboration,” Daiichi’s Mark Rutstein, M.D., head of global oncology clinical development, told Fierce Biotech on the sidelines of ESMO.

Beyond the upfront fee, Daiichi is entitled to $1.5 billion in continuation payments over the next 24 months and up to $16.5 billion in sales milestones. These are numbers seldom seen in licensing deals, especially these days.

For Merck's view of the deal, see our story: ESMO: Merck, flush with ADCs, eyes differentiation in massive Daiichi deal

For Daiichi, the idea behind the deal is simple: helping get the three ADCs into the clinic as fast as possible. The most advanced candidate is patritumab deruxtecan (HER3-DXd), a HER3-directed ADC currently in a pivotal trial in EGFR-mutated non-small cell lung cancer. The other two candidates are the phase 2 stage ifinatamab deruxtecan (I-DXd), a B7-H3-directed ADC, and raludotatug deruxtecan (R-DXd), which is aimed at CDH6 that’s overexpressed in cancers of the kidney, ovaries and other organs. Daiichi is currently enrolling a phase 1 trial for the latter asset.

Daiichi didn't really consider going it alone, according to Rutstein, although he added that his team has developed the know-how through the Enhertu program and other earlier-stage assets. It was all about speed and getting to patients.

“Now Daiichi Sankyo has certainly been very fast in building its capabilities. I mean, we have been building our talent, we have been building our capabilities, and we're on a very good pace,” Rutstein said. “But we recognize that in order to get those drugs out to the greatest number of patients as fast as possible, that partnership would be a logical step for us at this time.”

And the logical—or at least most obvious—partner, would have been AstraZeneca. Rutstein, of course, would not give the juicy details about whether there was ever an offer or discussion with Daiichi’s existing collaborator—and neither would AstraZeneca executive Susan Galbraith, Ph.D.

But with the kind of cash Merck put up, obviously Daiichi’s business development folks have been busy fielding calls.

“Because of the capability of the pipeline and the data that's being generated, there were a number of companies that were interested,” Rutstein said.

What made Daiichi pick Merck is its “fantastic track record in oncology research”—read: Keytruda—plus its clinical development capabilities. Despite nearing loss of exclusivity, Rutstein said Keytruda is still putting up robust data in multiple disease states, including at ESMO, and continues to have phase 3 success.

“That kind of partner with that kind of capability is very attractive to us,” Rutstein said.

Merck “did take careful consideration of what it offered,” he said. Ultimately, the company wanted in on Daiichi’s technological expertise and track record of delivering ADCs.

Galbraith, executive vice president of oncology R&D, told Fierce that after the successful partnership with Daiichi, the U.K. pharma was ready to focus inward on five ADC candidates developed in-house. While the Daiichi-partnered med Enhertu is approved in advanced breast cancer, the companies are working on their next candidate, datopotamab deruxtecan (Dato-DXd).

Data showcased on Dato-DXd at ESMO seemed to allay fears about a key adverse event, interstitial lung disease, which had shaken confidence in the next-gen ADC when several deaths in the study were first announced earlier this summer.

Rutstein is aware of the frenzy of companies diving into ADCs at the moment. Hours after the Merck deal was announced, GSK unveiled an $85 million deal to pick up Hansoh Pharma’s B7-H4-targeted ADC in solid tumors. The deal includes up to $1.4 billion down the line in milestones. And, prior to ESMO, Eli Lilly acquired Mablink Bioscience, its second ADC deal of the year.

It’s an exciting time to be an ADC company, but, back at Daiichi, the crew is heads-down working on the pipeline and expanding research efforts. To keep the excitement on the modality going forward, Rutstein said, “For us it's to continue doing what we're doing.”

To read more of Fierce Biotech's coverage of the ESMO Congress, click here. Fierce Pharma's coverage is available here.