ESMO: Merck, flush with ADCs, eyes differentiation in massive Daiichi deal

MADRID—Well that’s one way to open Europe’s biggest oncology conference. Merck & Co., known as MSD here, signed a multi-billion-dollar deal with Daiichi Sankyo, taking on the Japanese company’s next round of ADCs that are already making their way through the clinic.

Merck’s Jane Healy, M.D., Ph.D., VP of early clinical development, now has a whole new batch of treatments to work with, as the company navigates its post-Keytruda future.

Following in the footsteps of AstraZeneca, Merck has paid $4 billion upfront for access to three ADC therapies, with $1.5 billion in continuation payments over the next 24 months plus $16.5 billion in sales milestones.

"I can tell you that from my side, I'm very excited about the science behind the molecules and the efficacy and safety data to date and what these might represent in terms of differentiation compared to other programs," Healy told Fierce Biotech on the sidelines of the European Society for Medical Oncology Congress in Madrid on Friday afternoon.

Merck already has a busy ADC portfolio thanks to a similarly massive partnership with Kelun-Biotech signed at the end of 2022. That deal offered $175 million upfront plus $9.3 billion in potential milestones. Healy says Merck is still very much committed to that collaboration but the Daiichi announcement will add some differentiation—even if it’s in the same mechanism.

“It's a class we're very interested in,” Healy said.

ADCs combine two traditional oncology classes, antibodies and chemotherapy, to target the cancer cell and release the chemotherapy payload to the tumor cell while leaving healthy tissues unharmed, Healy explained. The hope is that a low dose can be used to avoid side effects associated with traditional chemotherapy.

The many different partnerships allow Merck to have a range of target and disease options “that can be important in different tumor types but also could be different payloads, could be mechanistic differences between one ADC type to the next that will kind of diversify the tools in our toolbox to then target specific diseases in cancer,” she continued.

Merck intends to study the three targets alone and in combination with existing meds from the portfolio. Keytruda, of course, will not fade from the picture, even as its exclusivity wanes. Healy said the company is assessing mechanisms to build out the future pipeline that could address cancer either alone or as a combination with so-called “foundational medicines” from Merck’s portfolio—Keytruda among them.

“We have been very active with internal development but also we are just interested in identifying the best science and the best molecules that can help patients and so we also look externally for collaborative partners,” Healy said. “If there are business deals that we can do to bring in new things to the pipeline to kind of help diversify that and broaden the range of mechanisms, we're looking at it.”

Could there be more ADC deals to come for Merck?

“We’re very happy with the ADC portfolio that we have. But could there be possibilities in the future for other targets? I think it would depend on the target. It would depend on the ability to differentiate from others … in the portfolio,” Healy said.

“So I certainly wouldn't rule out future collaborations, but I think we also have to be mindful of just the number of mechanisms we can investigate at once.”

Just as Healy packed up for her next meeting at ESMO, Merck’s peer company GSK announced its own ADC deal, this time with China’s Hansoh. The deal terms include $85 million upfront, plus $1.49 billion in milestones down the line. While not the same eye-popping number from Merck’s headline the evening before, the deal shows that ADCs will be the talk of the conference.

With Daiichi’s experience in the ADC space thanks to AstraZeneca-partnered Enhertu and other clinical work with datopotamab deruxtecan—a therapy due to get time in the spotlight later in the conference—it’s a wonder Merck was able to break through the pharmas clamoring for a partnership with the Japanese company.

“Clearly we have such a phenomenal [business development] team,” suggested Merck spokesperson Julie Cunningham. “They're always looking for the next best thing.” 

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