Merck agrees multi-billion deal with Daiichi to develop cancer therapy drugs

Daiichi Sankyo (TYO:) and Merck (NYSE:) 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).

Under this agreement, 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 also be solely responsible for manufacturing and supply.

These candidates are in various stages of clinical development for the treatment of multiple solid tumors.

Under the terms of the agreement, Merck will make upfront payments to Daiichi Sankyo, specifically:

• $1.5 billion for ifinatamab deruxtecan upon execution;
• For patritumab deruxtecan, $1.5B in total, with an initial payment of $750 million upon execution, followed by an additional $750M after 12 months;
• For raludotatug deruxtecan, $1.5B in total, with an initial payment of $750M upon execution, followed by an additional $750M after 24 months.

Additionally, Merck will make contingent payments of up to an extra $5.5B for each DXd ADC, contingent on achieving specific sales milestones. There’s also an additional refundable upfront payment of $1B described, bringing the total potential consideration to up to $22B across the three programs.

“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, Limited.

“At Merck, we continue to augment and diversify our oncology pipeline while building on our immuno-oncology foundation,” said Robert M. Davis, Chairman and Chief Executive Officer, Merck.