- AstraZeneca is betting on the research laboratories of Daiichi Sankyo for a second time in as many years, announcing Monday a licensing deal for an experimental cancer drug that could be worth as much as $6 billion to the Japanese pharmaceutical company.
- Much of the deal's value is tied up in $5 billion of conditional payments offered by AstraZeneca if the drug is approved and reaches certain, unspecified sales numbers. But AstraZeneca also committed to pay $1 billion to Daiichi Sankyo over the next 24 months, an upfront figure that puts the licensing agreement among the most valuable signed in recent years for a single product.
- The experimental treatment in question, known as DS-1062, is an antibody-drug conjugate, a class of medicines that combines a targeting antibody with a tumor cell-killing chemical. AstraZeneca has made the drug type a research focus and, in early 2019, paid Daiichi Sankyo $1.35 billion for rights to what would become the approved breast cancer therapy Enhertu.
AstraZeneca executives were so eager to license Enhertu from Daiichi last year they made the rare move to sell shares to finance the potentially $7 billion deal.
Now, seven months after Enhertu's approval in the U.S, the British drugmaker appears equally interested in securing rights to the next Daiichi drug in line.
Like Enhertu, DS-1062 is meant to treat multiple tumor types, including lung and breast cancers. But the experimental drug does so in a different way, taking aim at a protein called TROP2 that's overexpressed on tumor cells. Enhertu, by contrast, binds to the well-known cancer target HER2, the discovery of which paved the way for mainstay breast cancer treatments like Herceptin and Perjeta.
DS-1062 is currently in Phase 1 testing among lung and breast cancer patients for whom other treatments have failed. SVB Leerink analyst Andrew Berens, after speaking with AstraZeneca management, noted that the company plans to test DS-1062 in a Phase 3 study in lung cancer patients who have failed immunotherapies like Merck & Co.'s Keytruda.
With the money it's pledged to Daiichi, AstraZeneca clearly sees TROP2 as an important target for new cancer medicines. Its interest is supported by the recent Food and Drug Administration approval for Trodelvy, an TROP2-targeting antibody-drug conjugate developed by Immunomedics.
AstraZeneca will pay the $1 billion upfront to Daiichi in installments: $350 million when the deal closes, $325 million 12 months later and the final $325 million 24 months after the agreement is finalized.
In return, AstraZeneca secures equal rights to any profits from the sale of DS-1062 outside of Japan, where Daiichi will pay AstraZeneca mid-single digit royalties. The companies will split development and commercialization costs outside of Japan as well.
In recent years, AstraZeneca has mounted a major push to become a leading oncology company. Carried by the success of its lung cancer drug Tagrisso, and its breast cancer medicine Lynparza, AstraZeneca's cancer division is now the company's fastest growing and likely soon to be its largest.
So far, Enhertu hasn't yet contributed much in the way of sales, earning AstraZeneca only $14 million in the first quarter of 2020. But AstraZeneca views it as a potential blockbuster product, and aims to expand its use in breast, lung, gastric and colon cancers.