- Merck & Co. is broadening its pipeline of experimental cancer medicines, announcing Thursday a licensing agreement with China’s Kelun-Biotech that will give it rights to seven early-stage treatments known as antibody-drug conjugates.
- Under the deal, Merck will pay Kelun-Biotech $175 million upfront, as well as make an undisclosed equity investment. The pharmaceutical company has also pledged billions of dollars more in conditional payments should those experimental drugs successfully advance through testing, win approval and sell well.
- Merck was already partnered with Kelun-Biotech, having previously agreed to work with the drugmaker on more advanced antibody-drug conjugates, including one targeting a protein called TROP2 that’s in mid- to late-stage clinical trials.
Merck, the maker of top-selling immunotherapy Keytruda, has invested heavily in antibody-drug conjugates, or ADCs, another type of cancer drug that pairs a tumor-seeking antibody with a cancer-killing toxin.
In 2020, Merck invested $1 billion in ADC specialist Seagen and paid hundreds of millions of dollars more to acquire rights to two experimental breast cancer drugs. A few months later, the pharma spent nearly $3 billion to acquire VelosBio and its ADCs for lymphoma and solid tumors. Those assets now figure prominently in Merck’s expansive cancer drug pipeline.
The new deal with Kelun-Biotech, a subsidiary of Sichuan Kelun Pharmaceutical Co., involves medicines that are much earlier in development than the drugs in either of those transactions. But it’s broader, giving Merck access to an array of ADCs, the targets of which weren’t disclosed in the companies’ announcement.
“Advances in ADC technologies are yielding a new generation of candidates designed to more precisely target and deliver potent anticancer agents to the tumor site,” said Dean Li, head of Merck’s research laboratories, in a statement. “We continue to augment our oncology pipeline and look forward to working with the Kelun-Biotech team to advance these candidates to the patients that need them.”
Merck will hold an exclusive license to research, develop and commercialize multiple ADCs, while holding options to obtain additional licenses in the future. Kelun-Biotech retains rights in China, Hong Kong and Macau.
Should all seven drugs covered by the deal win approval, and if Kelun-Biotech gives up its retained rights, Merck could pay as much as $9.3 billion in additional milestone payments, although much of that sum is unlikely to come due.
The deal is the latest example of pharma company investment in ADCs, which have recently become a more attractive treatment type due to advances in the underlying technologies that make them work.
AstraZeneca has made the biggest splash, lining up major deals with Daiichi Sankyo that gave it the fast-selling Enhertu, as well as another promising clinical-stage drug. Gilead has also made a large bet, paying $21 billion to acquire Immunomedics and its drug Trodelvy. And last year, Bristol Myers Squibb linked up with Eisai, while Seagen looked to China in inking a partnership with RemeGen.
For several months this summer, Merck was reportedly in discussions about buying Seagen outright, but talks appear to have broken down.