2023-10-23 09:02:58 ET
Summary
- Daiichi Sankyo has entered into a collaboration with Merck for three antibody-drug conjugates, bringing in a significant upfront payment and potential milestone payments.
- The three drugs in development, targeting HER3, B7-H3, and CDH6, have shown promising early-stage clinical data in various cancers.
- While there are risks associated with the efficacy and toxicity of these drugs, the collaboration with Merck provides financial security and further potential for success.
Daiichi Sankyo Overview
Daiichi Sankyo Company, Limited ( DSNKY ) is an under-covered big pharma player out of Japan that has made a massive impact on the management of HER2-dependent cancers, with their flagship oncology drug representing one of the biggest leaps forward for these cancers since the approval of trastuzumab. This article is an update to my prior thesis , and I continue to have an optimistic outlook for the company, particularly given recent news I will detail.
Collaboration With Merck
On October 20, DSNKY announced that they were entering into a global development and commercialization agreement with Merck & Co., Inc. ( MRK ) for 3 antibody-drug conjugates that are still in clinical development. These include:
- Patritumab deruxtecan, which is a HER3-targeted deruxtecan
- Ifinatamab deruxtecan, which is a B7-H3-targeted deruxtecan
- Raludotatug deruxtecan, which is a CDH6-targeted deruxtecan.
The deal brings with it an upfront payment of $4 billion, with up to $5.5 billion in milestone payments. Potential sales milestone payments represent another potential $16.5 billion. As part of the deal, DSNKY will be giving up rights to sell these 3 molecules, assuming approval, everywhere but in Japan.
This deal unsurprisingly boosted the company, with a 20%+ gain on in share price valuation on the day it was announced. Let's take a look at where these 3 drugs stand, setting aside the company's flagship, trastuzumab deruxtecan, which continues to march forward with new approvals in different countries for HER2-altered solid tumors.
Patritumab deruxtecan
HER3 appears to be an important factor in driving resistance to targeted therapies , particularly those that are directed against EGFR family tyrosine kinases, including EGFR itself and HER2. I previously discussed some of the early results we saw with patritumab deruxtecan in lung and breast cancer, where we've seen some favorable response rates.
The most recent update we've seen from patritumab deruxtecan was a presentation at IASLC World Lung, where updates from HERTHENA-Lung01 were presented. Patients with EGFR-mutant NSCLC and progression on prior therapy had similar response rates whether they had received a third-generation EGFR inhibitor or not (response rates around 29% or 30% regardless), with no impact on on PFS or OS, as well.
Furthermore, these response rates held up regardless of the known reason for developing resistance to prior EGFR targeted therapy, and patritumab deruxtecan appeared to be active in patients with central nervous system metastases, with an intracranial response rate of 33.3% among patients with brain metastases at baseline.
Currently, patritumab deruxtecan is being evaluated in the phase 3 HERTHENA-Lung02 study, comparing it against platinum-based chemotherapy for patients with EGFR-mutant NSCLC after progression on a third-generation EGFR kinase inhibitor (presumably osimertinib).
Ifinatamab deruxtecan
The drug formerly known as DS-7300 is targeting a cell surface antigen called B7-H3, which shares a lineage with checkpoint molecules like CTLA-4 and PD-L1. However, we still do not have a clear picture of the ligand for this molecule, or what exactly it does in the cell.
What we do know, however, is that ifinatamab deruxtecan has demonstrated some interesting early-stage clinical data, with a 2022 readout suggesting some activity in small cell lung cancer, which led to the opening of a phase 2 trial enrolling patients with extensive-stage SCLC , now called IDeate-01.
At IASLC World Lung 2023, we got an update on the SCLC cohort of patients from their earlier trial. In the 21 patients with SCLC in that trial, 52.4% achieved a confirmed response, with one complete response and 10 partial responses observed. Median duration of response was 5.9 months, and median overall survival was 12.2 months. If these figures bear out in a more focused clinical trial, it could finally be a step forward for immunotherapy in SCLC, which is something we've been chasing and failing to catch for years, most notably with the recent failure of TIGIT-directed checkpoint inhibitors .
Raludotatug deruxtecan
One of the newer kids on the block, raludotatug deruxtecan targets a cell surface molecule called CDH6. At ESMO 2023, a subgroup analysis of their first-in-human phase 1 study continued to demonstrate manageable toxicity, and 21 of 42 patients with ovarian cancer remained on therapy, including 2 patients with ongoing partial responses. The response rate reported for the drug was 46%, which would be quite high for this heavily pretreated population, including patients with platinum-resistant ovarian cancer.
Strengths and Risks
The financial position of DSNKY has not changed meaningfully since my last coverage of them, save for this new catalyst infusing several more billions of dollars. The company is profitable, and this joint venture aims to further secure the coffers while pushing new candidates in a very promising class of drugs forward. Their projected double digit profit growth is reasonable if they can keep finding success with their ADCs.
However, efficacy of these agents is still unknown, and most of what we have to go on are very early stage data, with no guarantee of validation. DSNKY is going to bank on these new approvals to continue improving the bottom line, in addition to expanding the trastuzumab deruxtecan franchise further.
There's also the elephant in the room I have not discussed. One of the antibody-drug conjugates that was most anticipated has been datopotamab deruxtecan, which is vying for a spot along with Gilead's sacituzumab govitecan as a Trop2-targeted therapy. While their recent phase 3 readout showed improved PFS using this agent, there were serious concerns about toxicity that may jeopardize its future.
The reason for picking on this in the "risk" section is that this is an ongoing theme for these deruxtecan molecules. Trastuzumab deruxtecan has had a long battle with interstitial lung disease that's held up its development and forced a fair number of trials just comparing different doses at the phase 2 level, and it's one reason we may not have seen a colorectal cancer approval yet.
Every one of these drugs carries similar risks of some kind, and it's difficult to predict. Some of them might be targeting something on the cell that's just not really relevant, in the end. Some of them might have toxicity issues. There is a bit of de-risking by making the "active" part of the molecule not depend on the target itself (i.e., a kinase inhibitor relies on the cancer cell being addicted to the target of interest), but by no means do I judge the success of trastuzumab deruxtecan as a beacon of likely activity for the other deruxtecan molecules.
Bottom Line
Daiichi Sankyo Company, Limited has had a ripping success with trastuzumab deruxtecan, and this news with Merck basically ties the fates of these companies together much in the same way that their partnership with AstraZeneca (AZN) has. I continue to reiterate a positive sentiment, and this news only provides further security for that assessment.
For further details see:
Daiichi Sankyo: Merck Partnership Poises Both Companies For ADC Expansion