Merck (MSD outside North America) has signed an exclusive licence and partnership agreement with Kelun-Biotech for developing seven investigational preclinical antibody-drug conjugates (ADC) to treat cancer.

As per the deal, Merck will receive exclusive international licences from Kelun-Biotech for carrying out the research, development, production and marketing of these ADC therapies.

Additionally, Merck will obtain exclusive options for further licences to ADC candidates. 

The right for conducting the research, development, production and marketing of specific licenced and option ADCs in mainland China, Hong Kong and Macau will be retained by Kelun-Biotech.

Under the agreement, Merck will make $175m in upfront payment to Kelun-Biotech.

Kelun-Biotech is entitled to get payments of up to $9.3bn in the future on meeting development, regulatory and sales milestones.

This payment is contingent on Kelun-Biotech not retaining mainland China, Macau and Hong Kong rights for the option ADCs and all candidates obtaining regulatory approval.

Merck will also make tiered royalty payments on net sales for any ADC product commercialised to Kelun-Biotech. 

Furthermore, Kelun-Biotech is eligible to get equity investment from Merck. 

Merck Research Laboratories president Dr Dean Li said: “Advances in ADC technologies are yielding a new generation of candidates designed to more precisely target and deliver potent anticancer agents to the tumour site. 

“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.”

The latest development comes after the company entered a definitive agreement to acquire all outstanding shares of Imago BioSciences, through a subsidiary, in a deal totalling nearly $1.35bn.