Merck & Co (MSD) has entered an agreement to develop and commercialise three of Daiichi Sankyo’s DXd antibody drug conjugate (ADC) candidates, potentially spending up to $22bn on the partnership.

The drugs included in the partnership are patritumab deruxtecan (HER3-DXd), ifinatamab deruxtecan (I-DXd) and raludotatug deruxtecan (R-DXd).

As per the agreement, both companies will jointly develop and commercialise the ADCs worldwide, except in Japan where Daiichi Sankyo will hold exclusive rights with MSD receiving royalties on sales revenue.

Daiichi Sankyo will also hold the sole responsibility for manufacturing and supply of the three ADCs.

Daiichi Sankyo will receive $1.5bn in upfront and delayed payments, along with an additional $5.5bn in milestone-based payments for each of the three ADCs. While MSD will pay $1.5bn upfront for ifinatamab deruxtecan, the company will pay $750m for both patritumab deruxtecan and ralodotatug deruxtecan upon execution.

Daiichi Sankyo is eligible for two additional payments of $750m each for patritumab deruxtecan and raludotatug deruxtecan at 12 and 24 months, respectively. However, MSD has retained the right to opt out of paying this additional funding, resulting in the forfeiture of the global rights for the ADCs.

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Furthermore, a portion of the $1bn upfront payment, $500m each for patritumab deruxtecan and ifinatamab deruxtecan, is refundable on a pro-rated basis should the programs need to be terminated early.

All three of the ADCs were developed using Daiichi Sankyo’s DXd ADC technology, with each conjugate consisting of a monoclonal antibody attached to an exatecan derivative (DXd).

A US biologics licence application (BLA) submission for patritumab deruxtecan is planned by the end of March 2024, based on the 19 October announcement.

Ifinatamab deruxtecan is being evaluated in an open-label Phase 2 clinical trial (NCT05280470) in patients with pre-treated extensive-stage small cell lung cancer (SCLC).

Raludotatug deruxtecan is in Phase I clinical development for the treatment of advanced ovarian cancer. The results from the trial are planned for release at the European Society for Medical Oncology (ESMO) Congress 2023 in Madrid from 20-24 October.

In April, MSD acquired Prometheus Biosciences and added the latter’s monoclonal antibody candidate, PRA023, for treating auto-immune conditions, including Crohn’s disease and ulcerative colitis.