Merck signs $5.5 billion deal with Daiichi for cancer therapy
development
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[October 20, 2023]
By David Dolan and Kanjyik Ghosh
TOKYO (Reuters) -Drugmaker Merck <MRK.N> will pay Daiichi Sankyo $5.5
billion to jointly develop three of its candidate cancer drugs, they
said, a deal that could be worth up to $22 billion to the Japanese firm
depending on the success of the cell-targeting therapies.
The announcement sent shares of Daiichi Sankyo up 14.4% at the close of
trading in Tokyo, the steepest gain in more than a year.
The Japanese company is aiming for at least 900 billion yen ($6.0
billion) of revenue from its oncology business in the fiscal year ending
March 31, 2026, which would represent about a five-fold increase over a
three-year period.
The deal is a "big positive and much needed for Daiichi Sankyo", said
Tina Banerjee, a healthcare analyst who publishes on the Smartkarma
platform. "This raises expectations from Daiichi's oncology drug
pipeline."
![](http://archives.lincolndailynews.com/2023/Oct/20/images/ads/current/humanesociety_sda022411.png)
The three drug candidates to be developed with Merck belong to the class
known as antibody drug conjugates (ADC) and are in various stages of
clinical development for the treatment of multiple solid cancer tumors.
Unlike conventional chemotherapy, which can kill healthy cells, ADCs are
designed to target only cancer cells, potentially reducing damage to
normal cells.
The candidates - patritumab deruxtecan, ifinatamab deruxtecan and
raludotatug deruxtecan - have "multi-billion dollar worldwide commercial
revenue potential for each company" by the mid-2030s, the two companies
said.
The companies will jointly develop and potentially commercialize the
drug candidates worldwide, except in Japan, where Daiichi Sankyo will
maintain exclusive rights, they said. Daiichi Sankyo will be solely
responsible for manufacturing and supply.
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![](../images/102023PIX/health27.jpg)
Signage is seen at the Merck & Co. headquarters in Kenilworth, New
Jersey, U.S., November 13, 2021. REUTERS/Andrew Kelly/File Photo
![](http://archives.lincolndailynews.com/2019/Sep/05/images/ads/current/stclara_lda_SPONSOR_090519.png) Merck will pay Daiichi Sankyo $4
billion up front in addition to $1.5 billion in continuation
payments over the next two years. Merck may make additional payments
of up to $16.5 billion, contingent on future sales milestones, or
$5.5 billion for each product.
Daiichi Sankyo has six ADC candidates in its pipeline, including two
being jointly developed with AstraZeneca. This week, a data abstract
on a late-stage trial of datopotamab deruxtecan it is developing
with AstraZeneca disappointed some analysts.
Under the deal announced on Friday, Merck will take a pretax charge
of $5.5 billion, or approximately $1.70 per share, reflecting the
upfront payment and the continuation payments, resulting in a
reduction in fourth-quarter and full-year 2023 results, the
companies said.
Merck's investment in the pipeline assets and costs to finance the
transaction will reduce earnings per share by about 25 cents in the
first 12 months after the close of the transaction, they said.
The impact on Daiichi Sankyo's results would be announced in the
future, according to the joint statement.
(Reporting by David Dolan and Rocky Swift in Tokyo and Kanjyik Ghosh
in Bengaluru; Editing by Miyoung Kim, Jamie Freed and Gerry Doyle)
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