Merck Signs Multi-Billion Deal With Japan's Daiichi Sankyo For Cancer Therapy Drug Development

Merck & Company, Inc. MRK and Japan's Daiichi Sankyo Co. Ltd. DSKYF entered into a global development and commercialization agreement.

The companies are developing three of Daiichi Sankyo's DXd antibody-drug conjugate (ADC) candidates for patients across multiple types of cancer.

Merck will pay Daiichi Sankyo $5.5 billion in the agreement, which has a total potential consideration of up to $22 billion.

The three drug candidates include patritumab deruxtecan (HER3-DXd), ifinatamab deruxtecan (I-DXd), and raludotatug deruxtecan (R-DXd).

Daiichi Sankyo aims for at least 900 billion yen ($6 billion) of revenue from its oncology business in the fiscal year ending March 31, 2026, representing about a five-fold increase over a three-year period, according to a note by Reuters.

Daiichi Sankyo and AstraZeneca AZN recently released topline data from the TROPION-Breast01 phase 3 trial of datopotamab deruxtecan (Dato-DXd) in previously treated patients with inoperable or metastatic hormone receptor (HR) positive, HER2 low or negative breast cancer.

With the latest deal, the companies intend to jointly commercialize these ADC candidates worldwide, except in Japan where Daiichi Sankyo will maintain exclusive rights. 

Daiichi Sankyo will be solely responsible for manufacturing and supply following the close of the transaction. In conjunction with this transaction, Merck will record an aggregate pretax charge of approximately $1.70 per share, reflecting the $4 billion upfront payment and the $1.5 billion in continuation payments. This will result in a reduction of both fourth-quarter and full-year 2023 GAAP and non-GAAP results. 

Price Action: MRK shares are trading higher by 0.17% to $100.60 premarket on the last check Friday. 

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