AstraZeneca PLC has announced that it has agreed to pay an estimated $6 billion to acquire Daiichi Sankyo Co., the manufacturer of a promising lung and breast cancer drug.
It’s AstraZeneca’s second potential blockbuster oncology deal in the past two years. The two companies entered into a similar agreement in March 2019 for Daiichi Sankyo’s ENHERTU®, a HER2 directed DXd ADC.
As part of the global development and commercialization agreement, AstraZeneca will pay Japan’s Daiichi $1 billion upfront to jointly develop and bring to market a cancer therapy in early clinical tests called DS-1062, the companies announced. Up to $5 billion in additional payments could ensure, subject to regulatory and sales objectives.
“DS-1062, one of our lead DXd ADCs that will form a pillar of our next mid-term business plan, has the potential to become a best-in-class TROP2 ADC in multiple tumors, including lung and breast cancers,” said Sunao Manabe, Representative Director, President and CEO of Daiichi Sankyo Company, Limited. “This new strategic collaboration with AstraZeneca, a company with extensive experience and significant expertise in the global oncology business, will enable us to deliver DS-1062 to more patients around the world as quickly as possible. As we have done with ENHERTU, we will jointly design and implement strategies to maximize the value of DS-1062.”
AstraZeneca is trying to become a global oncology giant, while at the same time devoting its resources to developing a vaccine for the coronavirus. AstraZeneca said it would pay Daiichi as much as $6.9 billion for another cancer medicine in 2019—the company’s largest deal in more than 10 years. For Daiichi Sankyo, the deal is the latest in what has turned into a transformative partnership. Besides the cancer deals, Daiichi is in talks to make Astra’s COVID-19 vaccine in Japan.
The Daiichi treatment, an antibody-drug conjugate that targets tumors that express a protein known as TROP2, is “extraordinary,” José Baselga, Astra’s head of cancer research, said in an interview. He described it as an “agent that could transform and will transform the therapy landscape.”
Daiichi Sankyo moved to oncology treatments a decade ago, after being inundated with litigation over data fabrication at its Indian subsidiary. A big turning point came when the Tokyo-based company hired Antoine Yver, who ran the oncology unit at AstraZeneca. This hire in 2016 helped the British drug manufacturer become aware of Daiichi’s groundbreaking work in cancer.
“We had a number of potential collaborators who met with us,” about the therapy, Yver said in an interview. Astra was picked because “of their experience, because of their strength in oncology, because of our past collaboration.”
Since the first Astra deal in March 2019, Daiichi Sankyo’s stock has sky-rocketed 70%. The firm is now the second-biggest pharmaceutical company in Japan by market capitalization, moving ahead of Takeda Pharmaceutical Co.
AstraZeneca said that it will pay cash for the latest deal in three stages:
$350 million in July 2020 when the deal closes
$325 million after 12 months; and
$325 million after 24 months.
Daiichi Sankyo said it will manufacture and supply the cancer drug and keep exclusive rights to the medicine in Japan.
Data from early trials look promising with strong activity in lung cancer; however, there is also high toxicity resulting in two deaths, according to an analyst at Bloomberg Intelligence. Daiichi Sankyo is working to mitigate the toxicity, and the patients had received the highest doses of the drug, which are not likely to be those kept for wider application.
“We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express TROP2,” said Pascal Soriot, CEO at AstraZeneca. “We are delighted to enter this new collaboration with Daiichi Sankyo and to build on the successful launch of ENHERTU to further expand our pipeline and leadership in oncology. We now have six potential blockbusters in oncology with more to come in our early and late pipelines.”