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Our Take: Feature: Looking ahead, leading drugmakers will focus on innovation within their existing areas of specialty

Oct 30, 2023

Merck bets even bigger on ADCs with Daiichi Sankyo deal

With the potential to vastly change how many types of cancer are treated, and now that technological advances have overcome early challenges in their development and manufacture, antibody-drug conjugates have been the hot ticket in oncology research the past few years, and Merck is eager to pair ADCs with its market-dominating immunotherapy, Keytruda (pembrolizumab).  

After giving up on its attempt last year to acquire oncology-centric biotech Seagen (which Pfizer agreed to pay $43 billion for earlier this year), Merck has signed an agreement with Japanese pharmaceutical company Daiichi Sankyo that could be worth up to $22 billion. 

The Rahway, N.J.-based drugmaker will pay $4 billion up front for the rights to  jointly develop and commercialize three ADCs in Daiichi Sankyo’s pipeline. 

Along with the upfront payment, Merck agreed to $1.5 billion in continuation payments over the next two years and as much as $16.5 billion in sales milestones. 

The three ADCs are patritumab deruxtecan, currently being tested in multiple trials in patients with metastatic non-small cell lung cancer; ifinatamab deruxtecan, in Phase II development as a treatment for small cell lung cancer; and raludotatug deruxtecan, in Phase I testing in patients with advanced ovarian cancer. 

The ADC agreement with Daiichi Sankyo is not Merck’s first. Before attempting to buy Seagen, Merck entered into an agreement with the Seattle-based biotech in 2020 to acquire the rights to ladiratuzumab vedotin for $600 million up front and a $1 billion investment in Seagen. Merck said it was discontinuing that clinical program earlier this year, though Seagen said their original agreement is still active.  

Also in 2020, Merck shelled out $2.75 billion to acquire VelosBio, a clinical-stage biopharmaceutical company based in San Diego. VelosBio’s lead candidate, zilovertamab vedotin, is a ROR1-directed ACD being evaluated in patients with hematologic malignancies, including lymphoma, and solid tumors. 

And, in the last two years, Merck has entered into three license and collaboration agreements with Kelun-Biotech, a subsidiary of Chinese drugmaker Sichuan Kelun Pharmaceutical. The third and largest of the agreements, signed in December, included seven preclinical ADCs. Merck agreed to pay $175 million up front in that transaction and up to $9.3 billion in milestone payments. 

Altogether, the agreements with Kelun-Biotech covered nine ADCs — three in clinical development and six preclinical candidates — but FierceBiotech reported last week that, after signing the agreement with Daiichi Sankyo, Merck stepped away from two of the Kelun-Biotech preclinical ADC programs.  

Daiichi Sankyo partnered with AstraZeneca on its first two ADCs: Enhertu (trastuzumab deruxtecan), an FDA-approved treatment for certain types of breast, stomach, and lung cancers, and datopotamab deruxtecan, which is being evaluated as a treatment for various breast cancers and non-small cell lung cancer. 

Key patents on Merck’s Keytruda will begin to expire in 2028, but a potential subcutaneous version of the drug could extend the patents. Last year, Keytruda generated revenue of $20.9 billion for Merck.  

Roche to pay $7.1 billion for biotech Roivant co-owns with Pfizer 

Swiss pharma giant Roche entered into a definitive agreement with Roivant to acquire Telavant Holdings, a company Roivant and Pfizer formed in December to develop and commercialize RVT-3101, a potential first-in-class monoclonal antibody that targets TL1A. 

The agreement calls for Roche to pay $7.1 billion up front, along with a near-term milestone payment of $150 million. In exchange, Roche will gain the rights to develop, manufacture, and commercialize RVT-3101 in the U.S. and Japan for the treatment of inflammatory bowel disease and possibly other diseases. Pfizer will retain commercialization rights elsewhere. 

A Phase IIb study of RVT-3101 in patients with ulcerative colitis has been completed, and a Phase II trial to assess the candidate in patients with Crohn’s disease is underway. Roche has committed to starting a global Phase III trial of RVT-3101 as soon as possible, according to Roivant’s press release.  

Roivant owns 75% of Televant’s common and preferred stock, and Pfizer owns the remaining 25%. The transaction with Roche is subject to customary closing conditions and is expected to close within the next six months. 

Earlier this year, Merck spent $10.8 billion to acquire Prometheus Biosciences, gaining access to PRA-023/MK-7240, another TL1A-directed antibody in clinical development as a treatment for ulcerative colitis and Crohn’s disease. 

Sanofi to spin off its consumer health business

As GSK, Johnson & Johnson, Merck, Novartis, and Pfizer have done in recent years, Sanofi plans to divest its consumer health care business. 

The Paris-based drugmaker will likely spin off the unit into a stand-alone company, possibly as soon as the fourth quarter of 2024, according to a press release

The move is part of Sanofi’s strategy to focus on growth and innovation, particularly with regard to its vaccines and immunology pipelines. 

Along with news of the divestiture, Sanofi reported lower-than-expected earnings for the third quarter and lowered its guidance for 2024, in part because of changes in global tax regulations. When the stock market opened Friday morning, Sanofi’s share price dropped more than 19%, cratering the company’s market value by $21 billion. 

Sanofi said it will implement initiatives to cut costs by 2.7 billion euros, which it will use to accelerate research and development efforts and “unlock value-creation opportunities.”  

BMS plans to accelerate lagging performance of new products

Bristol Myers Squibb’s stock price also took a hit late last week after the company reported a 2% decline in revenue for the third quarter and lowered its near-term projections for overall sales of its portfolio of new drugs. 

Chief Operating Officer Christopher Boerner, who will take over as CEO on Nov. 1 when Dr. Giovanni Caforio steps down, said during the earnings call that the company continues “to see very strong long-term potential [for the new product portfolio] consistent with what we’ve said previously.”

Biopharma Dive reported that sales of several new products failed to meet analysts’ expectations, including Reblozyl (luspatercept), a treatment for MDS-related anemia; Camzyos (mavacamten), which is approved for symptomatic obstructive hypertrophic cardiomyopathy; and Abecma (idecabtagene vicleucel), a CAR T cell therapy for multiple myeloma. 

Others, like Sotyktu (deucravacitinib) for plaque psoriasis, exceeded consensus forecasts. 

Boerner said the company’s commercial team “is laser focused on … accelerating performance where necessary,” adding that the company is further increasing its “investment behind selective brands to ensure performance accelerates.”

Collectively, the new product portfolio was expected to bring in revenue of $10 billion to $13 billion in 2025, but BMS now anticipates that won’t happen until 2026.

In a move to diversity its oncology pipeline, BMS agreed earlier this month to acquire San Diego-based Mirati Therapeutics for up to $5.8 billion. 

Eisai presents new trial data on subcutaneous Leqembi

At the annual Clinical Trials on Alzheimer’s Disease conference in Boston last week, Eisai presented study results for an investigational subcutaneous formulation of Leqembi (lecanemab-irmb), the drug approved earlier this year as a disease-modifying treatment for Alzheimer’s disease. 

In a substudy of the Phase III Clarity AD trial conducted during an open-label extension, 322 participants who received intravenous (IV) Leqembi every two weeks in the core study were switched to weekly doses of the subcutaneous version of the drug. 

The substudy also included 72 participants who had not previously been treated with Leqembi. They also received weekly subcutaneous doses of the drug. 

Compared with the IV version, the subcutaneous formulation cleared 14% more amyloid plaque in the newly treated participants based on a preliminary analysis using amyloid PET at 6 months of treatment.

While the incidence of amyloid-related imaging abnormalities (ARIA) was slightly higher among the newly treated patients than among the cohort of participants in the core study, analysts have cautioned against drawing any conclusions because of the small sample size of newly treated patients. Eisai also said no exact comparison of ARIA events between the two groups of participants can be made for the same reason. 

Eisai plans to submit a biologics license application with the FDA for the subcutaneous version in the first quarter of 2024.

What else you need to know
The $2.67 billion settlement in the Blue Cross Blue Shield Association class-action antitrust lawsuit was upheld by the 11th Circuit Court of Appeals. Individuals policyholders and employers alleged that the association and nearly three dozen of its member plans entered into an agreement not to compete with each other, thereby violating antitrust laws and driving up the cost of health insurance. A U.S. district judge approved the settlement last August, but Home Depot and other plaintiffs challenged the agreement, saying it favored individuals and small businesses over self-insured employers. They also said the settlement did not go far enough to promote competition among the member plans. Those who objected to the settlement can ask the appellate court to reconsider its decision or take the case to the U.S. Supreme Court. 

Hospitals participating in the 340B drug discount program will have to resume listing offsite outpatient facilities on their Medicare cost reports and register the facilities in the 340B Office of Pharmacy Affairs Information System to qualify for the program. The requirements were waived in 2020 to expedite 340B certifications during the pandemic, but the Health Resources and Services Administration said in a Federal Register notice Friday that the waiver “has added risk and complexity to [its] ability to effectively oversee compliance in the 340B Program” and is no longer necessary now that the public health emergency has ended. HRSA is giving hospitals a 90-day grace period in which to provide information about when their offsite facilities will be in compliance with the requirements.  

Blue Cross and Blue Shield of North Carolina agreed to acquire all 55 FastMed clinics located in North Carolina. Tunde Sotunde, CEO of Blue Cross NC, said about half of the clinics are in rural areas with limited access to health care resources. FastMed clinics provide preventive, telehealth, occupational health, primary, and urgent care. Blue Cross NC said its short-term plans for the clinics include returning to pre-pandemic service operations; provider shortages in the last few years have caused the clinics to scale back. The insurer has been a minority investor in FastMed since 2012, according to a press release. The acquisition is expected to close early next year. In May, HCA Healthcare agreed to buy 41 of FastMed’s urgent care centers in Texas, and HonorHealth agreed in July to buy 26 urgent care centers it jointly operated with FastMed in Arizona. 

Almost 200 medical practices have come together to launch the American Independent Medical Practice Association (AIMPA), an advocacy organization that will focus on “promoting and protecting the high-quality, cost-efficient care furnished in independent medical practices,” according to the organization’s announcement. The participating practices provide health care services in 39 states and Washington, D.C., and employ more than 8,600 health care providers, including nearly 5,000 physicians. Collectively, they care for nearly 10 million patients annually. AIMPA’s vice president, Dr. David Eagle, said the organization “will advocate for policies that ensure that independent medical practices remain a robust alternative to care furnished in rapidly consolidating hospitals and health systems.”

Participants in CMS’ Global and Professional Direct Contracting (GPDC) model saved Medicare $371.5 million in performance year 2022 — more than five times as much as in the previous year. CMS released highlights from the model’s second-year results showing that 99 direct contracting entities (DCEs) participated in 2022 and their net savings was $484.1 million (vs. the model’s first year, when there were 53 participating DCEs who had net savings of $46.5 million). Net savings for individual DCEs in 2022 ranged from 26.6% for Bloom Health to -8.1% for Nivano Physicians; the average was 2%. Healthcare Dive pointed out that value-based primary care chains such as Iora, Oak Street Health, and VillageMD did particularly well. The GPDC model was redesigned and launched at the start of this year as the ACO Realizing Equity, Access and Community Health (REACH) Model. 



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