AZ makes $6.9bn play for Daiichi Sankyo HER2 drug

AstraZeneca has made a big bet on a HER2-targeted antibody-drug conjugate developed by Daiichi Sankyo as it tries to add another pillar to its fast-growing cancer business.

The $6.9bn deal, funded in part by an equity placement of approximately $3.5bn, includes a sizeable $1.35bn upfront payment which reflects the fact that the ADC – trastuzumab deruxtecan (DS-8201) – is in very late-stage development with a regulatory filing due later this year in advanced or refractory breast cancer.

The remainder comes from $3.8bn tied to future regulatory and development milestones, with another $1.75bn pledged if DS-8201 meets expected sales targets. The companies will split the costs of bringing the ADC to market and share in global profits, with the exception of Japan where Daiichi Sankyo retains exclusive rights to what it says is the “flagship” drug in its incology pipeline.

DS-8201 is currently in phase 3 testing for HER2-positive breast cancer, including a head-to-head trial with Roche’s rival HER2 ADC Kadycla (trastuzumab emtansine), with mid-stage trials being conducted in gastric, colorectal, and non-small cell lung cancer (NSCLC).

Notably, it is also in a phase 3 trial in breast cancer patients whose tumours have lower levels of HER2 expression. There are no anti-HER2 therapies currently approved for HER2 low expressing breast cancer, which represents about half of all cases.

The ADC has picked up a breakthrough designation from the FDA as treatment for advanced HER2-positive breast cancer who have previously been treated with Roche’s other HER2 drugs Herceptin (trastuzumab) and Perjeta (pertuzumab), and have disease progression after Kadcyla treatment.

AZ chief executive Pascal Soriot said that DS-8201 could become a “transformative new medicine” for the treatment of HER2-positive breast and gastric cancers, as well as the first drug in the class for low HER2 tumours.

The ADC rounds out AZ’s portfolio of emerging cancer drugs, sitting alongside cancer immunotherapy Imfinzi (durvalumab), targeted therapy Tagrisso for lung cancer and PARP inhibitor Lynparza (olaparib) for ovarian and breast cancer which collectively added more than $3bn to the company’s top-line last year.

AZ said that licensing DS-8201 helps build up one of its four strategic areas in oncology, namely “tumour drivers  and resistance, DNA damage response, immuno-oncology and ADCs.”

The drug links an HER2-targeting antibody with a topoisomerase I inhibitor , while Kadcyla links the HER2 antibody to a tubulin inhibitor. Daiichi Sankyo has said that means its drug can carry a greater cytotoxic payload.

Despite a couple of knockbacks in trials seeking to expand its uses into other indications such as gastric cancer, Kadcyla has become an important part of Roche’s anti-HER2 portfolio with sales approaching $1bn last year. That is however well behind the $7bn and $2.8bn added to the company’s coffers by Herceptin and Perjeta.

Current treatment guidelines for patients with HER2 positive metastatic breast cancer recommend the combination of trastuzumab, pertuzumab and a taxane as first-line therapy, with Kadcyla approved for second-line use.