AstraZeneca has agreed to pay potentially more than $6.9 billion to co-develop Daiichi Sankyo’s Trastuzumab deruxtecan—just months before the first application to market the cancer-fighting antibody-drug conjugate (ADC) is set to be submitted to the FDA.

Daiichi Sankyo is developing trastuzumab deruxtecan, also called DS-8201, for patients with multiple HER2-expressing cancers, as well as for patients with HER2-low expression. Trastuzumab deruxtecan is the subject of five pivotal trials in HER2-expressing breast and gastric cancers.

Trastuzumab deruxtecan is also in Phase II development for HER2-expressing advanced colorectal cancer and metastatic non-squamous HER2-overexpressing or HER2-mutated non-small cell lung cancer (NSCLC), and Phase I development in combination with Bristol-Myers Squibb’s Opdivo® (nivolumab) for HER2-expressing metastatic breast and bladder cancers. Additional development for indications in breast, NSCLC, gastric, and colorectal cancers is ongoing, the companies added.

AstraZeneca and Daiichi Sankyo said they plan to accelerate and expand development of trastuzumab deruxtecan across breast and other cancers, reasoning that the ADC has the potential to redefine standard of care.

“We believe that trastuzumab deruxtecan could become a transformative new medicine for the treatment of HER2positive breast and gastric cancers,” AstraZeneca CEO Pascal Soriot declared in a statement. “In addition, it has the potential to redefine breast cancer treatment as the first therapy for HER2-low expressing tumors. It also has the potential to treat other HER2-mutated or HER2-overexpressing cancers, including lung and colorectal cancers.”

Soriot also noted that the companies have collaborated on developing other drugs. In 2015, for example, Daiichi Sankyo agreed to pay AstraZeneca up to $825 million to co-commercialize in the United States AstraZeneca’s Movantik™ (naloxegol), an opioid-induced constipation treatment for adults with chronic noncancer pain.

Added George Nakayama, Daiichi Sankyo’s representative director, chairman, and CEO: “Through the strategic collaboration with AstraZeneca, a company with a wealth of global experience and expertise in oncology, we will combine our respective skill sets to maximize the value of trastuzumab deruxtecan and accelerate the establishment of our global oncology business.”

However, as of June 17, when Daiichi Sankyo holds its annual general meeting of shareholders, Nakayama will relinquish his CEO position while retaining his other positions, to be succeeded as chief executive by Sunao Manabe, who is now representative director, member of the board, president, and COO.

Targeting, delivering chemotherapy

Trastuzumab deruxtecan, the flagship candidate of Daiichi Sankyo’s cancer ADC franchise, consists of a humanized HER2 antibody attached to a novel topoisomerase I inhibitor payload by a tetrapeptide-based linker. Trastuzumab deruxtecan is designed to target and deliver chemotherapy inside cancer cells and reduce systemic exposure to the cytotoxic payload (or chemotherapy) compared to common delivery of chemotherapy.

In 2017, the FDA granted its Breakthrough Therapy Designation to trastuzumab deruxtecan in HER2-positive, locally-advanced or metastatic breast cancer who have been treated with Herceptin® (trastuzumab) and Perjeta® (pertuzumab)—both marketed by Genentech, a member of the Roche Group—and have disease progression after trastuzumab emtansine.

Last year Daiichi Sankyo launched two additional Phase III trials designed to assess the safety and efficacy of trastuzumab deruxtecan:

  • DESTINY-Breast03 (NCT03529110), a head-to-head comparison vs. another Genentech-marketed cancer treatment Kadcyla® (trastuzumab emtansine [T-DM1]), also a HER2 targeting ADC; and
  • DESTINY-Breast02 (NCT03523585), designed to study trastuzumab deruxtecan in patients previously treated with standard of care HER2 therapies including T-DM1, in patients with HER2 breast cancer that has been treated before and cannot be surgically removed, or has spread.

The first BLA for trastuzumab deruxtecan is scheduled in the second half of this year, AstraZeneca said, when the companies will seek FDA approval to market the ADC for patients with advanced or refractory breast cancer.

Separately, Daiichi Sankyo said it will accelerate filing of a separate BLA in the first half of its 2019 fiscal year—between April 1 and September 30—in HER2 positive metastatic breast cancer previously treated with T-DM1.

That BLA, which was originally scheduled for 2020, will be based on results from the pivotal Phase II DESTINY-Breast01 trial (NCT03248492), which will be presented at an unspecified upcoming medical meeting, the company said. DESTINY-Breast01 was designed to evaluate the safety and efficacy of trastuzumab deruxtecan in patients with HER2 positive unresectable and/or metastatic breast cancer previously treated with T-DM1.

$1.35B upfront

AstraZeneca agreed to pay Daiichi Sankyo $1.35 billion upfront—half of it due upon execution of the global development and commercialization licensing agreement, and the rest payable in 12 months. AstraZeneca also agreed to pay Daiichi Sankyo up to $5.55 billion tied to achieving milestones, including $3.8 billion for regulatory and other milestones, and $1.75 billion for sales-related milestones.

The companies agreed to jointly develop and commercialize trastuzumab deruxtecan worldwide, except in Japan where Daiichi Sankyo will maintain exclusive rights. Daiichi Sankyo will be solely responsible for manufacturing and supply.

Daiichi Sankyo will record sales in the U.S., certain European countries, and certain other markets where Daiichi Sankyo has affiliates. Profits shared with AstraZeneca will be accounted for as collaboration revenue by AstraZeneca—which is expected to record product sales in all other markets worldwide for which profits shared with Daiichi Sankyo will be accounted for as cost of goods sold.

Separately, AstraZeneca said it would pay for the upfront payment and near-term milestones to Daiichi Sankyo from the proceeds of a new $3.5 billion equity placement, more than half of which AstraZeneca plans to use toward the transaction and ongoing collaboration.

AstraZeneca said the collaboration is expected to be neutral to core earnings per share (EPS) in 2019, and begin adding to core EPS the following year, growing to a “significant contribution” in 2023.

AstraZeneca said the collaboration deal and financing will not affect its guidance to investors for 2019, as disclosed on February 14. The company projected “a high single-digit percentage increase” in product sales, as well as core earnings per share in the range of $3.50 to $3.70.

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