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Cancer Drugs: Deals and Licensing for Antibody-Drug Conjugates
Wednesday, June 5, 2024

Antibody-drug conjugates (ADCs) are a promising class of cancer treatments with an accelerating number of U.S. Food and Drug Administration (FDA) approvals and rapidly growing market size, as discussed in previous articles in this series. This article discusses issues relating to deals and licensing for ADCs/Antibody therapeutics.

Introduction

About 10 million people die from cancer every year, making it one of the largest health problems globally. Chemotherapy has remained a hallmark of cancer treatment since the 1940s. However, traditional chemotherapy is a “blunt force instrument” that not only kills fast-growing cancer cells, but also kills healthy cells that grow and divide quickly, such as mucosal cells which line the mouth and gastrointestinal tract, as well as hair cells. Some chemotherapy toxicity, such as fatigue, neuropathy, hair loss and heart damage, can last a lifetime.

ADCs, sometimes called “smart chemotherapy”, are cancer therapeutics comprising three blocks: a selective monoclonal antibody, a stable linker, and a potent cytotoxic drug. With an ADC, the antibody identifies biomarkers on cancer cells and attaches itself to them, the chemical linker then breaks, enabling delivery of the cytotoxic drug payload into cancer cells without collateral damage to healthy cells. Compared to conventional cancer therapies, ADCs improve treatment outcomes with respect to tumor remission, time to tumor progression and overall survival by specifically channeling cytotoxic agents into the malignant target cells, thereby limiting the exposure of healthy tissue to adverse effects. Thus, ADCs can dramatically reduce chemotherapy toxicity as well as open the door to the use of new highly toxic chemotherapeutic agents.

The efficacy of the 14 ADCs currently approved in the U.S. (Mylotarg™, Adcetris™, Kadcyla™, Besponsa™, Lumoxiti™, Polivy™, Padcev™, Enhertu™, Trodelvy™, Akalux™, Zynlota™, Aidixi™, Tivdak™, Elahere™) is derived from the introduction of novel linkers for the binding of cytotoxic agents to the antibody as well as the development of new, potent cytotoxic agents. Such potent cytotoxic agents, in the absence of antibody targeting to cancer cells, can exhibit a toxicity level which prohibits conventional use.

Oncology is the largest and the fastest-growing therapeutic area for biopharma, and this has triggered an increased flow of M&A investment towards ADCs. In 2023, ADCs were valued at $9.7B in market revenue, and ADC revenue is expected to grow to $19.8B by 2028. At present, there are over 60 biopharma companies involved in the ADC space and at least 100 ADC drugs in clinical trials.

This rapid pace of innovation has spurred dealmaking in the ADC tech space. In 2023, there were 76 ADC deals made — including licenses, collaborations and acquisitions, and the deal pace is continuing in 2024 (see the table below with exemplary deals listed).

Acquirer/
Licensee
Seller/Licensor Drug Tradename $ Value Deal Date
AbbVie ImmunoGen Mirvetuximab soravtansine-gyxn ELAHERE $10.1B 2024
Genmab Profound Bio Rina-S (rinatabart sesutecan) $1.8B 2024
Ipsen Sutro Bioscience STRO-003 $900M 2024
Johnson & Johnson Ambrx Biopharma ARX517 ARX788 ARX305 $2B 2024
BMS Orum Therapeutics ORM-6151 $100M 2023
BMS Tubulis P5 conjugation platform & Tubutecan payloads (topoisomerase-1 inhibitors) Up to $1B 2023
BioNTech Duality Biologics DB-1303 and DB-1311 Up to $1.5B 2023
BioNTech MediLink Therapeutics TMALIN ADC platform $25M+ 2023
Pfizer Seagen (formerly Seattle Genetics) brentuximab vedotin enfortumab vedotin tisotumab vedotin ADCETRIS PADCEV TIVDAK $43B 2023
Merck Daiichi Sankyo patritumab deruxtecan (HER3-DXd) ifinatamab deruxtecan (I-DXd) raludotatug deruxtecan (R-DXd) $16.5B 2023
GSK Hansoh Pharma HS-20093 $185M 2023
GSK Hansoh Pharma HS-20089 $85M+ 2023
GSK Mersana Therapeutics XMT-2056 $100M
AstraZeneca LaNova Medicines LM-305 $55M 2023
Lilly Mablink Bioscience PSARlink platform (linker technology) MBK-103 $700M+ 2023
Lilly Emergence Therapeutics ETx-22 $470M 2023

Issues that Impact Deal Valuation

1. Nature of the technology to be licensed

Is the technology to be licensed platform technology applicable to a number of ADC drugs, such as a new linker technology, or it is specific to one or more drug candidates? Platform linker technology has significant value, but it does not have the same value as a marketed drug.

Although the concept seems simple, the combination of three components of ADCs (monoclonal antibody, linker, and cytotoxin) into an optimized and functional therapeutic agent remains a great challenge:

  • Linker: If the technology relates to an ADC linker, is there extensive data demonstrating the improved efficacy of multiple ADCs utilizing the linker?
  • Payload: The first generation of ADCs used classical chemotherapy drugs such as doxorubicin and methotrexate with the benefit of a well-known toxicity profile. Newer ADCs utilize potent tubulin inhibitors, DNA damaging agents, and immunomodulators, but these drugs tend to have a less robust toxicity profile. Notwithstanding the targeted delivery of ADCs, only about 2% of ADCs reach targeted tumor sites after intravenous administration, thus making payload toxicity a concern.
  • Antibody targeting antigen: What is the identity of the target cancer antigen, typically specific proteins overexpressed in cancer cells, such as HER2, trop2, nectin4 and EGFR in solid tumors, and CD19, CD22, CD33, CD30, BCMA and CD79b? Newer ADCs utilize bi-specific antibodies targeting multiple antigens to improve specificity and immune response.

2. Stage of development

If the technology relates to an ADC drug candidate, at what stage in development is the ADC? Early-stage development ADCs carry an inherently higher risk, and therefore lower valuation, although even late-stage development ADCs can fail. For example, AbbVie first entered the ADC space in 2016 with the acquisition of Stemcentrx, but subsequently the ADC Rova-T (Rovalpituzumab Tesirine) failed clinical trials. Similarly, following GSK’s 2023 acquisition of Mersana Therapeutics’ XMT-2056, a clinical hold was put on the drug following a patient death, although the hold was lifted by the FDA about 7 months later in late 2023. Further, two ADCs approved by the FDA, Mylotarg™ and Blenrep™, had their approvals withdrawn due to failure to meet requisite endpoints in post-approval trials. Mylotarg™ was subsequently re-approved at a lower dose in combination with chemotherapy.

3. Competitive products, disease indication, potential patient population

For the technology encompassed by a potential license or acquisition, are there competitive ADC products on the market or in late-stage clinical development, thereby shrinking the potential patient population? Also, there is a higher threshold for U.S. FDA approval for an ADC having the same indication as a prior approved ADC. Notably, none of the current FDA approved ADCs have the exact same indication.

Is the potential disease indication particularly challenging to treat? Abbvie’s failed Rova-T ADC was being evaluated for small cell lung cancer, which is a particularly recalcitrant type of cancer. To be clear, pharma companies should not shy away from seeking treatments for challenging types of cancer, but deal valuation should recognize the difficulty of success with treating certain cancer types. Another factor in the Rova-T studies was that the Rova-T development strategy moved directly from promising small phase 1 studies to large phase 3 studies without confirming the safety and efficacy data in phase 2 studies. It’s understandable that patients are eager for new treatments, but taking shortcuts in development can have undesirable consequences, and these factors should impact deal valuation.

What is the potential patient population? Certain cancers qualify for orphan drug designation, meaning a rare disease or condition impacting less than 200K patients in the United States. In 2024, the FDA granted orphan drug designation to Mabwell’s ADC 9MW2821 for the treatment of patients with esophageal cancer; in 2023 the FDA granted two orphan drug designations to Antengene’s ADC ATG-022 for the treatment of patients with gastric cancer and pancreatic cancer; and in 2022 the FDA granted orphan drug designation to Mersana Therapeutics’ ADC XMT-2056 for the treatment of gastric cancer. Orphan drug designation provides multiple benefits, such as exemption from FDA user fees, tax incentives for clinical trials, smaller clinical trials, minimal competition, and potential for seven years of market exclusivity after approval.

Therapies for cancers which occur more frequently than orphan drugs are also highly desirable. For example, breast cancer is the most common cancer type with 313,510 new cases expected in the United States in 2024, and there are multiple ADCs approved for treating different types of breast cancer: Kadcyla™ (HER2-positive metastatic breast cancer (mBC)), Enhertu (HER2-positive breast cancer), and Trodelvy (triple-negative breast cancer (mTNBC)). Notwithstanding these treatments, and that breast cancer deaths are decreasing, breast cancer is still the second leading cause of cancer death in women so there remains a need for new and improved therapies.

4. Exclusivity & Freedom to Operate

Is the technology proprietary and protected by a robust patent portfolio? While the pace of development for ADCs is rapidly accelerating, the timeline from initial research and development to market launch is not short and the capital investment needed to conduct initial research and clinical trials is extensive. Thus, it is critical that ADCs in development be protected by a robust patent portfolio. A more extensive discussion regarding patenting of ADCs can be seen in our recent “Cancer Drugs: Strategies For Patenting Antibody-Drug Conjugate Inventions” article.

A flip side to exclusivity is whether there is freedom to operate (FTO) for the licensed technology. An FTO assessment for an ADC needs to address the multiple components of the licensed or acquired ADC.

5. Commercial relationship between the parties

The presence of an existing commercial relationship between two parties can positively impact valuation of a new deal. See the multiple deals between GSK and Hansoh Pharma, with the first deal having a valuation of $86M and the second a valuation of $185M. An existing relationship reduces risk in that the parties are a known quantity to each other, and subsequent deals build upon technology and research following an initial agreement.

6. Market pricing

Finally, a factor that supports increased valuation of ADC deals is the existence of multiple FDA approved ADC products on the market, meaning that pricing of ADCs is not new. It is always hard to be the first to launch a new type of therapeutic (see e.g., the pricing controversy regarding Solvaldi™ for treatment of Hep C). Pricing of ADCs needs to factor in the complex manufacturing, as well as R&D for multiple failed ADCs. Current U.S. list pricing of ADCs include:

  • $19,231 per cycle (2 infusions) for Gilead’s Trodelvy™
  • $18,500 -$25,000 per month for ImmunoGen’s Elahere™
  • $34,000 per month for Pfizer’s Tivdak™ (21-day cycle)
  • $27,703 for one intravenous injection lpyl 10 mg of ADC Therapeutics’ Zilina™
  • $13,300 per month for AstraZeneca’s Enhertu™ (21-day cycle)
  • $17,718 per patient per 28-day cycle for Astellas’ Padcev™
  • $22,450 per month for Roche’s Polivy™ (21-day cycle)

For additional resources on Antibody Drug Conjugates (ADCs) and how they will change the health care & life sciences and technology industries, click here, here, and here to read the other articles in our series.

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