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AstraZeneca and Daiichi Sankyo enter collaboration

Pascal Soirot

The global development and commercialization collaboration agreement with Daiichi Sankyo is for trastuzumab deruxtecan (DS-8201), a antibody-drug conjugate (ADC) and potential new targeted medicine for cancer treatment.

Trastuzumab deruxtecan is currently in development for the treatment of multiple HER2-expressing cancers, including breast and gastric cancer, and in patients with HER2-low expression. In 2017, trastuzumab deruxtecan was granted Breakthrough Therapy Designation by the US FDA for the treatment of patients with HER2-positive, locally-advanced or metastatic breast cancer who have been treated with trastuzumab and pertuzumab and have disease progression after trastuzumab emtansine.

A first regulatory submission is scheduled for the second half of 2019 for patients in the advanced or refractory breast cancer setting. Additional development for the treatment of breast, non-small cell lung cancer (NSCLC), gastric and colorectal cancers is ongoing.

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

“We believe that trastuzumab deruxtecan could become a transformative new medicine for the treatment of HER2-positive breast and gastric cancers. In addition, it has the potential to redefine breast cancer treatment as the first therapy for HER2-low expressing tumours. It also has the potential to treat other HER2-mutated or HER2-overexpressing cancers, including lung and colorectal cancers. We are proud to be working with Daiichi Sankyo, a long-term collaborator of AstraZeneca in other disease areas,” says Pascal Soriot, Chief Executive Officer, AstraZeneca.

Using Daiichi Sankyo’s DXd proprietary ADC technology, trastuzumab deruxtecan has been designed to deliver chemotherapy selectively to cancer cells and reduce systemic exposure, in contrast to conventional chemotherapy delivery. Data from the ongoing first-time-in-human trial shows strong activity in a number of tumour types. In particular, the strength of the overall response rate and durability of response in patients previously treated with trastuzumab emtansine for HER2-positive metastatic breast cancer formed the basis for the Breakthrough Therapy Designation.

Financial considerations

Under the terms of the agreement, AstraZeneca will pay Daiichi Sankyo an upfront payment of $1.35bn, half of which is due upon execution, with the remainder payable 12 months later.

Contingent payments of up to $5.55bn include $3.8bn for potential successful achievement of future regulatory and other milestones, as well as $1.75bn for sales-related milestones.

Overall, the transaction will be accounted for as an intangible asset acquisition, recognised initially at the present value of non-contingent consideration, with future milestones capitalised into the intangible asset as they are recognised. AstraZeneca and Daiichi Sankyo will share equally development and commercialisation costs as well as profits from trastuzumab deruxtecan worldwide, except for Japan.

Daiichi Sankyo will record sales in the US, certain countries in Europe and certain other markets where Daiichi Sankyo has affiliates. Further to the financial reporting announcement below, profits shared with AstraZeneca will be accounted for as Collaboration Revenue by AstraZeneca.

AstraZeneca 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. The transaction is expected to be neutral to core earnings in 2019, with growing Core EPS accretion from 2020 and making a significant contribution in 2023. There are no closing conditions to the transaction. The collaboration agreement will become effective on 29 March 2019.

The upfront payment and near-term milestones under the transaction will be funded from the proceeds of a new equity placement of approximately $3.5bn, of which more than half will be used to fund this transaction and the ongoing collaboration.

Photo of Pascal Soriot: AstraZeneca