Technology Kelun sells cancer drug development rights to Merck in...

Kelun sells cancer drug development rights to Merck in a deal worth $1.4 billion


United States-based Merck & Co has made an addition to its cancer-fighting drugs after entering into a contract with Chinese Pharmaceutical Company Sichuan Kelun. The details have not been disclosed by either party as yet.

Merck is only paying $47M (3.3% of the total amount) upfront, which is to gain global rights to the cancer drug. The remaining $1.36B will be paid in increments at different stages of the project, as well as the royalties resulting from sales. The said royalty payments are to be made in a ratio that is agreed upon by the partners.

As part of a collaboration between the two companies, Merck had made an upfront payment earlier, which was $17M, part of the total $47M upfront payment. 

Kelun Pharmaceutical believes this deal would fast-track its introduction to the global market, not only for oncological projects but for all of the company’s offerings. Following the disclosure of the cancer drug deal, the Chinese company saw a rapid 6.7% rise in its shares.

In March, Kelun Pharmaceutical approved an exclusive license to Ellipses Pharma, a drug developing company from the United Kingdom for the development of another experimental cancer drug in overseas markets, which also comprise the United States and the European markets. Kelun Pharmaceutical also has a subsidiary in the United States that goes by the name of Klus Pharma.

Kelun Pharmaceutical is working on the development of ADC candidates, bispecific antibodies, monoclonal antibodies, and numerous types of small molecules, all of which will have oncological applications as well as non-oncological.

Although both the companies have been reserved when it comes to the details of the contract, there is a possibility that the purchased drug could be either of the two; TROP2-targeting antibody-drug conjugate (ADC) SKB264, or HER2-targeting ADC A166. Higher emphasis is on the former as it could pair well with Merck’s existing immune-oncology hit Keytruda (pembrolizumab), and it is a realistic target. However, both of these drugs are in development stage phase 2 in China while in the United States they are in the early-stage testing, which makes both of these drugs a possibility.

Merck has previously been combining its hit Keytruda with TROP2-directed ADC datapotamab deruxtecan, which is manufactured by Daiichi Sankyo (a Japanese Pharmaceutical company), and AstraZeneca in previously-untreated non-small cell lung cancer patients (NSCLC), to compare its performance with Keytruda unaccompanied.

Rob Davis, company president, shared the organization’s desire to construct its channels using external partnerships on Merck’s results call of the first quarter.

Merck has been looking for business development deals to diminish its dependence on Keytruda, which is becoming harder due to the assets’ high values, mainly in the United States. The company is “not seeing a fundamental shift in the seller expectations as of this point,” according to Rob Davis. He also said that raising capital through public listings is hard for biotech companies as they grapple with financial limitations.

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