AstraZeneca has entered into a new global development and commercialization agreement with Daiichi Sankyo Company for DS-1062, Daiichi Sankyo’s proprietary trophoblast cell-surface antigen 2 (TROP2)-directed antibody drug conjugate (ADC) and potential new medicine for the treatment of multiple tumor types.

DS-1062 is currently in development for the treatment of multiple tumors that commonly express the cell-surface glycoprotein TROP2. Among them, TROP2 is overexpressed in the majority of non-small cell lung cancers1 and breast cancers, tumor types that have long been a strategic focus for AstraZeneca. This collaboration reflects AstraZeneca’s strategy to invest in antibody drug conjugates as a class, the innovative nature of the technology and the successful existing collaboration with Daiichi Sankyo.

“We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express TROP2. We are delighted to enter this new collaboration with Daiichi Sankyo and to build on the successful launch of Enhertu to further expand our pipeline and leadership in Oncology. We now have six potential blockbusters in Oncology with more to come in our early and late pipelines,” Pascal Soriot, Chief Executive Officer, said.

“DS-1062, one of our lead DXd ADCs that will form a pillar of our next mid-term business plan, has the potential to become a best-in-class TROP2 ADC in multiple tumors, including lung and breast cancers. This new strategic collaboration with AstraZeneca, a company with extensive experience and significant expertise in the global oncology business, will enable us to deliver DS-1062 to more patients around the world as quickly as possible. As we have done with Enhertu, we will jointly design and implement strategies to maximise the value of DS-1062,” Sunao Manabe, Representative Director, President and CEO of Daiichi Sankyo, said.

Using Daiichi Sankyo’s proprietary DXd ADC technology, DS-1062 is designed to deliver chemotherapy selectively to cancer cells and to reduce systemic exposure. A comprehensive development program with DS-1062 is planned globally.

AstraZeneca will pay Daiichi Sankyo an upfront payment of $1 billion in staged payments: $350 million is due upon completion, with $325 million after 12 months and $325 million after 24 months from the effective date of the agreement.

AstraZeneca will pay additional conditional amounts of up to $1 billion for the successful achievement of regulatory approvals and up to $4bn for sales-related milestones.

The transaction will be accounted for as an intangible asset acquisition, recognized initially at the present value of non-contingent consideration, with any potential future milestone payments capitalized into the intangible asset as they are recognized.

The companies will jointly develop and commercialize DS-1062 worldwide, except in Japan where Daiichi Sankyo will maintain exclusive rights. AstraZeneca and Daiichi Sankyo will share equally development and commercialization expenses as well as profits relating to DS-1062 worldwide, except for Japan where Daiichi Sankyo will be responsible for such costs and will pay AstraZeneca mid single-digit royalties. Daiichi Sankyo will record sales in the US, certain countries in Europe and certain other countries where Daiichi Sankyo has affiliates. Profits shared with AstraZeneca from those countries will be recorded as Collaboration Revenue by AstraZeneca. AstraZeneca will record Product Sales in other countries worldwide, for which profits shared with Daiichi Sankyo will be recorded within Cost of Sales. Daiichi Sankyo will manufacture and supply DS-1062.

There are no closing conditions to the transaction. The collaboration agreement became effective on 27 July 2020. The transaction does not impact the Company’s financial guidance for 2020.

TROP2 is a transmembrane glycoprotein that is overexpressed in many cancers including up to 80% of patients with triple-negative breast cancer. High TROP2 expression also has been identified in a majority of non-small cell lung cancers. Research indicates that high TROP2 expression is associated with cancer cell growth and proliferation. TROP2 is recognized as a promising molecular target for therapeutic development in various cancers.

DS-1062 is a TROP2-directed ADC. ADCs are targeted cancer medicines that deliver cytotoxic chemotherapy (‘payload’) via a linker attached to a monoclonal antibody that binds to a specific target expressed on cancer cells. Designed using Daiichi Sankyo’s proprietary DXd ADC technology, DS-1062 is comprised of a humanized anti-TROP2 monoclonal antibody attached to a topoisomerase I inhibitor payload by a tetrapeptide-based linker. DS-1062 is a potential new medicine that has not been approved for any indication in any country. Safety and efficacy have not been established.