M&As: what’s up with the ADC buying spree?


Antibody drug conjugates (ADCs) have been much sought-after through investments of late, with big pharma eyeing these drugs developed by various biotechs, to eventually nab them. With yet another ADC being bought by Bristol Myers Squibb, and AbbVie’s proposed $10 billion deal to seize ImmunoGen’s oncology pipeline, are these drugs the golden ticket to targeted cancer treatment?

“There are very strong incentives for companies to explore new technologies in this space, and the increased flow of M&A (mergers and acquisitions) investment towards antibody drug conjugates indicates the level of opportunity that exists,” said Subin Baral, Global Deals Leader, at EY Life Sciences.

AbbVie’s proposed multibillion dollar acquisition of ImmunoGen, oncology industry expanding

Commercially, as oncology is the largest and the fastest-growing therapeutic area for biopharma, Baral pointed out that big pharma companies access these kinds of innovations like ADCs, through incubators, accelerators and various strategic partnership deals. 

“At present, we are seeing companies direct more of their firepower towards outright acquisition, but whichever dealmaking pathways are used, investment will keep flowing towards the antibody drug conjugate sector as it continues to build up clinical and commercial acceptance,” said Baral.

Multinational pharmaceutical AbbVie’s upcoming buyout of American ADC company ImmunoGen, is quite telling of this growing interest in the ADC space. The $10.1 billion agreement would tighten the big pharma’s grip on the oncology sector, as it would acquire the U.S. Food and Drug Administration (FDA)-approved ADC, Elahere. 

Elahere is a drug that targets folate receptor alpha (FRα) in adults with ovarian cancer, fallopian tube cancer, or primary peritoneal cancer, who have not responded or are no longer responding to treatment with platinum-based chemotherapy.

This is not the first time that AbbVie has taken an interest in the field. However, when it had purchased American company Stemcentrx for billions of dollars back in 2016, failed clinical trials of the ADC Rova-T had led to layoffs and pipeline cuts.

BMS sweeps up ADCs in M&A deals

BMS’ $100 million acquisition of South Korean biotech Orum Therapeutics’ ADC candidate is proof of this. The anti-CD33 antibody-enabled GSPT1 degrader, ORM-6151, received U.S. Food and Drug Administration (FDA) clearance to pursue phase 1 trials for treating patients with acute myeloid leukemia (AML) among other blood cancers.

Mortality rates for AML have increased by 55% over the past few decades in the U.K. alone, according to Cancer Research UK, and, on top of that, patients have unmet needs demanding more targeted approaches that are well-tolerated. 

“At present, the gold-standard treatment for many cancers involves a mixture of cytotoxic chemotherapies – drugs which kill cancer cells but carry significant side-effects for other body cells – and targeted therapies, particularly monoclonal antibodies (MAbs) which can identify and attach to specific protein markers on cancer cells,” said Baral.  

ADCs bring these two technologies together. While the antibody targets cancer cells with high precision, it is connected to – through a linker – a highly potent chemotherapy drug. So, when the antibody identifies biomarkers on cancer cells and attaches itself to them, the drug payload is delivered into cancer cells without the collateral damage to healthy cells, which would typically come with chemotherapy.

Describing ADCs as “smart chemotherapy,” Baral said: “This is a particularly promising line of treatment for solid tumors (cancers of bodily organs, rather than blood cancers), which are traditionally very resistant to pharmaceutical treatment.”

But BMS’ fondness for ADCs didn’t just grow recently. Earlier this year, it purchased German company Tubulis’ ADC platforms for $22.75 million, and the latter is eligible to pocket more than a billion dollars in milestone payments. The Tubutecan payload platform and the Tub-tag conjugation platform have been used to develop a string of preclinical candidates so far.

But BMS’ ADC fixation is fairly modest, compared to other multinationals. Like Merck’s $4 billion ADC buyout with Japanese multinational Daiichi Sankyo. Three of the latter’s ADC candidates will be commercialized by Merck, around the world, except in Japan. For one of its investigational drugs, patritumab deruxtecan, which is a human epidermal growth factor receptor (HER)-3 directed ADC, it has filed a biologics license application (BLA) based on recent phase 2 trial results in patients with EGFR-mutated locally advanced or metastatic non-small cell lung cancer (NSCLC).

Big pharma’s affinity to ADC grows

Meanwhile, global biopharma GSK procured Chinese biotech Hansoh Pharma’s gynaecologic cancer candidate last month. Currently in a phase 1 trial that is set to end by the end of this year, HS-20089, which targets the B7-H4 surface antigen overexpressed in ovarian and endometrial cancers, showed that it suppressed tumor cell growth.

According to the $85 million deal, where Hansoh will be eligible to receive up to $1.485 billion in milestone payments, Hansoh will hand over exclusive worldwide rights – except in China, Hong Kong, Taiwan and Macau – of HS-20089 to GSK. This comes almost a year after GSK doled out $100 million for the U.S.-based Mersana Therapeutics’ HER-2 cancer candidate. However, a clinical trial hold has just been lifted for the candidate, after a patient had died earlier this year.

As Merck and GSK tread into the ADC space, it seems like ADCs might be BioNTech’s latest passion project as well. The German immunotherapy giant is collaborating with clinical-stage ADC companies DualityBio and MediLink Therapeutics to treat HER-2 and HER-3 cancers. Its acquisition of MediLink’s asset that is designed to combat cancers where HER-3 is overexpressed, like NSCLC and breast cancer, is based on the latter’s tumor microenvironment activable linker-payload (TMALIN) platform, which has supposedly shown a wider therapeutic window compared to existing ADC technologies, in preclinical studies.

And that’s not all with ADC M&As. Pharmaceutical giant AstraZeneca hopped on the trend in 2023 as well, when the British biotech got its hands on Chinese company LaNova Medicines’ preclinical candidate against relapsed and refractory multiple myeloma, in exchange for $55 million. Moreover, American multinational Lilly is set to acquire ADC-focused French biotech Mablink Bioscience, which is known for its PSARlink platform that develops linker molecules. This was following another one of Lilly’s ADC purchases, of Emergence Therapeutics, in August.

These notable acquisitions within the large commercial market for cancer treatments, means that there is significant ongoing investment in cancer R&D, according to Baral. 

“The sector will therefore continue to expand. There are already new approaches opening up for ADC platforms, including radioligand conjugates (using antibodies to deliver targeted radiotherapy), immune-stimulating conjugates, probody drug conjugates, and other novel approaches,” said Baral. “The size of the patient population and potential market, mean there is scope for all of these approaches and more. There are also potential applications of ADC technology outside oncology, including in autoimmune diseases.”

ADC market poised to double in five years, driven by increased investment

ADCs have come a long way since the first one was approved by the FDA and soon withdrawn from the market after a black box warning for potential liver damage. Although, ADC resistance is a potential drawback that can eventually result in disease progression.

“We often see with new modalities that, while the promise is obvious, it takes some time for the technology to prove itself,” said Baral. “ADC technology has matured in the decade since the first ADC to win full FDA approval reached the market in 2013, and since 2017, there has been a wave of 13 new ADC launches. At this point, there are over 60 biopharma companies involved in the space and at least 100 further products in clinical trials. With two leading industry players’ deals of over $20 billion in the last few years, there are signals the industry now recognizes ADCs as a key technology.”

Baral explained that these ADC M&A deals contribute towards a competitive commercial market that includes re-engineering monoclonal technology, cell and gene therapy, mRNA vaccines against cancer, novel radiotherapies and protein degraders.

With ADCs being valued at $9.7 billion in 2023, poised to hit $19.8 billion in five years, according to MarketsandMarkets, its popularity has risen over the past decade. And the recent big pharma splurge on ADCs seems to be a testament to this, although we are yet to see the fruits of it.

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