Big pharma places big bets on antibody-drug conjugates

Antibody-drug conjugates have emerged as one of the most popular treatment modalities for investment in recent years. Following Pfizer’s proposed move for Seagen, Ben Hargreaves tracked how the field has developed in recent years, and why the industry is expecting major commercial successes in the area.

The first ever approval of an antibody-drug conjugate (ADC) did not prove to be a success. The treatment, known by brand name Mylotarg (gemtuzumab ozogamicin), was given marketing authorisation by the FDA in 2000 for the treatment of acute myeloid leukaemia (AML). Clinical trial data meant that the treatment had already been associated with veno-occlusive disease, which can be fatal. However, further safety concerns were raised in follow-up clinical trials, and it was revealed that no clinical benefit was gained over standard therapy. Pfizer, which had acquired Mylotarg through an acquisition of Wyeth, voluntarily withdrew the treatment from the market. The result saw worries over potential toxicity slow research, as a lack of commercial success and need to navigate safety issues dissuaded some companies from engaging in the area.

Despite this, the obvious potential of the treatments meant that research and development continued and a ‘second-generation’ of ADCs emerged. These therapies managed to have higher specific antigen levels, more stable linkers and longer-half lives. However, off-target toxicity issues, faster clearance, and competition with unconjugated antibodies were negative factors that remained. The third-generation of ADCs has since been developed, and drugmakers managed to take the lessons from earlier iterations to create more effective therapies. With safety and efficacy improved, greater commercial interest and capital investment has emerged.

A growing pipeline

The list of approved ADCs has grown quickly in the last few years, with eight ADC products approved between 2019 and 2022. Several of these approved treatments have rapidly transitioned into blockbuster successes for their owners, such as Roche’s Kadcyla (trastuzumab emtansine), and Daiichi Sankyo and AstraZeneca’s Enhertu (trastuzumab deruxtecan). The increasing sophistication of ADC technology, with improvements being made to linker chemistry and to payload potency, has allowed the benefit-risk ratio to weigh more heavily in favour of their use.

The overall pipeline of clinical prospects is growing, as a result. Analysing data from 2022, Beacon Intelligence found that the number of new ADCs entering the clinic had doubled compared to 2021. A large amount of this research was emerging from the US, but when Asian countries were grouped together, the amount of clinical assets being developed there outnumbered those in the US. IQVIA’s 2023 report on global oncology trends outlines that R&D growth into solid tumour research is a major focus across the industry, and ADCs are becoming a larger part of this research. This is due to ADC clinical prospects being concentrated on solid tumour targets, with 65% growth over the last five years in assets in the area.

The floodgates open

Due to increasing numbers of approvals and the commercial success being seen, licensing and acquisition deals are rising in number. According to GlobalData, the industry saw a 400% growth in total deal value for licensing deals between 2017 and 2022. In 2022, this saw peak value of the deals reach $16.6 billion. The first half of 2023 also saw 19 disclosed licensing deals, with a total value of $2.3 billion.

However, the largest deal with the most significance in the space is Pfizer’s proposed acquisition of Seagen, valued at $43 billion. Since this agreement was announced, the floodgates have opened on ADC deals. None have been concluded at the same scale, but many would lead to payouts in the billions of dollars should the ADC prospects hit development milestones.

Similarly to Pfizer, MSD has also been making major investments into ADCs, as the company reached an agreement in October with Daiichi Sankyo, one of the leaders of the ADC field, to gain access to three drug candidates. The deal sees MSD pay $4 billion upfront, but if each of the candidates hit their milestones then the total value could be as much as $22 billion.

Even more recently, AbbVie has joined the list of big pharma admirers of ADCs to launch a $10.1 billion deal to acquire ImmunoGen. The motivation behind the move arrives not only in taking on the company’s pipeline of ADC assets, but also the fact that the ImmunoGen possesses an approved product, Elahere (mirvetuximab soravtansine). Though not currently a blockbuster product, Elahere is already bringing in sales exceeding $100 million per quarter.

Earlier this year, BioNTech sealed an agreement with DualityBio to gain rights to two ADCs being developed within oncology, which could rise to be worth more than $1.5 billion to the latter company. At a similar time, Takeda also made an agreement with Innate Pharma worth a potential $410 million for the development of an ADC designed to treat coeliac disease.

The deals also extend into wider areas of the industry, with contract development and manufacturing organisations (CDMOs) making moves in the space. Lonza recently bought Synaffix to gain access to both its portfolio of ADCs, but primarily to own its platform technology to design and develop new ADC therapies. The strategic move by Lonza was made with the expectation that there will be a growing number of companies looking to develop ADCs, and therefore increased demand for CDMO services to aid in the R&D process.

ADC developers are also benefitting from this rash of deal-making by being the subject of private equity and venture capital investment. According to EY Life Sciences, 52% of private equity and venture capital investment in the first quarter of 2023 was focused on new treatment modalities, including ADCs, gene therapies, and peptides. 

Protected future

More than just being potentially commercially lucrative, the investment into ADCs can also be viewed as a strategic move on the part of the larger companies to develop IP protected from the growing influence of biosimilars.

Ophelia Chan, business fundamentals analyst at GlobalData, said, “Advancements in ADCs could potentially spur biosimilar competition; however, the complex design of ADCs presents a greater challenge for rivals. The lack of biosimilar competitors could provide ADC drugmakers with more pricing flexibility and foster new collaborations with top players in the biopharmaceutical industry.”

This could explain part of the reasoning behind why many big pharma players are making moves to break into the ADC market. For the first company to have an ADC approved, Pfizer, its commercial interest in the area has come full circle: from pulling the first ADC from the market, to potentially paying one of the largest acquisition fees on record to re-enter the space as a leader.

However, the story of Mylotarg did not end with it being pulled from the market. In 2017, the company received approval from the FDA for the treatment to once again be used to treat AML. The decision was reached after research had continued into the treatment to prove that the benefit-risk profile had been established at a lower dose than the original approval. Now, the comeback story of Pfizer’s therapy is being played out across the wider ADC space, as major companies bet that the treatments are set to be commercial winners in the years to come.