China-based Sichuan Kelun Pharmaceutical Co., Ltd (SHE: 002422) and its innovative drug development subsidiary Sichuan Kelun-Biotech Biopharmaceutical Co., Ltd (HKG: 6990) have announced that their US partner Merck, Sharp & Dohme (MSD; NYSE: MRK) has decided to cancel the development of one pre-clinical antibody drug conjugate (ADC) and will not exercise its option right to another pre-clinical ADC asset.
Financial Implications of Cancellation
Kelun-Biotech will not be required to refund any received payments to MSD regarding the termination of the two ADC licenses, and MSD is not obligated to pay any termination fees or subsequent license-related payments to Kelun-Biotech for the said ADC assets. This decision follows MSD’s recent USD 5.5 billion upfront payment to Japan’s Daiichi Sankyo for three of its preclinical candidates for global development.
Background of Licensing Deals
MSD previously entered into three licensing deals with Kelun-Biotech in quick succession, with total deal commitments worth upwards of USD 10 billion and covering all 9 ADC products in the Chinese firm’s pipeline. These included TROP2 ADC SKB264, Claudin18.2 ADC SKB315, and Nectin-4 ADC SKB410, all clinical ADC products, alongside 6 pre-clinical ADCs. In December 2022, MSD invested USD 100 million into Kelun-Biotech, taking a 6.95% stake.
Future Development Plans
The remaining 7 ADCs committed under the earlier deal remain under co-development. MSD is now expected to advance the clinical development of SKB264 and SKB315, as well as an undisclosed Phase I program, indicating a continued commitment to innovation in the ADC space.-Fineline Info & Tech
