AstraZeneca Plc and Daiichi Sankyo Co Ltd sign lucrative cancer drug deal

The deal sees Britain’s AstraZeneca Plc led by Pascal Soriot sharing development and commercialization costs for the drug worldwide. For AstraZeneca the deal makes sense as it will replenish its pipeline as its cancer drug sales grow.

In a significant development, AstraZeneca Plc and Daiichi Sankyo Co Ltd have signed a deal to develop and sell Daiichi’s cancer drug trastuzumab deruxtecan; the deal could see AstraZeneca, a British drugmaker, pay as much as $6.9 billion to its Japanese partner.

With the news reaching the market, Daiichi’s shares surged by 16% , its daily limit, on Friday. Daiichi’s shares have risen by 45% this year on the back of investor expectations for increased usage of the drug.

Under the terms of the agreement, AstraZeneca will make an upfront payment of $1.35 billion to Daiichi. Both companies will share development and commercialization costs for the drug worldwide, while Daiichi will retain the right to sell and market the drug exclusively in Japan.

Daiichi is the latest Japanese drugmaker to strike such a deal to gain access to a bigger overseas player’s R&D and sales clout.

The deal assumes significance on the grounds that it is a huge bet on Japanese research by Pascal Soriot, AstraZeneca’s Chief Executive, who is seeing results in his efforts to replenish the drugmaker’s pipeline as its cancer drug sales grow.

The duo have a long-standing relationship which includes a 2015 agreement to jointly commercialize constipation drug Movantik in the United States.

Trastuzumab deruxtecan “could become a transformative new medicine for the treatment of HER2 positive breast and gastric cancers,” said Soriot in a statement.

The drug also has the potential to treat lung and colorectal cancers.

Incidentally, AstraZeneca plans on using some of the proceeds of the $3.5 billion share issue to fund the deal.

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