Medical personnel use a mammogram to examine a woman’s breast for breast cancer.
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SAN FRANCISCO — An established but the promising group of anticancer drugs was a hot market in 2023 and more companies could be looking treatments to fuel growth next year.
This was a clear quote from JPMorgan Healthcare Conference in San Francisco, the nation’s largest gathering of biotech and pharmaceutical industry executives, analysts and investors.
During the four-day event, the biotech and pharmaceutical industry signaled its enthusiasm for antibody-drug conjugates, or ADCs, which provide a cancer-killing therapy to target and kill specific cancer cells and minimize damage to healthy. Meanwhile, standard chemotherapy is less selective – can affect both cancerous and healthy cells.
Johnson & Johnson last week announced the acquisition of ADC-developer for 2 billion dollars Ambrx Biopharma to enhance the existing ADC pipeline, which some researchers believe could herald a “new era” for the treatment of cancer. Other pharmacists such as Pfizer and Merckwhich closed some of the more than 70 offers related to ADC over the past year, said these drugs will be key growth drivers for their businesses.
Interest in the drugs will only continue this year, as some analysts expect more trades and progress in ADCs in progress.
The factors fueling the recent rise in ADCs will not abate this year and the fear of missing out among non-entrants will drive more companies to enter the space, Andy Hsiehan analyst at William Blair & Company told CNBC.
These factors include increased confidence in ADC technology among companies and researchers, the potentially greater market exclusivity of these drugs, and the rise of attractive ADCs from pharmaceutical companies in Asia.
The drugs also have the potential to generate huge profits: ADCs could account for $31 billion of the $375 billion global cancer market by 2028, according to report citing estimates from drug market research firm Evaluate. The market for these drugs in 2023 was estimated to be worth about $9.7 billion, another report said by research firm MarketsandMarkets.
“It’s kind of like FOMO, right? Everyone wants to gain exposure [ADCs] and they’re basically making it a cornerstone of their entire corporate strategy,” Hsieh told CNBC. “I really don’t see any kind of slowdown and in our view it will be a continuation of the momentum of 2023.”
Why ADCs have become popular
ADCs are not new.
About a dozen have earned endorsements by regulatory authorities around the world, with the sooner comes in 2000. But trading began to pick up in 2020 and “really take off” in 2022 and 2023, according to Daina Grayboschsenior research analyst at Leerink Partners covering immuno-oncology.
He called the recent rise of ADCs a “multi-decade innovation cycle,” where it took several years for the industry to make some “fundamental transformative innovation, which then unlocked more investment and much more potential.”
Improvements in ADC technology appeared to have made some newer iterations of the drugs safer and more effective, which boosted industry confidence in their capabilities and encouraged more investment in the space. Steady growth in approvals and acquisitions in recent years has also contributed to that confidence, convincing some companies that ADCs have a “lower-risk growth path,” Hsieh said.
A view of an AstraZeneca facility is seen during Prime Minister Scott Morrison’s visit on August 19, 2020 in Sydney, Australia.
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Graybosch highlighted an ADC jointly developed by AstraZeneca and Japanese pharmacist Daiichi Sankyo called Enhertu, which it called the first of its “next-generation ADCs” that had a wider therapeutic range compared to older versions of the drugs. For example, Enhertu became the first ADC to show the ability to treat breast cancer patients with high and low levels of a protein called HER2which controls how breast cells grow, divide and repair damage.
Pharmacists have optimized key components of ADCs in recent years, such as the chemical bond that helps these drugs deliver a cancer-killing treatment to cancer cells, according to William Blair’s Hseih. He said companies are learning how to maximize the effectiveness of these drugs “without having a lot of side effects.”
ADCs still have their drawbacks—for example, cancerous tumors can develop resistance to them over time. And not all of the newer ADCs in development are successful: Last month, Sanofi scrapped its only experimental ADC after it failed a late-stage trial in lung cancer patients.
Graybosch also noted that companies from Japan and China have emerged as effective ADC developers that “rapidly innovate” drugs and bring ADCs to market that could be better than older versions of the drugs.
Companies based in the US and the UK enter into agreements with these international pharmaceutical companies, such as two licensing agreements GSK signed late last year with China’s Hansoh Pharma for ADCs targeting various types of cancer.
The complexity of ADC technology has likely become another incentive for companies to invest in and develop the drugs, Hsieh noted. He said it could reduce the chances of other companies creating biosimilars, allowing drugmakers to keep ADC prices high for longer periods of time.
Gilead’s approved ADC for breast cancer, Trodelvyit has a US list price more than $2,000 per vial. But some ADCs on the market have much higher list prices: An advanced ovarian cancer drug from biotech company ImmunoGen costs more than $6,000 per vial from 2022.
List prices are before insurance and other discounts.
How some pharmacists are betting on ADCs
Merck now waits 20 billion dollars in sales of new cancer drugs in the early to mid-2030s, thanks in part to its recent investments in ADCs, executives announced during the conference. That’s double the estimate the company gave at the same conference last year.
The increased forecast signals Merck’s confidence in the future of its cancer drug offerings, even as its immunotherapy Keytruda approaching loss of exclusivity in 2028. This will expose it to generic competition.
Merck executives emphasized that they are able $5.5 billion licensing deal with Daiichi Sankyo to jointly develop three of the Japanese pharmaceutical company’s experimental ADCs. This year, the company hopes to win approval for one of these ADCs to treat non-small cell lung cancer.
“…We have a leadership position now in antibody-drug conjugates, and we’ve done it through very smart deal-making,” said Merck CEO Robert Davis. He added that “what all of this really translates into is the potential for growth.”
Merck’s newly constructed research facilities located at 213 E Grand Ave in South San Francisco.
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Pfizer hopes ADCs will help the company bounce back after a difficult 2023. Shares fell about 40% last year as Pfizer grappled with waning demand for its products due to Covid and other commercial missteps.
Pfizer CEO Albert Bourla told reporters that the $34 billion acquisition of ADC developer Segen would help restore investor confidence in Pfizer, especially now that the deal has officially closed.
Burla noted that antibody-drug conjugates have become the hottest area in oncology, adding that Seagen’s expertise in ADCs will give Pfizer a huge advantage in further developing these drugs and establishing itself as a leader in cancer treatment.
Pfizer believes the acquisition of Seagen will generate over $10 billion in risk-adjusted sales by 2030. Seagen specifically brings four approved cancer drugs, including three ADCs, which will strengthen Pfizer’s ADC portfolio.