Biotech and pharma companies are betting on a promising class of cancer drugs to drive growth

SAN
FRANCISCO
—
An
established
but
promising
group
of

cancer
drugs
was
a

red-hot
market
in
2023,
and
more
companies
could
look
to
the

treatments
to
fuel
growth
in
the
year
ahead.

That
was
one
clear
takeaway
from
the

JPMorgan
Healthcare
Conference
in
San
Francisco,
the
nation’s
largest
gathering
of
biotech
and
pharmaceutical
executives,
analysts
and
investors. 

During
the
four-day
event,
the
biotech
and
pharmaceutical
industry
signaled
its
enthusiasm
for

antibody-drug
conjugates,
or
ADCs,
which
deliver
a
cancer-killing
therapy
to
specifically
target
and
kill
cancer
cells
and
minimize
damage
to
healthy
ones. Meanwhile,
standard
chemotherapy
is

less
selective
–
it
can
affect
both
cancer
cells
and
healthy
cells.

Johnson
&
Johnson
last
week
announced
a
$2
billion
acquisition
of
ADC-developer


Ambrx
Biopharma
to
beef
up
its
existing
pipeline
of
ADCs,
which
some
researchers
believe
could
be
heralding
a

“new
era”
for
cancer
treatment.
Other
drugmakers
such
as


Pfizer
and


Merck,
which
closed
some
of
the

more
than
70
ADC-related
deals
over
the
last
year,
said
those
drugs
will
be
key
growth
drivers
for
their
businesses. 

Interest
in
the
drugs
will
only
continue
this
year,
as
some
analysts
expect
more
dealmaking
and
advancements
in
ADCs
currently
in
development.

The
factors
fueling
the
recent
rise
of
ADCs
will
not
abate
this
year,
and
a
fear
of
missing
out
among
businesses
that
have
not
entered
the
market
will
only
push
more
companies
to
enter
the
space,

Andy
Hsieh,
an
analyst
at
William
Blair
&
Company,
told
CNBC. 

Those
factors
include
increased
confidence
in
ADC
technology
among
companies
and
researchers,
the
potentially
longer
market
exclusivity
of
those
drugs
and
the
rise
of
attractive
ADCs
from
drugmakers
in
Asia.

The
drugs
also
have
potential
to
draw
huge
profits:
ADCs
could
account
for
$31
billion
of
the
$375
billion
worldwide
cancer
market
in
2028,
according
to
a

report
citing
estimates
from
the
drug
market
research
firm
Evaluate.
The
market
for
those
drugs
in
2023
was
estimated
to
be
worth
around
$9.7
billion,
another

report
from
research
firm
MarketsandMarkets
said.

“It’s
kind
of
like
FOMO,
right?
Everyone
wants
to
gain
exposure
to
[ADCs]
and
basically
make
it
a
cornerstone
of
their
entire
corporate
strategy,”
Hsieh
told
CNBC.
“I
really
don’t
see
any
sort
of
slowing
down
and
it
will
very
much,
in
our
view,
be
a
continuation
of
the
2023
momentum.” 

ADCs
aren’t
new.

Roughly
a
dozen
have

won
approvals
from
regulators
worldwide,
with

the
earliest
coming
in
2000. But
dealmaking
started
to
pick
up
in
2020
and
“really
take
off”
in
2022
and
2023,
according
to

Daina
Graybosch,
senior
research
analyst
at
Leerink
Partners
covering
immuno-oncology.

She
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
a
lot
more
potential.”

Improvements
in
ADC
technology
appeared
to
have
made
some
newer
iterations
of
the
drugs
more
safe
and
effective,
which
boosted
the
industry’s
confidence
in
their
potential
and
encouraged
more
investments
in
the
space.
The
steady
surge
of
approvals
and
acquisitions
over
the
last
several
years
also
contributed
to
that
confidence,
convincing
some
companies
that
ADCs
have
a
“lower-risk
development
path,”
Hsieh
said.

Graybosch
highlighted
an
ADC
jointly
developed
by


AstraZeneca
and
Japanese
drugmaker

Daiichi
Sankyo
called

Enhertu,
which
she
called
the
first
of
“the
next-generation
ADC”
that
had
a
greater
breadth
of
treatment
compared
to
older
versions
of
the
drugs.
For
example,
Enhertu
became
the
first
ADC
to
show
the
ability
to
treat
breast
cancer
patients
with
both
high
and
low
levels
of
a
protein
called

HER2,
which
controls
how
breast
cells
grow,
divide
and
repair
damage.

Drugmakers
have
fine-tuned
key
components
of
ADCs
over
the
last
several
years,
such
as
the
chemical
bond
that
helps
those
drugs
deliver
a
cancer-killing
therapy
to
cancer
cells,
according
to
William
Blair’s
Hseih. He
said
companies
are
learning
how
to
maximize
the
efficacy
of
those
drugs
“without
getting
into
too
much
side
effects.”

ADCs
still
have
their
drawbacks
—
for
example,
cancer
tumors
can

develop
resistance
to
them
over
time.
And
not
all
newer
ADCs
in
development
are
successful:
Last
month,


Sanofi
scrapped
its
only
experimental
ADC
after
it
fell
short
in
a
late-stage
trial
in
lung
cancer
patients.

Graybosch
also
noted
that
companies
from
Japan
and
China
have
emerged
as
effective
ADC
developers
that
are
rapidly
“innovating
tweaks”
to
the
drugs
and
bringing
ADCs
to
the
market
that
could
be
better
than
older
versions
of
the
drugs.

U.S.
and
U.K.-based
companies
are
inking
deals
with
those
international
drugmakers,
such
as
two
licensing
agreements


GSK
signed
late
last
year
with
Chinese-based
Hansoh
Pharma
for
ADCs
targeting
several
types
of
cancer.

The
complexity
of
ADC
technology
has
likely
become
another
motivation
for
companies
to
invest
in
and
develop
the
drugs,
Hsieh
noted. He
said
it
could
reduce
the
chances
that
other
companies
will
create
biosimilars,
allowing
drugmakers
to
keep
ADC
prices
high
for
longer
periods
of
time. 

Gilead’s
approved
ADC
for
breast
cancer,

Trodelvy,
has
a
U.S.
list
price
of

more
than
$2,000
per
vial.
But
some
ADCs
on
the
market
have
far
higher
list
prices:
An
advanced
ovarian
cancer
drug
from
biotech
company
ImmunoGen
costs

more
than
$6,000
per
vial
as
of
2022.

List
prices
are
before
insurance
and
other
rebates.

Merck
now
expects

$20
billion
in
new
cancer
drug
sales
by
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
provided
during
the
same
conference
last
year. 

The
raised
forecast
signals
Merck’s
confidence
in
the
future
of
its
cancer
drug
offerings,
even
as
its
blockbuster
immunotherapy

Keytruda
nears
a
loss
of
exclusivity
in
2028.
That
will
expose
it
to
generic
competition. 

Merck
executives
highlighted
its
up
to

$5.5
billion
licensing
agreement
with
Daiichi
Sankyo
to
jointly
develop
three
of
the
Japanese
drugmaker’s
experimental
ADCs.
This
year,
the
company
hopes
to
win
an
approval
for
one
of
those
ADCs
for
the
treatment
of
non-small
cell
lung
cancer. 

“….We
have
a
leading
position
now
in
antibody-drug
conjugates,
and
we’ve
done
that
through
what
I
think
is
very
smart
deal-making,”
Merck
CEO
Robert
Davis
said.
He
added
that
“what
all
of
that
really
translates
to
is
the
potential
for
growth.”

Pfizer
hopes
ADCs
will
help
the
company
turn
around
after
a
rocky
2023.
Shares
fell
roughly
40%
last
year
as
Pfizer
grappled
with

weakening
demand
for
its
Covid
products
and
other
commercial
missteps. 

Pfizer
CEO
Albert
Bourla
told
reporters
that
the
company’s
$34
billion
acquisition
of
ADC-developer
Seagen
would
help
restore
investor
confidence
in
Pfizer,
especially
now
that
the
deal
is
officially
closed. 

Bourla
noted
that
antibody-drug
conjugates
have
become
the
hottest
area
of
oncology,
adding
that
Seagen’s
expertise
in
ADCs
will
give
Pfizer
a
huge
advantage
in
developing
those
drugs
further
and
establishing
itself
as
a
leader
in
cancer
treatment. 

Pfizer
believes
the

Seagen
acquisition
will
bring
in
more
than
$10
billion
in
risk-adjusted
sales
by
2030.
Seagen
specifically
brings
four
approved
cancer
drugs,
including
three
ADCs,
which
will
beef
up
Pfizer’s
own
ADC
portfolio.