[NEWS IN FOCUS] Watch out for 'biological missile drugs,' the next big thing in pharma

Antibody-drug conjugates (ADCs) are a growing trend in cancer treatment, with recent breakthroughs attracting significant investment from pharmaceutical and biotech companies worldwide.

Mike Gaito, global head of healthcare investment banking at JP Morgan, speaks at the Westin St. Francis Hotel during the annual J.P. Morgan Healthcare Conference in San Francisco on Jan. 8. [J.P. MORGAN HEALTHCARE CONFERENCE]

Antibody-drug conjugates (ADCs), or so-called biological missile drugs, were the hottest commodity in the pharmaceutical industry last year, and the trend is going strong into 2024.

Recent breakthroughs in the field are fueling optimism, and the upcoming few years could be a crucial tipping point in determining whether new pipelines will reach commercial takeoff and live up to their hype.

ADCs are a fast-growing class of drug modality designed for targeted therapy, mostly for cancer treatments. Consisting of antibody, linker and payload, ADC delivers chemotherapy agents selectively to cancer cells while sparing healthy ones — hence the nickname “biological missile” or the “magic bullet.”

Though the ADC drugs have been around since the early 2000s, heat dwindled due to their toxic side effects. But a breakthrough in the second-generation ADC, led by AstraZeneca and Daiichi Sankyo’s breast cancer treatment Enhertu, has reignited the global race for the highly targeted cancer therapy. The U.S. Food and Drug Administration has approved 15 ADC treatments so far, 10 of which received their nod over the past five years.

Despite sector-wide slowdown last year, the world’s biggest pharma and biotech companies — such as Johnson & Johnson (J&J), Pfizer, Bristol-Myers Squibb and AstraZeneca — have been scrambling to get a slice of the fast-emerging ADC market, which is estimated to reach $19.8 billion in 2028 from last year’s $9.7 billion, according to MarketsandMarkets’ forecast.

The fever was evident at this year’s J.P. Morgan Healthcare Conference held in San Francisco, California from Jan. 8 to 11, with J&J’s $2-billion acquisition of ADC developer Ambrx Biopharma announced on the first day of the annual investment symposium.

Pfizer had acquired Seagen for $43 billion earlier that year, and Merck signed a potentially $22 billion licensing deal with Daiichi Sankyo for three ADC candidates with an upfront payment of $4.5 billion.

Korean companies have also put forward ADCs as growth drivers.

Samsung Biologics CEO John Rim said “We’re building an ADC facility that will be coming online at the end of this year,” in his presentation on the main stage during the J.P. Morgan Healthcare Conference.

Samsung Biologics invested in Araris Biotech, a Swiss ADC-linker developer, as well as Korean ADC company AimedBio, through Samsung’s Life Science Fund last year.

Celltrion, a biosimilar developer, also cited ADC as one of its future growth drivers. To secure ADC technology, the company made a $47 million equity investment in British Iksuda Therapeutics jointly with Mirae Asset Capital. It also signed a $1.24 billion deal with Pinot Bio for its ADC platform technology.

Lotte Biologics, a contract development and manufacturing organization, also invested $80 million into the construction of an ADC facility at its Syracuse site.

Meanwhile, Korea’s smaller biotech and pharmaceutical companies have formed partnerships for the co-development of ADC pipelines with big pharma through licensing deals. LegoChem Biosciences, for example, clinched a licensing deal with Janssen Biotech for its ADC candidate with an upfront payment of $100 million. The landmark deal, which is the largest ever signed by a Korean biopharmaceutical company, may potentially reach as much as $1.72 billion in value.

“I could certainly feel the interest growing in the ADC field over the recent years,” said an anonymous executive at a Korean biotech company during the J.P. Morgan Healthcare Conference, adding “We will likely find out whether this is hype or not in the next three or four years.”

Another source from the biotech industry said, “It is true that the valuation of ADC technology has jumped steeply as of late,” citing last year's up-to-$22 billion deal between Merck and Daiichi Sankyo.

But ADC technology’s growth potential has already proved legitimate, at least for the platform developers, the source said, as “the biggest hurdle for ADC drug development often has been phase one clinical trials due to the drug’s possible toxicity,” which have been going on for a while and seeing results, whether promising or not. ADC-based combination therapies also make the drugs versatile for a wide range of treatment options, the source said.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]