Merck and Lixin Pharmaceuticals Sign a $588 Million Deal, Oncology Drug R&D Becomes the Focus of Global Pharmaceutical Transactions

Merck recently announced that it has signed a global exclusive licensing agreement with Lixin Pharmaceuticals for an innovative PD-1/VEGF bispecific antibody named LM-299. According to the agreement, Merck will pay $588 million upfront, and Lixin Pharmaceuticals may receive up to $2.7 billion in additional payments upon achieving specific milestones related to the transfer, development, approval, and commercialization of LM-299 for multiple indications.

In 2024, the deal between Merck and Lixin Pharmaceuticals, due to its massive value, has entered the top ten global biopharmaceutical deals by transaction amount, highlighting the significance of oncology drug transactions in the global pharmaceutical R&D market. Although the total transaction amount in 2023 exceeded $53 billion, that year included a $22 billion agreement between Daiichi Sankyo and Merck, making a direct comparison between the two years' totals unfair. However, 2024 has still seen numerous significant transactions, with the top ten expected to exceed $31 billion in total.

Among the Top 10 global biopharmaceutical transactions in 2024, each deal has a potential value exceeding $2 billion, with some reaching or surpassing $4 billion. While cardiovascular and neurological diseases are reflected in these deals, oncology treatments remain the most prominent theme, accounting for six of the top ten deals.

Novartis has demonstrated a particularly aggressive strategy in oncology, dominating the TOP 10 deals with more than half related to oncology, including partnerships with Dren Bio, PeptiDream, ImmuneOnco, and MOMA Therapeutics. This trend underscores the central role of oncology in biopharmaceuticals, especially in emerging fields such as bispecific antibodies and radioligand therapies.

In July 2024, Novartis entered a strategic collaboration agreement with California-based Dren Bio, focusing on developing innovative bispecific antibodies, particularly in the field of tumor immunotherapy. According to the agreement, Novartis will pay up to $3 billion to develop novel antibody drugs targeting myeloid cells. Dren Bio's bispecific antibody platform can activate myeloid cells, potentially offering superior safety and efficacy compared to traditional T-cell activators and antibody-drug conjugates (ADCs). Currently, Dren Bio’s bispecific antibody DR-0201, the first bispecific antibody targeting CD8-positive T cells, is undergoing Phase 1 clinical trials in patients with B-cell non-Hodgkin lymphoma (B-NHL). Through this collaboration, Novartis will acquire Dren Bio’s technology and take responsibility for late-stage clinical development and commercialization, further solidifying its leadership in cancer immunotherapy.

Bispecific antibodies, as an emerging immunotherapy strategy, can bind to two different targets simultaneously, potentially inducing a stronger immune response and offering higher efficacy than traditional therapies. Particularly in the field of tumor immunotherapy, bispecific antibodies are becoming a critical component of next-generation cancer treatments.

In addition to the collaboration with Dren Bio, Novartis has executed a series of transactions in the oncology space, including the €2.7 billion acquisition of antibody company MorphoSys in February and obtaining the rights to develop Arvinas' androgen receptor protein degrader for prostate cancer in April, a deal valued at $1.16 billion.

Other pharmaceutical companies are also making significant strides in the oncology field. Instil Bio signed a licensing agreement with ImmuneOnco, gaining development rights for two Phase 1 clinical candidates targeting solid tumors. ImmuneOnco's IMM2510, a novel PD-L1xVEGF bispecific antibody, can simultaneously target PD-L1 and vascular endothelial growth factor (VEGF), showing significant advantages in enhancing antibody-dependent cellular cytotoxicity (ADCC) and tumor penetration.

Additionally, IMM27M, as a next-generation anti-CTLA4 antibody, exhibits stronger ADC activity with relatively low toxicity. These two drugs are currently undergoing combination therapy clinical trials, aiming to bring new hope to the field of tumor immunotherapy soon.

In the field of precision medicine, Roche’s collaboration with MOMA Therapeutics has garnered widespread industry attention. In January 2024, Roche and MOMA signed a $2 billion cooperation agreement, leveraging MOMA's KNOMATIC platform to develop precision oncology drugs. The KNOMATIC platform focuses on studying the motion and structural patterns of ATPases and other hard-to-target enzymes, offering new targets for cancer and other disease treatments.

This collaboration represents a crucial strategy for Roche in precision medicine, with MOMA providing early-stage drug discovery and target validation support, while Roche takes responsibility for late-stage clinical development and commercialization. The goal of precision oncology is to develop more personalized and effective therapeutic drugs by understanding the dynamic characteristics of cancer cells.

Among the Top 10 transactions of 2024, Prime Medicine and Bristol Myers Squibb’s (BMS) subsidiary Juno Therapeutics reached a collaboration worth $3.595 billion, marking a significant milestone for CRISPR Prime Editing technology in its commercialization journey. This deal not only represents a landmark in the CRISPR field but also reflects the rising importance of gene-editing technology as a core driver in the biopharmaceutical industry. Juno Therapeutics gained Prime Medicine's Prime Editing technology license to develop ex vivo T-cell therapies, aiming to provide more precise solutions for complex diseases like cancer.

Novartis continues to strengthen its presence in the protein-based drug space in 2024, highlighted by its expanded collaboration agreement with PeptiDream. PeptiDream, a Japanese biotechnology company, uses its core Peptide Discovery Platform System (PDPS) to generate highly diverse cyclic peptide libraries for screening against various biological targets. These targets are further optimized into peptide drugs, small molecules, or peptide-drug conjugates (PDCs).

Under the expanded agreement, Novartis will pay $180 million upfront, with potential milestone payments up to $2.71 billion, alongside royalties from product sales. PeptiDream's PDPS platform holds a vital position in current peptide drug research. Compared to traditional linear peptides, cyclic peptides exhibit greater stability and bioactivity, with broad application potential in treating cancer, diabetes, and autoimmune diseases. Through its partnership with PeptiDream, Novartis not only strengthens its research advantage in radiopharmaceuticals but also makes breakthroughs in peptide drug development. Expanding the agreement with PeptiDream aligns with Novartis' trend of advancing radiopharmaceutical development, as evidenced by collaborations with Bicycle Therapeutics and 3B Pharmaceuticals in March and April 2023.

In addition, 2024 has seen rapid development in the protein degradation field, driven by capital markets. Multiple biotechnology companies with protein degradation technologies or pipelines have secured funding globally. In April, Novartis entered an exclusive licensing agreement with Arvinas, paying over $1 billion for worldwide rights to Arvinas' second-generation androgen receptor (AR) targeted PROTAC drug ARV-766 and another preclinical AR-targeted PROTAC degrader AR-V7. While global pharmaceutical companies focus on popular drugs like GPL-1, Novartis is blazing new trails by withdrawing from less advantageous areas to expand its presence in emerging technology platforms, including targeted protein degradation, cell therapy, gene therapy, radioligand therapy, and RNA therapy. The protein drug sector is expected to bring more clinical breakthroughs in the coming years.

In a globalized environment, cross-border transactions in the pharmaceutical industry are becoming increasingly frequent, driving industry development. In the first half of 2024, there were 2,674 transactions in the global pharmaceutical industry. Facing a new market landscape, companies worldwide are actively seeking opportunities through collaborations.

In recent years, Chinese biopharmaceutical companies have performed exceptionally in international collaborations, particularly in technology exports and candidate drug transfers. By 2024, there have been over 50 domestic innovative drug out-licensing deals, dominated by biopharmaceuticals and supplemented by chemical drugs. From E-link/Roche’s c-MET single-target ADC deal at the start of the year to YingEn/GSK’s ADC agreement, China’s impressive partnerships span ADC drugs, monoclonal antibodies, TCE bispecific/trispecific antibodies, fusion proteins, and vaccines. More Chinese companies are expected to make their mark on global pharmaceutical markets.