By Kristy Dorsey

AstraZeneca has signed its second multi-billion cancer collaboration in as many years with Japan’s Daiichi Sankyo in a deal that will see the pair further development of a targeted treatment for breast and lung tumours.

The UK’s biggest drug maker by market capitalisation will pay up to $6 billion (£4.7bn) for the global rights to Daiichi Sankyo’s DS-1062 treatment, which has yet to be approved for use in any country. DS-1062 targets cancers that produce a protein known as TROP2, and is designed to deliver chemotherapy just to those cells, leaving healthy ones alone.

AstraZeneca will pay $1bn upfront in staggered instalments over three years. Further payments of up to $1bn will be due upon achieving regulatory approvals, plus $4bn for reaching certain sales milestones.

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In a further boost to AstraZeneca’s oncology unit, two of its on-market therapies have been recommended for approval in the European Union. They are Imfinzi, for the treatment of small cell lung cancer, and the Calquence treatment for patients with chronic lymphocytic leukaemia, the most common type of leukaemia in adults.

Daiichi Sankyo will retain the rights in Japan to DS-1062, which belongs to a class of therapies known as antibody drug conjugates (ADCs). AstraZeneca has been bolstering its portfolio of cancer therapies, particularly ADCs, as it also continues work on its coronavirus vaccine candidate.

“We see significant potential in this antibody drug conjugate in lung as well as in breast and other cancers that commonly express TROP2,” said Pascal Soriot, chief executive of AstraZeneca.

“We are delighted to enter this new collaboration with Daiichi Sankyo and to build on the successful launch of Enhertu to further expand our pipeline and leadership in oncology. We now have six potential blockbusters in oncology with more to come in our early and late pipelines.”

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Last year, AstraZeneca agreed to pay up to $6.9bn to Daiichi Sankyo to partner in the development of Enhertu, a breast cancer treatment that is currently approved for use in certain patients in Japan and the United States. The partners are now exploring the possibilities for Enhertu in treating other types of cancers.

Analysts at JP Morgan said DS-1062 could bring in $1bn or more in annual sales, and added that because AstraZeneca’s upfront commitments are spread over three years, the company will be able to cover its dividend commitments.

“This new strategic collaboration with AstraZeneca, a company with extensive experience and significant expertise in the global oncology business, will enable us to deliver DS-1062 to more patients around the world as quickly as possible,” Daiichi Sankyo chief executive Sunao Manabe said.

AstraZeneca and Daiichi Sankyo are also in talks over the supply of the British company’s potential coronavirus vaccine in Japan. Known as AZD1222, it is being developed in partnership with Oxford University.

Interim results revealed last week from the Stage 1/2 trial of the vaccine suggested that it drove antibody and T-cell immune responses against Covid-19 in each of the study’s 1,077 patients. Of the approximately 160 coronavirus vaccine candidates currently in pre-clinical or clinical development, AZD1222 is one of only two now entering Stage 3 trials.