What are Sichuan Kelun Pharmaceutical's recent drug deals?

20 March 2025
Overview of Sichuan Kelun Pharmaceutical

Company Background
Sichuan Kelun Pharmaceutical is a prominent biopharmaceutical company in China focused on the research, development, manufacturing, and commercialization of novel drugs. Over the years, the company has built a reputation for addressing unmet clinical needs by leveraging its in-house innovation and integrating multiple specialized capabilities—from early discovery and preclinical development to large-scale manufacturing and eventual market launch. The organization’s robust infrastructure, which includes a dedicated ADC (antibody–drug conjugate) platform with proprietary technologies such as K-Lock, underscores its commitment to breakthrough oncology treatments and other therapeutic areas. As a subsidiary of Kelun Pharmaceutical, Kelun-Biotech has strategically positioned itself to not only serve the domestic market but also to pursue global collaborations with major international pharmaceutical companies, enhancing its profile and creating pathways for further expansion.

Recent Performance and Market Position
In recent years, Kelun Pharmaceutical has demonstrated a strategic focus on innovation and growth by balancing capital-raising initiatives with targeted licensing and partnership agreements. The company’s performance has attracted attention due to factors such as its progress in clinical pipelines, including assets at various stages of clinical development—from Phase 1/2 antibody drugs and ADCs to assets in pivotal trials—and its growing presence in the international market. Analysts have noted that Kelun-Biotech is on the cusp of reaching breakeven, with expectations of turning profitable in the near future as its pipeline matures and strategic deals begin to generate revenue streams. These achievements have been supported by the company’s integrated approach, combining independent R&D capabilities with collaborations that expand both its technological prowess and market reach.

Recent Drug Deals

Major Deals and Partnerships
Kelun Pharmaceutical’s recent drug deals have been primarily characterized by high-profile partnerships focused on the development of novel ADCs and other innovative oncology therapies. One of the most significant aspects of these deals is their focus on ADC-related assets, which provide a targeted treatment modality by combining the specificity of antibodies with the potent killing ability of cytotoxic drugs.

Collaboration with Merck & Co. (MSD outside of the United States and Canada):
A series of announcements over the past couple of years have highlighted Kelun-Biotech’s close collaboration with Merck. In these deals, Merck has secured global rights—excluding the Greater China region—for multiple ADC assets developed by Kelun-Biotech. These assets include clinical-stage molecules such as SKB-264 (also known as MK-2870), a TROP2-targeting ADC actively evaluated in late-stage clinical trials across several solid tumors, including metastatic triple-negative breast cancer and non-small cell lung cancer.
Merck’s investment strategies in these ADC deals are notably high stake. For example, under one agreement, Kelun-Biotech received an upfront payment of approximately US$35 million for exclusive global rights to an investigational ADC, alongside eligibility for milestone payments that could exceed US$901 million if all regulatory and sales goals are achieved. This arrangement was later further expanded into a larger licensing deal encompassing multiple preclinical ADC candidates. In another major transaction, Merck and Kelun-Biotech entered into an exclusive license and collaboration agreement covering seven investigational ADC candidates for oncology indications. This deal involved a substantial upfront payment of US$175 million and potential milestone payments that could total up to US$9.3 billion, highlighting the confidence of Merck in Kelun-Biotech’s technological capabilities and innovative pipeline.

Adjustments in the ADC Portfolio:
Despite the large deal volumes, the dynamic nature of ADC technology development has led to adjustments in Kelun Pharmaceutical’s portfolio. For instance, in one report, Merck decided not to advance two of the nine preclinical ADC candidates originally included in their collaboration with Kelun-Biotech, focusing instead on their clinical-stage ADCs such as SKB-264. Later, Merck revisited the collaboration, rebalancing the portfolio by opting to license the bispecific ADC candidate SKB571 for an upfront payment of US$37.5 million, while concurrently relinquishing rights to an asset targeting CLDN18.2. These strategic adjustments—where assets enter or exit the development pipeline based on evolving scientific and market criteria—reflect both the challenges and the agile management of high-value partnerships.

Deal with Levena Biopharma:
Another noteworthy deal involves a partnership with Levena Biopharma—a Sorrento Therapeutics subsidiary—where Kelun-Biotech collaborated on the development and clinical evaluation of A166, an anti-HER2 ADC. The joint development efforts have shown promising clinical results, with data presented at the American Society of Clinical Oncology (ASCO), which reported an overall response rate (ORR) of approximately 70% across different dose cohorts. This partnership represents an important step in combining Kelun Pharmaceutical’s ADC expertise with international partners, thereby broadening the therapeutic indications and potential global market reach.

Capital Raising Initiatives in Connection with Strategic Deals:
Apart from licensing and collaboration agreements, Kelun Pharmaceutical has also pursued capital-raising activities to support its drug development initiatives. A notable example is the recent announcement of an IPO in Hong Kong, through which the company aimed to raise approximately US$208.6 million. The funds are expected to bolster the company’s R&D efforts and further support strategic alliances with international partners such as Merck and Levena Biopharma. This multifaceted approach—combining capital market strategies with joint development deals—not only enhances the financial flexibility of the company but also accelerates clinical development timelines.

Financial and Strategic Implications
The scale and structure of these drug deals have far-reaching financial and strategic implications for Kelun Pharmaceutical.

Financial Upside:
The combined upfront payments—from US$35 million to US$175 million—and the enormous potential milestone payments (up to US$9.3 billion) embedded in these agreements provide Kelun with significant near- and long-term revenue opportunities. These deals are structured to minimize immediate cash burn while providing substantial future paybacks contingent on successful clinical outcomes and market approvals. The risk-sharing nature of these licensing deals means that Kelun retains a high degree of control over the development of its assets while benefiting from the global commercialization infrastructure of its partners.

Strategic Positioning:
From a strategic standpoint, partnering with global giants like Merck reinforces Kelun Pharmaceutical’s credibility and technological robustness. The selective termination of less promising preclinical ADC candidates in favor of a more focused pipeline further demonstrates the company’s intent to concentrate its resources on high-probability-of-success assets. Supporting this, the collaboration with Levena Biopharma on A166 not only diversifies Kelun’s product pipeline beyond a single therapeutic area but also opens additional avenues for regulatory and commercial expansion in oncology. Furthermore, the IPO in Hong Kong is a testament to market confidence in the company’s innovative capabilities and long-term growth prospects, providing additional capital to fuel ongoing and future R&D endeavors.

Portfolio Optimization and Risk Management:
The continuous evaluation and adjustment of the ADC portfolio, such as Merck’s decision to exit certain preclinical assets while picking up others, highlight Kelun Pharmaceutical’s active portfolio management. By fine-tuning its contributions to each strategic alliance, Kelun is able to manage risk more effectively—a critical consideration given the high R&D costs and inherent uncertainties in drug development. This dynamic and responsive approach to asset management is aligned with global best practices in pharmaceutical R&D, ensuring that only assets with robust clinical potential and competitive edge are prioritized for further development.

Impact on the Pharmaceutical Market

Competitive Landscape
Kelun Pharmaceutical’s recent drug deals have had notable implications for the broader pharmaceutical industry, particularly in the highly competitive field of oncology. The ADC space, which is evolving rapidly with advancements in conjugation technologies and antibody engineering, has attracted significant investments from multiple industry players. By partnering with Merck and Levena Biopharma, Kelun has not only solidified its position as a leading innovator in ADC technology but also set new benchmarks for international collaboration in this space.

Accelerated Innovation:
The influx of diversified assets into Merck’s global portfolio through these deals has accelerated the pace of innovation in targeted cancer therapies. Merck’s commitment to investing billions in ADCs, as evidenced by the multi-asset deal frameworks, is a clear signal that successful ADC technologies are reshaping treatment paradigms in oncology. Kelun’s ability to contribute high-quality ADC assets—backed by robust preclinical and early clinical data—means that it stands as a key competitor in a market characterized by rapid scientific evolution and intensive R&D investments.

Market Dynamics:
The strategic restructurings within the deals, such as the selective termination of certain preclinical candidates and the subsequent reallocation of resources to more promising assets, mirror the broader market dynamics prevalent in the pharmaceutical industry. Major deals that involve upfront payments combined with backloaded milestone structures have become a trend, as they align the financial interests of both the licensor and licensee while sharing the inherent risk of drug development. By adhering to this model, Kelun is in an excellent position to compete with other global players who have similar risk-sharing collaborations.
Moreover, Kelun’s recent IPO and capital-raising efforts indicate that investors are increasingly confident in a company that not only innovates but also adeptly navigates the complexities of global pharmaceutical partnerships. This confidence is likely to encourage further strategic investments in similar innovative drug development platforms, intensifying the competition among worldwide ADC developers.

Market Expansion and Innovation
The partnerships and deals executed by Kelun Pharmaceutical have broad market expansion implications for the entire industry.

Cross-Border Collaborations:
Through its licensing agreements with Merck and its collaboration with Levena Biopharma, Kelun is not merely expanding its product pipeline but also opening up global commercialization channels. Merck’s global infrastructure—excluding the Greater China market—ensures that Kelun’s ADC candidates benefit from access to markets in North America, Europe, and other regions. Such cross-border initiatives serve to position Kelun as a global innovator while enabling it to leverage international regulatory and commercial frameworks. This strategic approach is likely to influence the competitive dynamics in the global oncology market, increasing pressure on domestic companies to seek similar international collaborations.

Innovation in ADC Platforms:
Kelun’s investment in its proprietary ADC platforms, coupled with successful strategic deals, underscores its commitment to advancing state-of-the-art bioconjugation technologies. The evolution of its ADC candidates, such as the progression from earlier TROP2-targeting agents like SKB-264 to newer, innovative bispecific ADCs like SKB571, indicates a clear trajectory of continuous improvement and a commitment to expanding therapeutic indications. This pattern of innovation not only strengthens Kelun’s competitive advantage but also sets a precedent for the kind of technological breakthroughs that can redefine clinical outcomes in oncology.
The success of these deals, validated by the significant investments and milestone potentials, is pushing the entire ADC market forward, prompting further research into more precise targeting strategies and more effective payload-linker systems.

Investor and Analyst Perspectives:
Market analysts are optimistic about Kelun Pharmaceutical’s trajectory as evidenced by detailed reports and analyses that project the company to breach profitability within a few years. The consensus among industry experts is that the strategic deals, particularly those with Merck, have elevated the company’s market position by building both revenue-generating potential and technological leadership in innovative drug modalities. This favorable market sentiment is spurred not only by the current value of these agreements but also by the promising pipeline of ADC candidates that hold the potential to revolutionize cancer treatment paradigms globally.

Future Prospects

Potential Future Deals
Looking ahead, many indicators suggest that Kelun Pharmaceutical will continue to be an attractive partner for large multinational pharmaceutical companies seeking to expand their oncology pipelines with innovative ADC candidates. Given the robust clinical data emerging from current deals and the company’s demonstrated ability to optimize its portfolio dynamically, future agreements are likely to involve:

Further ADC Collaborations:
Kelun is poised to become a long-term strategic partner in the ADC space. Future deals may likely involve additional preclinical or clinical ADC assets, driven by both iterative improvements on current technologies and the development of novel targets beyond TROP2 and HER2. As global partners like Merck continue to evaluate their pipeline portfolios, Kelun’s demonstrated capability to deliver high-quality, clinically validated ADC candidates will ensure continued interest. Moreover, changes in the global regulatory landscape and evolving market needs may spur further licensing agreements that incorporate even more flexible, risk-sharing financial models than those seen to date.

Expansion into Other Therapeutic Areas:
The success in oncology could serve as a springboard for Kelun to explore partnerships in other high-unmet-need therapeutic areas such as autoimmune, inflammatory, and metabolic diseases. While the current focus has been predominantly on oncology, the company’s integrated R&D capabilities and expertise in biologic drug development make it a potential hotbed for deals in broader indications. Such future deals would diversify the company’s revenue streams, mitigate risks associated with a single therapeutic focus, and open up additional growth avenues in the global biopharmaceutical market.

Increased Capital Partnerships and Joint Ventures:
The momentum from the recent IPO, which raised significant capital to support these R&D and commercial endeavors, indicates that Kelun is also open to more complex financial partnerships. Future deals might not only focus on licensing and collaboration but also on strategic equity investments and joint ventures that share both operational control and revenue upside. Such financial partnerships would allow Kelun to maintain a competitive edge by investing in state-of-the-art technologies while ensuring a robust capital structure that can weather the uncertainties of drug development.

Strategic Directions and Research Focus
Kelun Pharmaceutical’s strategic direction is clearly oriented toward harnessing innovative technologies to drive global market expansion and clinical excellence. Several key factors will shape the company’s future:

Continued Innovation in ADC Technology:
Kelun’s ability to adapt to market needs is evident in its ongoing refinement of ADC candidates. The strategic decision to focus on bispecific ADC candidates, which is designed to address issues of tumor heterogeneity, is a prime example. The recent licensing of SKB571 and the adjustment of the existing portfolio reflect an agile R&D model that continually aligns with clinical insights and competitive pressures. Going forward, Kelun is likely to invest even more heavily in developing next-generation ADCs with improved therapeutic indices and synergistic combinations with other cancer therapies.

Leveraging Global Partnerships for R&D Excellence:
The collaborations with Merck and Levena Biopharma serve as blueprints for sustainable international partnerships. These collaborations provide Kelun with both access to advanced global research and development infrastructures and the opportunity to share in the rewards of successful global commercialization. As these partnerships mature, they will not only enhance Kelun’s technological capabilities but also generate circuitous opportunities for further alliances, potentially including dual-licensing programs and cooperative research agreements with other major players in the biopharmaceutical space.

Focus on Data-Driven Portfolio Optimization:
The strategic moves in recent deals—including the termination of certain preclinical assets and the redirection of focus toward high-yield candidates—reflect Kelun’s commitment to data-driven decision making. By continuously evaluating clinical data, market trends, and financial outcomes, the company is well positioned to prune its pipeline and invest in assets with the highest probability of clinical and commercial success. This iterative approach not only reduces R&D waste but also enhances the overall yield of its investment in innovative drug development.

Alignment with Global Regulatory Trends:
Kelun is well aware that regulatory environments across different countries are becoming increasingly supportive of biologics and targeted therapies. By forging strategic partnerships that include provisions for significant milestone payments and technology transfers, Kelun is aligning itself with regulators and market players worldwide. This alignment is critical in ensuring that the company remains at the forefront of innovation while simultaneously streamlining the path to market for its products. The company’s ongoing efforts to raise capital through strategic public offerings and private partnerships further underline its commitment to maintaining regulatory and production excellence on a global scale.

Enhanced Commercialization Strategies:
Future strategic directions for Kelun will likely include a refined focus on commercialization. The ability to harness both internal capabilities and external partnership networks provides the company with an ideal platform for successfully marketing its novel therapies. Increased global awareness and rising investor confidence, as demonstrated by the recent successful IPO and favorable market analyses, suggest that Kelun is ready to push its products into new markets. Furthermore, by expanding its portfolio to cover a broader range of therapeutic indications, the company can secure multiple revenue streams that collectively strengthen its competitive position on the global stage.

Conclusion
In summary, Sichuan Kelun Pharmaceutical has strategically navigated a rapidly evolving drug development landscape by securing a number of high-profile, high-value partnerships—most notably in the development of innovative ADC therapies. The deals with Merck & Co. highlight a complex but promising mixed-asset licensing model that includes significant upfront payments (ranging from US$35 million to US$175 million) and milestone payments that offer upside potential upward of US$9.3 billion. In parallel, the collaborative efforts with Levena Biopharma on the A166 ADC candidate further underscore the company’s commitment to innovation in oncology, as reflected in promising clinical data presented at major scientific conferences like ASCO.

From a financial standpoint, these deals not only provide crucial capital but also lay the groundwork for sustained market expansion and risk mitigation through diversified portfolios. Strategically, Kelun’s active portfolio optimization—evidenced by the timely termination of less promising assets and the pivot to more innovative candidates like the bispecific ADC SKB571—demonstrates a data-driven and agile approach that is likely to be emulated by other players in the industry.

The impact on the pharmaceutical market is equally significant. Kelun’s partnerships contribute to accelerating innovation in the ADC space, intensify competitive dynamics, and stimulate further international collaborations, all while providing a strong model for risk-sharing and financial prudence. As global market leaders like Merck integrate Kelun’s high-quality assets into their expansive pipelines, the competitive landscape is rapidly evolving, with increased pressures on both domestic and international players to leverage advanced technologies for improved patient outcomes.

Looking forward, the prospects for Sichuan Kelun Pharmaceutical appear robust. Future deals are likely to further leverage Kelun’s innovative ADC platform and expand its applications into other therapeutic areas. The firm’s strategic direction, underscored by continuous innovation, enhanced commercialization strategies, and proactive global partnerships, positions it strongly for long-term growth and industry leadership. Moreover, the combination of a strong R&D pipeline, capital market confidence as evidenced by successful IPO initiatives, and strategic financial partnerships will likely pave the way for further high-value deals and sustained global expansion.

In conclusion, Sichuan Kelun Pharmaceutical has emerged as a leading force in the biopharmaceutical arena through its strategic drug deals and innovative approach to ADC technology. These collaborations not only promise significant financial returns but also serve as critical catalysts for scientific and commercial advancements on a global scale. The company’s ability to dynamically manage its drug portfolio, foster international partnerships, and continuously adapt to market and regulatory trends will be instrumental in determining its long-term success. As the landscape of targeted cancer therapies continues to evolve, Kelun stands ready to play a pivotal role in shaping the future of oncology drug development while expanding its global footprint and enhancing patient care worldwide.

Discover Eureka LS: AI Agents Built for Biopharma Efficiency

Stop wasting time on biopharma busywork. Meet Eureka LS - your AI agent squad for drug discovery.

▶ See how 50+ research teams saved 300+ hours/month

From reducing screening time to simplifying Markush drafting, our AI Agents are ready to deliver immediate value. Explore Eureka LS today and unlock powerful capabilities that help you innovate with confidence.