LaNova Medicines Ltd.

Merck partner Kelun-Biotech fleshed out a Phase 3 win in lung cancer from a study in China for the experimental antibody-drug conjugate sac-TMT, raising hopes that the benefit could translate to Western patients. Patients who received sac-TMT on top of Merck’s anti-PD-1 immunotherapy Keytruda saw a 65% reduction in the risk of disease progression or death compared to individuals who only got Keytruda. Overall survival data were not mature, but researchers observed a “favorable trend” that, thus far, has resulted in a 45% reduction in the risk of death. The new data come from an abstract released Thursday afternoon ahead of the annual ASCO conference next weekend in Chicago, giving Merck an early but key win as it approaches Keytruda’s patent cliff in 2028. The company is seeking to maintain its significant presence in oncology as Keytruda — once the best-selling drug in the world — loses its exclusivity. So far, results have been promising. Earlier this week, Merck announced that a global trial for sac-TMT succeeded for the first time, with a Phase 3 win in endometrial cancer. There were no specifics, but Merck said the trial achieved co-primary endpoints of progression-free survival (PFS) and overall survival (OS). Merck has signed several licensing deals, including multiple agreements with Kelun, to accomplish this goal. Merck could pay Kelun up to $9.3 billion if all programs pan out. In 2025, Keytruda pulled in $31.7 billion in sales, making up 49% of Merck’s total revenue. In the trial, known as OptiTROP-Lung05, patients taking both sac-TMT and Keytruda did not yet reach a measurable progression-free survival, while individuals who received only Keytruda went about 5.7 months before their cancer worsened. The data were highly statistically significant with a p-value of p< 0.0001. Kelun did not report median OS figures for either trial arm, or whether the difference was statistically significant. But it reported a hazard ratio of 0.55 with a range of outcomes (i.e. confidence interval) that generally describes a statistically significant improvement. Kelun had reported the topline results last November. Overall, 146 out of 208 patients who received sac-TMT and Keytruda saw their tumors shrink by at least 30%, good for an objective response rate of 70.2%. Only 86 of 205 individuals who got Keytruda (42.0%) saw at least the same level of tumor shrinkage. Sac-TMT is a TROP2 ADC, and could provide Merck a defense against another up-and-coming drug class: the PD-(L)1xVEGF bispecific drugs from Summit Therapeutics, BioNTech/Bristol Myers Squibb and 3SBio/Pfizer. Summit’s partner Akeso landed a coveted plenary slot for a China-only trial, while the two other teams also had data released Thursday afternoon as the embargo for regular abstracts was lifted. The bispecifics’ earliest signs of success came in lung cancer, and a first-line victory for the sac-TMT/Keytruda combo could ease the pressure if Merck can push an approval forward in the US. Merck is also developing a PD-1xVEGF bispecific in partnership with LaNova Medicines, but it’s in a much earlier stage of development than the others. Merck’s corresponding global study for the sac-TMT plus Keytruda combo is called TroFuse-007. The trial is evaluating a slightly different population, looking at the first-line setting in individuals with PD-L1 expression on greater than 50% of tumor cells. Kelun’s study is in patients with PD-L1 expression of at least 1%. Merck is also using a lower dose than Kelun in its global studies. In a note to investors Thursday morning, Leerink analyst Daina Graybosch wrote that one of the best comparators to the sac-TMT trial is Summit and Akeso’s HARMONi-2 study for its bispecific ivonescimab. Even though the two therapies work differently, Graybosch wrote that both trials are in the same treatment setting and region, “providing a clean comparison” for competitive purposes. An important cross-trial caveat here, however: HARMONi-2 looked at ivonescimab as a monotherapy, while OptiTROP-Lung05 measured sac-TMT plus Keytruda in combination. Graybosch acknowledged this by writing, “the comparison is valid when considering the intended commercial market.” In her note, Graybosch also said an ORR of 65% and median PFS of about 14 months would qualify as a “super” outcome. Data from Thursday’s abstract surpassed both those benchmarks. The HARMONi-2 study showed a median PFS of 11.1 months for the ivonescimab arm and 5.8 months for the Keytruda arm, whereas median PFS in OptiTROP-Lung05 was not reached for the active arm. HARMONi-2’s hazard ratio of 0.51 translated to a 49% reduction in the risk of disease progression or death, compared to OptiTROP-Lung05’s 0.35 hazard ratio and 65% reduction in the same risk. Graybosch also highlighted the HARMONi-2 data in patients with PD-L1 expression of greater than 50%. In this population, median PFS was 11.1 months for ivonescimab and 8.2 months for Keytruda. That was good for a 52% reduction in the risk of disease progression or death, or a 0.48 hazard ratio. In OptiTROP-Lung05, Kelun reported a hazard ratio of 0.47, which equals a 53% reduction in the risk of disease progression or death. Kelun did not report median PFS figures for this subgroup in its abstract released Thursday.

For smaller biotechs or funders that lack the resources to maintain a presence in Chinese biotech hotspots like Shanghai, due diligence has become even more critical.\n In an effort to defend its Keytruda kingdom, Merck & Co. agreed in November 2024 to pay $588 million upfront to license a phase 1-stage PD-1/VEGF bispecific antibody for solid tumors from Shanghai-based LaNova Medicines. That deal came with $2.7 billion in potential milestone payments.Fourteen months later, AbbVie was willing to part with even more upfront cash—$650 million—to source its own phase 1-stage PD-1/VEGF bispecific courtesy of Shandong, China-based RemeGen. In that case, milestone payments could reach up to $4.9 billion and RemeGen was also promised double-digit royalties on net sales.These two deals highlight a couple of important industry trends, according to Dan Chancellor, vice president of thought leadership at biotech intelligence firm Norstella. First, they underscore how hot the market has become for the PD-1/VEGF bispecific class, driven by data from Akeso and Summit Therapeutics\' first-in-class drug ivonescimab.Secondly, the jump in deal values reflects a broader trend of Chinese biotechs commanding increasingly large sums to license their promising drugs. “Each positive trial improves the likelihood of success for follow-on drugs in the class, meaning that Pfizer, AbbVie, Merck, BMS, etc., are more comfortable with larger upfront sums to enter the race,” Chancellor told Fierce Biotech.“AbbVie is paying additional value in royalties and milestone payments, relative to the Merck deal,” Chancellor pointed out. “Over the lifetime of these deals, AbbVie’s structure could end up many times more expensive depending on how successful the program becomes.”These trends aren\'t unique to the PD-1/VEGF pathway. According to data from Evaluate, the average upfront value of licensing deals between Western biopharma companies and their Chinese counterparts surged by 230% over the past four years—from $52 million in 2022 to $172 million in early 2026. Chinese companies now execute 50% of global out-licensing deals, with U.S. companies dropping to about 28%, a January report from SynBioBeta revealed. Meanwhile, Europe accounts for less than 20%, and Japan less than 5%. As a result, one-third of new compounds in U.S. pharma pipelines now originate from Chinese companies.According to Evaluate, the biggest China deal to date was Pfizer’s $1.25 billion upfront payment for—you guessed it—a PD-1/VEGF bispecific from Shenyang-based 3SBio. The lofty prices fetched by Chinese PD-1/VEGF licensing deals reflect continued investor confidence in such partnerships. “It’s not a bargain basement anymore,” Evaluate Director and Portfolio Strategy Practice Lead Mark Lansdell, Ph.D., told Fierce in February.As price tags rise for China-sourced drug candidates, it’s becoming more challenging for companies to source the right opportunities. For large or small biopharmas, the previous processes are no longer sufficient. Geoff Meyerson, founder and CEO of Locust Walk, a global life sciences-focused investment bank, has advised on and closed more than 60 transactions and is a frequent visitor to China’s biotech scene. He stressed the importance of being plugged into local markets. “There is no other investment bank in the world that has someone on the ground who speaks Chinese,” he told Fierce in an interview. “We are seeing deals that most of the biggest pharmas are not seeing, giving us differentiated deal flow.”Meyerson attributes his firm’s success to connections and relationships. “We uncover things that aren’t publicly disclosed. People talk; things leak; it’s a different world,” he said.For smaller biotechs or funders who lack the resources to maintain a presence in Chinese biotech hotspots like Shanghai, due diligence has become even more critical. Sidley Austin lawyer Adam Welland, who specializes in life science IP transactions and has held leadership roles at Illumina and Altos Labs, told Fierce that he has seen an increasing emphasis on Chinese development processes among potential licensees.Flawed studies can destroy the value of an asset, making it even more crucial to vet development strategies carefully. Welland suggested that increased deal sizes are raising the stakes around who has the final say during the drug development process.He shared an anonymized example of how this can play out. When a U.S.-based company out-licensed a bispecific antibody, the Chinese owner was keen to retain the right to commercialize the drug in China. However, the U.S. licensee was concerned that activities in China could jeopardize the value of its own rights to commercialize the drug elsewhere.Specifically, the U.S. company worried that if a clinical study in China was “risky” in terms of endpoint or indication and generated negative data, it could put the American company\'s investment at risk, according to Welland. Typically, such partnerships include a joint steering committee to review plans and reach a consensus on clinical studies. However, when disagreements arise, it is critical to establish which party has ultimate decision-making authority, he pointed out.In Welland’s example, the Chinese company wanted to have the final say in the event of a disagreement. “This shows the power of the Chinese company in this negotiation because in many other situations like this, the licensee would have the ability to veto a study that it reasonably believes could have a material adverse effect on the safety profile of the licensed drug,” Welland explained. Investing directly in the Chinese biotech scene is another avenue for maximizing value and gaining a stronger foothold in the country’s increasingly expensive drug development industry, according to Welland. AstraZeneca CEO Pascal Soriot has long been an evangelist for China\'s biopharma scene, but the U.K.-based Big Pharma took this to the next level in January by committing $15 billion through 2030 to invest in drug discovery, clinical development and manufacturing in the country. Even before that, AstraZeneca had a reputation as one of the most active buyers in the China market, striking deals with Harbour BioMed, CSPC Pharmaceutical, Jacobio and AbelZeta, as well as acquiring Gracell Biotechnologies, and investing in Syneron Bio.Meanwhile, Pfizer’s venture arm backed a $100 million series A raise in December for Shanghai-based OTR Therapeutics. “The sophistication and capabilities in China are such that investors are now putting money directly into Chinese companies when the opportunity is right,” Welland said.Still, direct investment in China can be fraught with uncertainty and geopolitical risk. A Santander Bank analysis this year warned that “certain factors continue to pose challenges to foreign investment, including a lack of transparency, legal uncertainty, weak intellectual property rights protection, corruption and protectionist policies that favor local businesses.”While companies are always looking for ways to invest upstream and as prices continue to rise, Locust Walk’s Meyerson noted that Chinese licenses will remain a popular investment target because U.S.-based biopharmas rarely sell U.S. rights to their assets. Typically, investors must acquire the entire company to secure domestic rights to a single drug.“Even if values do go up, it’s still cheaper than buying the entire company,” Meyerson said. Another use for AI? In addition to maintaining a local presence and stepping up due diligence, biopharma development teams are turning to artificial intelligence to scout potential assets. Luba Greenwood, CEO of Mwyngil Therapeutics, said the explosion of data and biotech candidates in China makes AI a powerful sourcing tool.“Gone are the days when investors or purchasers were simply looking for an immunology asset,” Greenwood explained. “Now, they need to find specific modalities, delivery mechanisms or specialized molecules.” The proliferation of biotech platform technologies means companies now have dozens of similar assets to evaluate, where they once had only one or two. “You have all of these different areas and pockets now where assets lie, when that wasn’t the case before,” she added. A report from EY in January detailed how AI tools can augment business development teams’ pursuit of new biopharma deals. As the number of potential targets grows, teams need data that is granular, comprehensive and current.These programs can comb through datasets to identify assets that fill portfolio gaps, monitor competitor programs, predict financial impact, compare deal options and present information in a usable format.Although Big Pharma has heavily invested in AI for drug discovery and development, Greenwood said there remains significant untapped potential for AI in asset sourcing.Rather than an analyst spending weeks cross-referencing clinical trial registries and patent filings or translating research from Mandarin, AI can run a systematic search and come back with a shortlist of options and evidence. That allows the team to build a relationship with its owner and further evaluate the science, Greenwood explained“For companies whose whole model depends on finding the right overlooked asset before anyone else does, that speed, detail and coverage make a huge impact on the bottom line,” she said. While larger deal sizes and increased competition are raising the stakes for licensors and business development leaders, there may be an upside for U.S. biotechs. As Chinese prices rise, drugs developed domestically may become more competitive again from a price perspective.“Chinese assets were much cheaper and either in the clinic or likely to get there faster. It was hard to justify a higher price tag for a U.S. preclinical asset,” Welland said. “But with the rising costs of Chinese assets, U.S. preclinical companies could become more attractive in the eyes of potential licensees,” he added.

Merck & Co. reported first-quarter sales of $16.3 billion, up 5% from a year earlier, as continued demand for its cancer immunotherapy Keytruda and contributions from newer products helped offset declines in vaccines and diabetes medicines.The company also lifted the lower end of its 2026 revenue guidance by $300 million, and now expects sales will fall somewhere in the range of $65.8 billion to $67 billion this year.Keytruda up 12%Sales for megablockbuster Keytruda climbed 12% year-over-year to $8 billion in the three months ended March; the figure includes $128 million from the immunotherapy's newer subcutaneous (SC) formulation, Keytruda Qlex (see – Physician Views Results: Oncologists begin integrating SC Keytruda Qlex, expect meaningful uptake within a year).Merck is working to broaden the reach of Keytruda Qlex, which has received two label expansions in bladder and ovarian cancer since its original approval last September. Some analysts think combinations using the SC formulation could help Merck weather looming patent expirations for Keytruda."These regimens are unlikely to qualify for biosimilar substitution and thus must be carved out for reimbursement," noted Leerink Partners analyst Daina Graybosch.Winrevair surgesBesides Keytruda, Merck said its pulmonary arterial hypertension drug Winrevair posted $525 million in sales, up 88% year-over-year, amid continued US uptake and early international launches, especially in Europe and Japan. Analysts were anticipating the drug would bring in $499 million.Ohtuvayre, a chronic obstructive pulmonary disease therapy Merck obtained via its $10-billion takeout of Verona Pharma in October, contributed $131 million, though that missed expectations of $158 million.Kidney cancer therapy Welireg had quarterly sales of $199 million, up 45%, while HPV vaccine Gardasil/Gardasil 9 declined 19% to $1.1 billion due largely to weaker demand in China and Japan.Looking aheadMeanwhile, Merck's broader attempts to grow its oncology portfolio include its PD-1/VEGF bispecific MK-2010, licensed from LaNova Medicines. Promising early data for the candidate were presented at the American Association for Cancer Research (AACR) conference a few weeks ago."We're eager to move PD-1/VEGF forward in our trials," said research chief Dean Yi on the company's earnings call. "We think, in our hands, a PD-1/VEGF — if it should be better than Keytruda — we have a plethora of agents that would benefit from a combination," he said, adding that pairing MK-2010 with Merck's Trop2-targeting antibody-drug conjugate sacituzumab tirumotecan (sac-TMT) was "absolutely" a possibility.While expressing confidence in Merck's internal pipeline, CEO Rob Davis indicated that the company is leaning on business development as well to fill pipeline gaps, and continues to scan for opportunities, typically in the $1 billion to $15 billion range, while remaining open to larger deals.  "We start with the science…and where we see science and value align, we move," Davis said.