The "Success Formula" Fails: Merck and Daiichi Sankyo Stumble, While Two Chinese B7-H3 ADCs Break Through.

In 2023, Merck made a big deal: paying Daiichi Sankyo $4 billion in upfront payments to lock in global rights to three ADC drugs.

The deal logic seemed impeccable. Daiichi Sankyo's DXd platform, riding on the success of Enhertu, was viewed as a reliable "success formula" in the ADC field — the same linker, the same topoisomerase I inhibitor payload, applied to different targets. With Keytruda's patent cliff approaching, Merck needed an ADC pipeline to fill the growth gap in the "post-K-drug era."

But the story's turning point came faster than expected.

Among the three ADCs Merck had its eye on, HER3-DXd was the first to fall — in May 2025, the confirmatory trial failed to demonstrate an overall survival benefit, and the BLA was voluntarily withdrawn. Merck's commercialization hopes then shifted to I-DXd. However, this寄托 also did not survive.

In late September, Daiichi Sankyo and Merck announced the voluntary withdrawal of the BLA for I-DXd (ifinatamab deruxtecan) in extensive-stage small cell lung cancer (ES-SCLC). The FDA stated that data from its Phase II IDeate-Lung01 did not meet the requirements for accelerated approval.

At the same time, for the same target and same indication, two Chinese pharmaceutical companies on the other side of the ocean delivered OS-positive data from Phase III randomized controlled trials for their comparable products.

Where exactly did Merck and Daiichi Sankyo lose?

Chapter 1: Successive "Derailments"

In April, the FDA accepted the marketing application submitted by Daiichi Sankyo and Merck for the B7-H3 ADC product I-DXd and granted it priority review. The application targeted adult ES-SCLC patients with disease progression after platinum-based chemotherapy, with a PDUFA date set for October 10.

But during the review process, the FDA explicitly stated that the data supporting the application, including the results of Phase II IDeate-Lung01, did not meet accelerated approval requirements. The two parties then chose to voluntarily abandon the application, with only half a month remaining before the scheduled approval date.

I-DXd is not a drug lacking efficacy signals. In the 12 mg/kg dose group of IDeate-Lung01, 137 treated ES-SCLC patients had a confirmed objective response rate of 48.2%, disease control rate of 87.6%, median duration of response of 5.3 months, median progression-free survival of 4.9 months, and median overall survival of 10.3 months.

For second-line SCLC — a field with extremely limited treatment options — a 48.2% ORR is not unimpressive on its own. However, what the FDA requires is confirmatory evidence sufficient to support accelerated approval, and single-arm Phase II data, under 2026 regulatory standards, are no longer sufficient.

The seeds of this withdrawal were planted years ago.

In October 2023, Merck and Daiichi Sankyo reached a collaboration agreement worth up to $22 billion: Merck paid $4 billion upfront and an additional $1.5 billion within 24 months, obtaining global development and commercialization rights to three DXd ADCs — HER3-DXd, I-DXd, and R-DXd — with up to $16.5 billion in additional payments potentially payable based on sales milestones. Daiichi Sankyo retained exclusive rights in Japan and was fully responsible for manufacturing and supply of the three candidates.

However, among the three ADCs, HER3-DXd, which was closest to commercialization, received an FDA CRL in June 2024 due to a third-party CMO manufacturing facility inspection issue. In May 2025, the BLA for HER3-DXd was voluntarily withdrawn because the OS data from the confirmatory Phase III HERTHENA-Lung02 did not reach statistical significance.

In the HERTHENA-Lung02 study, the HER3-DXd group had a median OS of 16.0 months versus 15.9 months for the platinum-containing chemotherapy group, with an HR of 0.98, indicating no significant difference in overall survival between the two groups, with no clinically meaningful OS benefit observed. The accelerated approval pathway originally supported by the 29.8% ORR from the single-arm Phase II HERTHENA-Lung01 therefore could not continue.

Thereafter, Merck and Daiichi Sankyo shifted their near-term commercialization focus more toward the B7-H3-targeting ADC product I-DXd. Unfortunately, history repeated itself.

Chapter 2: "Besieged on All Sides"

Daiichi Sankyo's DXd platform adopts a "universal" design, with the core assumption being: as long as the antibody can precisely recognize the tumor, the linker and payload can be standardized. The platform's success in the HER2 target — despite HER2 being an endocytosis-resistant receptor — is more attributable to DXd's high membrane permeability, strong bystander effect, high drug-to-antibody ratio, and efficient release of the cleavable linker in lysosomes.

I-DXd structurally shares the DXd platform architecture entirely, conjugating a humanized anti-B7-H3 IgG1 monoclonal antibody with multiple topoisomerase I inhibitor DXd molecules via a cleavable tetrapeptide linker. If I-DXd were merely a "target-swapped version" of the HER2 ADC, the problem would be simple. But B7-H3's biological characteristics differ from HER2's.

B7-H3 is consistently highly expressed across SCLC molecular subtypes, while its expression in normal lung tissue is extremely low or absent — this constitutes its core advantage as an SCLC ADC target, theoretically covering a broader patient population and reducing the risk of target-mediated normal lung injury. However, low expression in normal lung does not equal no ILD risk. ILD is in fact a shared toxicity of DXd platform ADCs, and I-DXd's clinical data also exposed this risk.

In Phase II IDeate-Lung01, the 12 mg/kg dose group had a treatment-related ILD reporting rate of 12.4% (≥Grade 3: 4.4%). In December 2025, the Phase III IDeate-Lung02 trial voluntarily paused enrollment due to a higher-than-expected incidence of Grade 5 ILD events.

At the same time, the FDA's regulatory风向 is also changing. In February 2026, the FDA formally established "a single pivotal trial supplemented by confirmatory evidence" as the default review benchmark for new drug applications, replacing the long-standing "two pivotal trials" requirement.

This policy appears on the surface to be "accelerating approval," but in essence it redefines the admission logic for accelerated approval. The FDA established "one robust pivotal trial supplemented by confirmatory evidence" as the default review benchmark — prioritizing randomized controlled designs over single-arm studies. The former FDA oncology head Pazdur's team further required sponsors to plan confirmatory trials before accelerated approval, and preferably initiate them at the time of application submission, to shorten the "vulnerable period" between approval and confirmation of confirmatory results.

In 2026, a JAMA analysis of 20 years of FDA oncology drug approvals showed that the proportion of approvals based on single-arm studies continued to rise: from 12.9% in 2006–2010 to 37.2% in 2021–2025, more than tripling. This trend has raised regulatory vigilance.

For Merck and Daiichi Sankyo, what is even more challenging is that on the same timeline, two Chinese pharmaceutical companies' B7-H3 ADCs are completing the validation that I-DXd has yet to complete — using Phase III randomized controlled trial OS hard endpoints.

Chapter 3: The Chinese Duo

In September 2026, at the World Conference on Lung Cancer (WCLC) held in Seoul, South Korea, data from two Chinese pharmaceutical companies were presented successively at the Presidential Symposium.

MediLink Therapeutics' YL201 (icotentan botutab, 依康坦博妥塔单抗), in the TAISHAN-302 study, conducted a "head-to-head" comparison of YL201 versus standard chemotherapy topotecan. Data showed: median OS of 13.3 months vs 9.4 months, HR of 0.46, reducing the risk of death by 54%. Median PFS of 7.4 months vs 2.8 months, ORR of 59.1% vs 9.7%.

Along with clear efficacy advantages, safety data were also quite good: ≥Grade 3 treatment-related adverse event incidence was 46.4%, lower than the chemotherapy control group's 74.7%; ≥Grade 3 ILD incidence was only 0.9%, with no Grade 4 or 5 events. In the B7-H3 ADC track, where pulmonary toxicity is the greatest concern, the weight of this safety signal is no less than the OS benefit itself. This coexistence of efficacy and safety may be related to the TMALIN platform on which YL201 is based.

Traditional ADCs typically rely on antibody internalization into tumor cells, followed by cleavage in lysosomes to release the payload. TMALIN, however, employs a "tumor microenvironment + lysosome dual-cleavage" mechanism, allowing the linker to undergo extracellular cleavage under specific conditions in the tumor microenvironment. The released toxin kills surrounding tumor cells through the bystander effect, without relying on antibody internalization efficiency.

This design aims to increase effective payload concentration in tumor tissue, while reducing off-target exposure to normal tissues through the linker's high plasma stability; in preclinical safety evaluations, ADCs using the TMALIN platform showed no drug-related adverse pathological changes in the lungs.

Hansoh Pharmaceutical's HS-20093 (瑞康立伏妥塔单抗) is the world's first positive study to confirm that a B7-H3-targeting ADC can deliver OS benefit in a randomized controlled Phase III trial. This product adopts a fully human anti-B7-H3 monoclonal antibody with a topoisomerase I inhibitor payload, conjugated via a cleavable tetrapeptide linker.

The ARTEMIS-008 study in recurrent SCLC after platinum-based treatment failure showed a median OS of 18.5 months versus 10.3 months for the control group (HR=0.46); 12-month OS rates were 64.5% and 43.3%, respectively. Consistent OS benefit trends were observed across all prespecified subgroups. ILD data also performed well, with an overall interstitial lung disease incidence of 11.7% in this study, with no Grade 4 or 5 events reported.

Putting the two products alongside I-DXd: I-DXd had a median PFS of 4.9 months and median OS of 10.3 months. The two Chinese products both had PFS above 7 months, with OS of 13.3 and 18.5 months, respectively.

Of course, cross-trial comparisons must be interpreted with caution, as studies differ in enrolled populations, lines of therapy, geographic distribution, follow-up duration, and study design. I-DXd's Phase II enrolled more later-line patients, which may have pulled down the median OS of its overall population. But the gap in evidence level is objective: the two Chinese products have already completed confirmation using Phase III OS hard endpoints, while I-DXd has not yet proven itself in a randomized controlled trial.

— In Conclusion —

According to Yaodu data, there are more than 90 B7-H3 ADCs in development globally, with 30 entering clinical stages, of which over 70% are led by domestic Chinese companies. Seven have advanced to Phase III, five from Chinese pharmaceutical companies — in addition to the two products mentioned above, there are DualityBio's Elfetabart drozuntecan, Hengrui Medicine's FH006, and CSPC Group's Jushi Biotech's SYS-6043.

One trend worth watching: Chinese innovative drug companies are becoming the "risk filter" for multinational pharmaceutical companies' ADC pipelines. MNCs no longer need to validate a completely new target from scratch; instead, they can acquire clinically confirmed assets through licensing collaborations after Chinese companies complete pivotal validation.

Hansoh Pharmaceutical licensed the overseas rights to HS-20093 to GSK in December 2023, with a $185 million upfront payment and up to $1.525 billion in milestones.

MediLink Therapeutics entered into a global exclusive licensing agreement with Roche for YL201 in January 2026, with upfront and near-term milestone payments totaling $570 million — setting a new record for upfront payments in Chinese ADC out-licensing. In January 2024, the two parties had reached a collaboration on another ADC project, YL211, for which Roche paid a $50 million upfront payment.

The Phase III IDeate-Lung02 trial for I-DXd is still ongoing, with enrollment nearly complete. If the OS data can replicate the magnitude of benefit seen in the Chinese products, Merck and Daiichi Sankyo may still have a chance to re-enter the SCLC market, but the timeline has been significantly delayed.

According to clinical trial registry information, the primary completion date for IDeate-Lung02 is approximately early 2028, while the two Chinese products are expected to receive NMPA approval decisions in 2027.

References:

1. Merck, Daiichi pull lung cancer filing after FDA pushback deals another blow to $4B deal; FierceBiotech

2. Two lung cancer new-target antibody-drug conjugates announce positive results, Chinese innovative drug companies lead the new track; Beijing News

3. Daiichi Sankyo, MSD withdraw cancer drug application; Pharmaceutical

4. MediLink Therapeutics announces topline data from Phase III registrational clinical trial of icotentan botutab for recurrent small cell lung cancer; MediLink Therapeutics

5. Hansoh Pharmaceutical | Marketing application for 瑞康立伏妥塔单抗 for osteosarcoma accepted by NMPA; Hansoh Pharmaceutical

6. DualityBio Announces 2026 Interim Results and Corporate Updates; DualityBio